The Experts

John McGrath
Property Expert
+ About John McGrath
About John McGrath - CEO, McGrath Estate Agents

John McGrath is considered one of the most influential figures in the Australian property industry.  As Chief Executive of McGrath Estate Agents, he took the company from a lounge room start-up in 1988 to one of Australia's most successful residential real estate groups, selling $10.1 billion in residential property in FY14.

A total solution company, McGrath Estate Agents currently has offices located throughout Sydney, North Coast, Central Coast, Southern Highlands, South Coast, the ACT and Queensland, as part of its growing franchise network.

In October 2008, he was honoured by the Real Estate Institute of NSW with the Woodrow Weight OBE Award, a lifetime achievement award for his outstanding contribution to the real estate industry.

John himself has become a spokesperson for the industry both in Australia and internationally. John has five books that have reached bestseller status including “You Don’t Have To Be Born Brilliant” and “You Inc.”.  In “The Ultimate Guide to Real Estate”, John shares with the reader his invaluable knowledge on the Australian property market.

Growth slows but not in top tier suburbs

Tuesday, March 13, 2018

Along the East Coast, our capital city markets were characterised by a substantial decrease in the rate of property price growth in Sydney and Melbourne, with a much smaller decline in Brisbane. 

In 2017, Sydney house prices went up 2.1% compared to 16.7% in 2016, according to CoreLogic figures. Melbourne house values rose by 9.1% in 2017, which was well off the 15.1% recorded in 2016. In Brisbane, price growth declined just a little – it was 3.1% in 2017 compared to 4% in 2016.

In citywide terms, the boom markets of Sydney and Melbourne began to cool in 2017 but plenty of suburbs still experienced great growth, as shown in CoreLogic’s Best of the Best Report 2017.

What we tend to see at the end of booms is a declining rate of growth citywide but ongoing demand and strong prices still being achieved in the best suburbs for the better-quality properties. The best suburbs could be defined as those offering a great lifestyle, close proximity to jobs or affordability.

At this time in the cycle, buyers become more discerning and are less willing to compete for ‘B’ or ‘C’ grade properties.

For example, Sydney house prices might have only grown by 2.1% overall last year but in the blue ribbon harbourside suburb of McMahons Point on the Lower North Shore, they went up by 45%.

McMahons Point offers a great lifestyle with plenty of cafes, restaurants, shops and sought-after schools close by. It also has excellent transport links for the 10 minute commute into the CBD. It was the No 1 suburb for house price growth nationally last year.

Let’s look at the other best performing suburbs for both house and apartment price growth in 2017.             


Best growth in median values – Houses

  1. McMahons Point 45%
  2. North Sydney 36.5%
  3. Kemps Creek 36.4%
  4. Cammeray 35.3%
  5. Bringelly 34.6%

Best growth in median values – Apartments

  1. McMahons Point 45.6%
  2. The Rocks 45.1%
  3. Birchgrove 37.7%
  4. Beecroft 31.7%
  5. North Sydney 31.4%


Best growth in median values – Houses

  • North Melbourne 41.6%
  • Frankston North 37.6%
  • Ardeer 37.1%
  • Jacana 33.7%
  • Broadmeadows 32.8%

Best growth in median values – Apartments

  1. Watsonia 36.7%
  2. Ardeer 34%
  3. Clarinda 33.8%
  4. Fitzroy 33.3%
  5. Capel Sound 32.2%


Best growth in median values – Houses

  1. Yeronga 25.4%
  2. Mount Mee 25.2%
  3. Sheldon 17.3%
  4. Taringa 17.2%
  5. Yeerongpilly 15.6%

Best growth in median values – Apartments

  1. Ormiston 15.7%
  2. Rochedale South 12.8%
  3. Caboolture South 11.5%
  4. Raceview 11.2%
  5. Corinda 11.2%

Some other figures in CoreLogic’s Best of the Best Report are also worth analysing. Here are the most affordable suburbs and the highest gross rental yields within 10km of the CBD in each capital city.


Most affordable suburbs within 10km of the CBD – Houses

  1. Sydenham $1,215,465
  2. Tempe $1,230,502
  3. Arncliffe $1,237,819
  4. Turrella $1,257,490
  5. Waterloo $1,312,289

Most affordable suburbs within 10km of the CBD – Apartments

  1. Belmore $506,675
  2. Campsie $608,394
  3. Ropes Crossing $641,505
  4. Croydon Park $649,663
  5. Eastlakes $650,500

Highest gross rental yields within 10km of the CBD – Houses

  1. Waterloo 3.4%
  2. Sydenham 3.3%
  3. St Peters 3.2%
  4. North Balgowlah 3.2%
  5. Chippendale 3.2%

Highest gross rental yields within 10km of the CBD – Apartments

  1. Ultimo 4.5%
  2. Chippendale 4.5%
  3. Wolli Creek 4.4%
  4. Darlington 4.4%
  5. Arncliffe 4.3%


Most affordable suburbs within 10km of the CBD – Houses

  1. Maidstone $809,830
  2. Coburg North $824,113
  3. Footscray $869,189
  4. West Footscray $891,432
  5.  Pascoe Vale $910,216

Most affordable suburbs within 10km of the CBD – Apartments

  1. Travancore $381,962
  2. Flemington $386,972
  3. Kingsville $399,182
  4. West Footscray $401,903
  5. Carlton $409,465

Highest gross rental yields within 10km of the CBD – Houses

  1. St Kilda 4.1%
  2. South Yarra 3.5%
  3. Collingwood 3.5%
  4. Parkville 3.4%
  5. West Melbourne 3.4%

Highest gross rental yields within 10km of the CBD – Apartments

  1. Carlton 7.2%
  2. Melbourne 5.9%
  3. Travancore 5.5%
  4. Southbank 5.3%
  5. Docklands 5%


Most affordable suburbs within 10km of the CBD – Houses

  1. Rocklea $411,416
  2. Keperra $530,989
  3. Salisbury $561,430
  4. Chermside West $566,838
  5. Nathan $570,835

Most affordable suburbs within 10km of the CBD – Apartments

  1. Boronia Heights $259,099
  2. Strathpine $268,265
  3. Bethania $273,680
  4. Springfield $304,753
  5. Richlands $322,770

Highest gross rental yields within 10km of the CBD – Houses

  1. Rocklea 4.8%
  2. McDowall 4.4%
  3. The Gap 4.4%
  4. Virginia 4.3%
  5. Chapel Hill 4.2%

Highest gross rental yields within 10km of the CBD – Apartments

  1.  Salisbury 6.2%
  2. Oxley 6.1%
  3.  Strathpine 6.1%
  4.  Coopers Plains 5.9%
  5.  Spring Hill 5.9%

I’m expecting a lower rate of growth in 2018 as the Sydney and Melbourne markets cool further. The East Coast capital worth watching now is Brisbane, which is overdue for stronger levels of growth.


Australia's doom prophecy déjà vu

Tuesday, March 06, 2018

Well, he’s back. Harry Dent – the controversial US economic forecaster has returned to Australia to promote his latest book and sell tickets to seminars being held around the country. And what are his predictions for our property market? Pretty much the same as they were in 2014. Oh, and 2011.  

Dent says Australian property is “way overvalued” and we’re in the midst of a bubble that will inevitably burst. He describes real estate as our economic “vulnerability” with price losses of 20-50% expected during what he predicts will be a second GFC that will be worse than the first. Yep, it’s doomsday stuff all right.  

In an interview on Channel 9 last week, he agreed that his 2011 and 2014 predictions of a price crash here were wrong. He says while most of his economic predictions have come true, we’re “the exception” and it’s largely due to our strong immigration.

“Australia is one of the few countries in the developed world that has very strong demographic trends now and ahead,” he said during the TV interview. “Your demographics is your savings grace and that is coming from very high quantity and quality of immigration. You’ll weather (the next GFC) better than most countries but I think real estate is your vulnerability.

He goes on to say: “I predicted almost every major bubble and major turn of events in the world except for this one. (Australia) really has been the exception but a bubble can only go so far, you are way more overvalued now than you were back then, more than twice what the US is and most European countries and this global crisis, so it may just be 20%, I say 50% max, that’s the range.” 

Now I’ve been in real estate for 35 years and I’m yet to see any doomsday predictions about our property market from overseas commentators come true.

Strong population growth is not the only reason we survived the GFC relatively unscathed and I believe it’s certainly not the only reason our property market will never crash like the US. And herein lies the problem with Dent. You can’t bring an American mindset into any analysis of the Australian property market.

I can understand why Dent would look at Sydney, in particular, and think it’s overvalued. That’s how it might look on paper to an analyst who doesn’t understand how things work here. He fails to take into account all the unique factors that have kept our property prices growing while also protecting our market from collapse.

One of the most important factors is the high level of prudential oversight in our banking system. As we all know, it’s harder to get a loan for investment these days – especially on interest only terms; and that’s because APRA has identified a potential threat from high levels of investment activity and applied measures to deal with it. 

We have stringent approval procedures on every new loan, such as assessing a person’s ability to make their repayments when interest rates are at the long term average of 7%-7.5% – not at today’s 4-5%.  

Among other things, Dent looks at demographic trends to determine his predictions, so let’s highlight one of the most unique trends in Australia that is significant in keeping a floor under prices in all capital cities.

Australia may be ‘a land of sweeping plains’ but we have nowhere near the population spread across our country that the US does. In fact, more than two-thirds of Australians (about 15 million people) live in a capital city and we only have eight of them.

On top of this, 8 in 10 of our migrants also choose to live in a capital city, primarily Sydney and Melbourne.

When you’re having a growing population that is very concentrated around a small group of cities – and two in particular, you’re going to have much greater stability in home values no matter how high prices go.

Additionally, in major growing cities like Sydney where urban sprawl has gone about as far as it can, we now have a chronic undersupply of new housing that is also serving as a strong foundation for ongoing growth.

On top of this, we have low unemployment, a strong and resilient economy, low interest rates, a tax system that rewards property investment and a growing market of international buyers. All of this will contribute to the ongoing growth and stability not only of Sydney and Melbourne but all of our major city markets.

Dent argues that it takes 10 times the typical income to buy a typical house in Sydney and Melbourne, which he says is unsustainable. Well, if it’s so unsustainable, why are we currently seeing healthy auction clearance rates of 60%-70% in Sydney and Melbourne, even though both cities are at a price peak following a five year boom?

While I don’t question that there is an affordability challenge for young buyers, Dent also fails to take into account the ingenuity of Australians, not to mention our long-embedded culture and passion for property ownership.  Australians seem to find a way when they want to buy a home.

Look at the emergence of ‘rentvesting’ and the bank of mum and dad among first home buyers. Look at how many families have adapted to apartment living over the traditional quarter acre block. Look at the number of people swapping Sydney for Melbourne or Brisbane to achieve better affordability. And how about the way we’ve embraced property investment through self-managed super? Prices keep going up but we still find a way.

In today’s high tech world, with so much information available and so many people expressing opinions, it can be hard for the ordinary home buyer or investor to figure out what’s worth listening to.

My advice is to cut through the noise and take a simple lesson from history.

Good quality Australian real estate, held over the long term, is one of the safest and most reliable asset classes you’ll find anywhere in the world. Regardless of any sort of local or global economic downturn, we have decades of evidence proving that despite recessions (like in the 1990s), or 17% interest rates (like in the 1980s), or major economic events (like the GFC), Australian property will continue to grow over the long term.

Keep in mind our market’s outstanding history next time an overseas ‘expert’ comes to town!


Surge in auction bookings for March

Tuesday, February 27, 2018

Here at McGrath, we’ve noticed a significant increase in auction bookings across our Eastern Seaboard offices for the month of March, with volumes well up on the same period last year. 

We currently have 38% more auctions booked for this Saturday (March 4th) compared to the first Saturday of March in 2017 across our network.  Also Sydney bookings are up 40%, with the Eastern Suburbs leading the surge with a 115% increase year-on-year, followed by the Sutherland Shire with a 64% increase.

This is a really exciting change for buyers and sellers alike. We had a significant shortage of listings for sale last year because home owners were very reluctant to sell before buying in a moving market. If they sold first, they risked having to wait several months to find a new home while prices kept rising.

Now that the market has peaked, sellers are feeling less fear and buyers are newly motivated with competition decreasing a bit. Instead of competing against five to eight bidders at auction, they’re more likely to be up against three or four so they feel they have a better chance of purchasing.


In terms of auction volumes, Sydney and Melbourne experienced a major auction day last Saturday, with about 1,500 properties going under the hammer in Melbourne and about 1,100 in Sydney, according to CoreLogic data.

It was a big day because these campaigns were the first to have four full weeks of marketing after Australia Day.

Based on our bookings to date for March, we are expecting two ‘Super Saturdays’ on March 17 and March 24 in the lead-up to the Easter weekend. 

Auction clearances rates are holding up well in both Sydney and Melbourne despite both markets beginning to cool. 


In Sydney, auction clearances were tracking in the low 50% range in the final quarter of 2017 but we’ve seen an upswing this year, with CoreLogic reporting clearances in the 60% range over the past few weeks, and this past Saturday even higher at 71%.   Melbourne is doing even better with recent clearances around 70%. 

Another interesting trend right now is the sale of properties today that failed to sell last year, when auction clearances were lower and buyers were a bit more cautious.

We had a townhouse in Randwick, in Sydney’s Eastern Suburbs that passed in at auction in December with no registrations or bids but sold this month for well over the asking price. This is purely due to heightened buyer engagement in an increasingly balanced market. 

Another really exciting change in the auction market is the re-emergence of first home buyers.

Government incentives that either remove or significantly reduce stamp duty (depending on sale price) are motivating young buyers to come back to property. They’re also dealing with less competition from their main rivals – investors, who are finding it tougher to borrow due to restrictions on investment lending and interest only loans.

Sydney and Melbourne rental yields have also fallen to a point where many investors are looking at other markets, such as Brisbane, for more affordable opportunities and better rental returns. This is further opening the door for young buyers in our two biggest cities.

There are few things more exciting at auction than seeing a young buyer purchase their first home. As we prepare for a big auction month in March, I hope to see even more young people out there inspecting properties and bidding for their first homes over coming weeks. 


How immigrants are shaping our suburbs

Tuesday, February 20, 2018

Immigration to Australia has now hit a peak not seen since the late 1800s, with the percentage of Australian residents born overseas increasing every year for the past 16 years, official figures show.

About 1.3 million new immigrants moved here between 2011 and 2016, according to the latest Bureau of Statistics Census. Today, one in four (26%) Australian residents hail from overseas, making us one of the most culturally diverse countries in the world.

By comparison, we have more immigrants than the UK (13%), US (14%), Canada (22%) and New Zealand (23%).

In our latest Annual McGrath Report 2018, we took a look at the current and historical impact of so many people crossing borders into Australia. The most obvious impact is that it raises demand, particularly in Sydney and Melbourne where most immigrants choose to settle.

Sydney has the largest immigrant population of all capital cities and the 2017 Global Wealth Migration Review shows it also attracts the highest number of high net worth international buyers.

Overseas purchasers have become increasingly important in the harbour city, where locals consider home prices expensive but some overseas buyers see greater value.

Great Britain and New Zealand have long been our greatest source countries for immigrants but change is afoot with a rising middle class in Asia resulting in more Chinese, in particular, aspiring to an Australian lifestyle with our strong economy, clean air, pristine beaches and superior schools.

The 2016 Census revealed that for the first time ever, the majority of Australian residents born overseas are now from Asia, not Europe.

Around Federation, immigrants from Britain and Ireland made up more than 75% of our overseas born population, according to historical figures from the ABS. After WWII, we accepted large numbers of immigrants from other European countries such as Italy, Germany, The Netherlands and Greece. 

After the White Australia policy was abolished in 1973, new groups of immigrants (particularly Asian) have increasingly led to a massive diversification of our resident immigrant population.

Today, 40% of our immigrant residents were born in Asia – up from 33% in 2011 and 24% in 2001. The dominant source countries are China and India. UN figures show these two enormous growing economies already make up 37% of the world’s population and their close proximity to us means we can expect them to be a major force in our property market for decades to come.

Immigrants can affect our market in different ways. For example, Chinese buyers have a strong preference for certain suburban locations and property types.

New Chinese immigrants tend to buy in suburbs with established Asian communities. Families are choosing new or renovated properties and young people are choosing apartments and townhouses close to shops, transport and universities.

Wealthy Chinese families are very active in the high end suburbs of Sydney and Melbourne and prioritise homes within the catchment zones of top public schools or close to private schools.

An elevated position, good feng shui and water views are highly prized and if there is an 8 in the address or sale price, it is considered good fortune.

Desirable suburbs for Chinese prestige buyers in Sydney include Mosman, Hunters Hill, Point Piper and Vaucluse; while in Melbourne they are targeting Toorak, Malvern, Balwyn and Kew.

When it comes to national population growth, net overseas immigration plays a bigger role than natural increase (births minus deaths). So, what happens to our property market if we take down the welcome sign to immigration and international investment in real estate? 

There are already indications that new fees and processing charges are dissuading foreigners. The latest Foreign Investment Review Board Annual Report notes that the introduction of these fees, among other factors, contributed to a decrease in the number of approvals for purchases of established homes in FY16, down 36% compared with the previous year.

Foreign fees represent a very short-sighted approach by governments. Given the enormous impact of both immigration and foreign investment not just on our property market but also on the broader economy, it makes no sense to me why we are disincentivising it, especially when we have such a long, rich history proving the benefits. 

As I’ve said previously, all of our origins are from elsewhere.  Our multicultural society is one of our great assets. Why send a message to the world that we’re not open for business?


Property trend: The rise of vertical high streets

Tuesday, February 13, 2018

As Australia’s international reputation continues to grow, we are witnessing the emergence of a new and more discerning class of apartment buyer that demands a sophisticated world class residential offering. This has given rise to two new property trends, vertical high streets and super apartments. 

With more Australians living in apartments than ever before, our tastes have matured and our expectations for high rise living have soared. Apartments are no longer just about affordability, they are about lifestyle, convenience and definitely a little bit of luxury. 

Developers are not only amping up the wow factor in terms of style, design and in-house facilities and services, they are also looking for ways to add lifestyle value by incorporating retail and dining precincts within and around the developments themselves. 

Welcome to the vertical high street. Luxury apartments with every possible convenience at your doorstep. It is the type of lifestyle that wouldn’t be out of place in major international cities and both local and overseas developers can see a growing market for it in Australia. 

As revealed in our latest annual McGrath Report, vertical high streets come in many forms. 

The first is luxury apartment towers with a serious emphasis on amazing services and facilities such as a 24-hour concierge, private bars, cinemas and even virtual golf studios that allow residents to play the world’s top courses. 

Among Australia’s new luxury apartments is Melbourne’s first six-star residential and retail development, Capitol Grand in South Yarra. 

The 50-storey property, which has movie star Charlize Theron as an ambassador, will offer residents private dining rooms, libraries, a cinema, an underground car wash and a 24-hour concierge. An extensive landscaped rooftop will feature cabanas for private dining and outdoor entertaining. 

On the Gold Coast, the $1B Jewel development will feature a five-star hotel and 512 luxury apartments. Amenities include resort-style pools, private bars and casual and fine dining restaurants. 

Vertical high streets often have a transformative impact on their immediate surrounds. In Sydney, Barangaroo has drawn many city tenants away from the CBD, leaving many old office buildings ready for re-purposing into luxury residential towers. This is leading to a revitalisation of George Street and Circular Quay, where keen developers are snapping up prime sites with harbour views. 

The planned $1B redevelopment of Gold Fields House into One Circular Quay is one such project set to rejuvenate the area with its five-star hotel and boutique retail premises complementing 190 luxury private residences. 

We are also seeing more vertical high streets in suburban areas where new apartments are increasingly popping up above existing shopping centres, which usually undergo a major upgrade at the same time. Top Ryde City in Sydney’s northern districts is a great example. 

Some residential developers are incorporating brand new retail and dining precincts into their blueprints. These precincts are separate to the apartments and open to the public but form an important part of the lifestyle package that every buyer is purchasing. 

In Sydney, Meriton’s Mascot Central incorporates several towers of about 800 apartments along with a brand new retail precinct including 17 shops, eateries and a full line Woolworths. 

In the prestige apartment sector, Australia is now following in the footsteps of the world’s leading cities by providing an even greater premium living experience in the form of super apartments for ultra high net worth (UHNWI) clientele. 

In New York, super apartments such 40 Bond Street in Manhattan’s NoHo district provide residents with services like personal grocery shopping and pet walking. 

The Aldyn on the Upper West Side has a rock climbing wall, indoor basketball court, indoor pool, a bike room, bowling alley and a golf simulator; while Austin Nichols House in Williamsburg has a recording studio for musically-inclined residents. 

In London, One Hyde Park in Knightsbridge – known as the world’s most expensive residential block, offers residents a pool, spa, squash court, gym, wine cellar and a virtual golf course. 

Among Australia’s super apartments are the Opera Residences at Circular Quay, where the penthouse sold for a new national apartment record of $27M in late 2016 to a Sydney couple. The previous national apartment record was $26M paid only days earlier by another local family for the adjoining penthouse in the Opera Residences. 

In early 2015, $25M was paid for the penthouse of Melbourne’s Australia 108 development. At 319 metres, the Southbank tower will be one of Australia’s tallest residential buildings. Amenities include two infinity pools, a golf simulator, five gyms and seven private dining rooms. 

The customer base for both luxury vertical high streets and super apartments is rising, with Australia’s resident population of HNWIs and UHNWIs increasing and more of the globe’s rich buying second homes here. 

In 2016, an estimated 11,000 HNWIs moved to Australia, making us the world’s No 1 destination for millionaire inflows for the second consecutive year, according to the 2017 Global Wealth Migration Review by New World Wealth.

The evolution of apartment living in Australia has only just begun. Buyers at all price levels are demanding a better living experience, with quality, uniqueness and lifestyle factors becoming as important to them as value for money when looking for a new home.


How do we make housing more affordable?

Tuesday, February 06, 2018

The latest Housing Affordability Report published by The Real Estate Institute of Australia and Adelaide Bank showed an improvement in housing affordability nationwide.

The report, which is based on data from all major lenders for the September 2017 quarter, showed the proportion of income required to make loan repayments had fallen in every state and territory over the previous 12 months.

First home buying had also increased nationwide, with the number of young Australians buying their first home up by 32.6% in September 2017 compared to September 2016.

The biggest change was in NSW where first home purchasing rose by 70.9% – no doubt a reflection of government incentives introduced in July to make first home ownership easier, including significant stamp duty savings.

It’s great to see affordability improving based on these particular measures but it’s cold comfort to young buyers who can’t even get the deposit together. Their ability to make the repayments, based on their income, is often good but it’s the 20% deposit that makes life difficult, especially in a boom market where prices are rising faster than they can save.

Affordability is one of my main concerns in the Australian marketplace today, primarily for first home buyers.

As outlined in our recent Annual McGrath Report, I believe both first home buyers and governments need to take responsibility if a solution is to be found.

Attempting to reduce values materially will never work as that would require major artificial manipulation and would negatively impact millions of existing home owners around the country, not to mention lenders and other stakeholders.

I believe the solution needs to work from all sides. My key points on the road to affordability are:


  1. This is a supply issue not a demand issue. We shouldn’t attempt to dissuade Australians from buying property, instead we should increase the supply so we can all live the Great Australian Dream
  2. As the workforce becomes more skilled and moves away from its industrial base, workers need access to work hubs and therefore infrastructure and planning are keys to the resolution
  3. The tax treatment. The current burden of stamp duty is impacting many Australians’ ability to move to the most appropriate home for them. We need an enlightened look at the major tax structures that impact property (stamp duty, negative gearing, land tax and capital gains) in order to deliver a fairer, and most likely broader based sharing of the tax burden, especially around stamp duty
  4. Local government approval process. The delays experienced by developers to obtain complying development approvals is absurd. It is clogging up the system and causing billions of dollars in delays across the country. This must be addressed to clear the blockage.


Having worked in this wonderful world of property for some 35 years now, it would give me great comfort to see the housing affordability crisis resolved. I believe this can happen through a joint effort between all stakeholders.

So, let’s all get mobilised on this issue, so every young Australian can fulfil the dream of home ownership.


Changing the way we use our homes

Tuesday, January 30, 2018

Affordability, the rising cost of living, our ageing population and increasing multiculturalism is driving a revolution in the way we use our homes.

As revealed in our latest McGrath Report 2018, multi-generational living – where more than one generation of related adults live together, is on the rise as more extended families look to help each other both financially and in terms of lifestyle, particularly in our major capital cities.

We are also seeing a strong trend in home owners seeking ways to make money from their homes, with Airbnb enabling principal places of residence to be used for short term letting.

Changes to state planning laws are also allowing more people to build granny flats alongside their homes to accommodate family members or rent out to tenants.

In Sydney, the prevalence of people living in multi-gen homes has increased by 31.8% in just 10 years.

According to the latest Census, 129,885 grandparents, aunts, uncles, cousins and siblings were living with a core family unit of mum, dad and children compared with 98,564 in 2006. In Melbourne, multi-gen living has increased by 37.7% and in Brisbane by 39%.

Among the most common scenarios is grandparents living with the core family unit due to their need for care or to help raise their grandkids to save on child care costs.

Families are also living together simply to pool funds, with a typical mortgage now requiring 39% of household income to service compared with 25% in 2001, according to CoreLogic’s 2017 Perceptions of Housing Affordability Report.

As our population continues to age, we expect this trend to grow within our marketplace.

Multiculturalism is also playing a significant role in the rise of multi-gen living, especially given increasing immigration from Asia where it is common for several generations to share a home.

Another common multi-gen scenario is 20-somethings remaining in the family home to save money for a place of their own. In 2016, 18% of Sydneysiders aged 25-34 were still living with their parents. In Melbourne, it was 16.5% and in Brisbane it was 12.5%, according to Census data.

This trend is being driven by housing affordability, with young people struggling to save the deposit for a first home and often needing the bank of mum and dad to make up the difference.

According to CoreLogic, 62% of young Australians living with their parents said they could not afford to move out.

Within the property market, multi-gen living has resulted in greater demand for larger homes with teen retreats, self-contained in-law accommodation and granny flats in the backyard.

With the cost of living increasing, more Australians are also looking for ways to make money from their homes.

Airbnb has provided a substantial platform, with many owners leasing their homes while they are away on holidays. Almost 200 countries have Airbnb listings and Australia is among the top 10 destinations and top 10 sources of outbound guests, according to its website.

We expect these trends to continue, primarily in major capital cities where the cost of living and property prices are high and there are large populations and multicultural communities.


What’s next for Sydney in 2018?

Tuesday, January 23, 2018

The new year will bring further change to our big markets – none more so than Sydney. People are no longer asking “when will the boom be over” as it’s very clear the Sydney market is cooling. The most common question now is “how far will prices fall”?

My suggestion is to remove that question from your psyche.  Prices will do what they always do at this stage in the cycle – they’ll be up some months, down in others and overall we’ll be looking at a fairly flat year for growth and that’s exactly what Australia’s biggest marketplace needs.

For those of you who like numbers, the final stats for 2017 are in. Over the year, Sydney house prices grew by 2.1% and apartment prices rose by 5.4%, according to CoreLogic. That’s a big change from 2016 when house prices rose 16.7% and apartments 9.6%.

No two ways about it – Sydney is cooling. But after a 75% growth in property values, should you really be worrying about whether prices in your area fall (or rise) a few percent this year? There will be no crash – that’s for sure. Sydney has too many strong fundamentals keeping a floor under the market, such as undersupply and population growth.

I’d advise home owners to direct their attention elsewhere.  Forget about what prices are doing and the tiny changes month to month that create those gloomy headlines when markets begin to cool. Look for the opportunity in today’s market. Here’s how I see it:

  • If you’re a home owner, the biggest opportunity lies in debt management. Are you getting the best deal on your home loan?  Is it time to look at fixing given fixed rates are lower than variable in many cases at the moment?  Can you afford to pay down some debt while interest rates are so low? Or do today’s rates combined with new equity give you the chance to renovate and improve your home?
  • If you’re a buyer, take advantage of extra choice in the market and less competition. Do your research and buy the highest quality home you can within your budget. Buyers waiting for prices to come back may be chasing a rainbow.  By all means watch the market – especially the number of homes for sale as this could have a real impact on the price you pay but don’t get too caught up in trying to buy “at the right time”
  • If you’re a seller, you might get a slightly better price selling earlier in the year as the market is likely to cool further. Big picture – the timing of your sale shouldn’t be the major consideration right now. Look to sell when you’re ready. Talk to the most experienced, professional agents in your area and ask them about their recent results and what they’re doing differently to combat the change in market conditions. The best agents will already have a strategy in place

Whatever your real estate goals this year, I wish you all the very best. Remember, the market presents opportunities in times of both rising prices and falling (or stagnant) prices. You just need to figure out how the market climate in 2018 could help you get ahead. 


What’s next in the cycle?

Tuesday, December 19, 2017

By John McGrath 

After a five year upwards trajectory, we are now seeing affordability constraints and tighter lending conditions softening demand in both the Sydney and Melbourne markets.

Affordability is always a factor at the end of booms. The market cycle eventually reaches a critical price point where buyers begin to exit the marketplace. Some owner occupier buyers renovate instead of trading up while others leave the city altogether.

Many investor buyers begin to lose interest as capital growth prospects wane and yields become too small to service the loan. 

The combination of restrictions on lending to investors, the cap on interest only loans and higher mortgage rates for investors have been major factors reducing demand as well. The latest statistics from APRA for the September 2017 quarter show investor demand has fallen and new interest only lending is at its lowest level on record. 

Typical post-boom market trends we expect to see over the next year include an increase in stock, as more vendors come to market with hopes of achieving a final boom price and thousands of new apartments are completed following the construction boom.

Apart from first home buyers, we will see a gradual reduction in demand as investors exit and owner occupiers struggle with affordability. The buyers remaining in the market will be choosier given improved supply, leading to an increase in average days on market.

Auction clearance rates will fall back to the more normal rate of sale around 60%. After several months of post-boom activity, vendor discounting will increase as sellers finally adjust their expectations and accept that boom level prices are no longer achievable.

Price growth will continue – albeit at a slower pace, particularly in Sydney and Melbourne’s best suburbs. The citywide medians will rise and fall over many months as the market rebalances.

Overall, there is a possibility of a minor price correction and this would be healthy for the long term sustainability of our major city markets following such a prolonged period of rapid growth.

According to the latest monthly report from CoreLogic, Sydney property prices have fallen by 1.3% over the three months to November 30. Saturday auction clearance rates have also dipped into the mid 50% range. 

The Melbourne market is also softening but at a slower pace than Sydney. Prices are up 1.9% over the three months to November 30 and clearance rates are hovering in the late 60% range.   

CoreLogic says Melbourne is doing better because it’s more affordable, has higher net migration and has had less investor activity during the boom, therefore the exit of investors in both cities due to tighter lending restrictions has not hit the southern capital as hard. 

My best advice to buyers and sellers over the next six months is don’t let yourself be distracted by the headlines. Yes, the boom is over but the opportunity to make money in the Sydney and Melbourne markets will always be there if you keep a long term view. 

This is my final column for the year. I’ll be back in January with more market insights but until then, I wish you and your friends and family a wonderful Christmas and holiday season. 


The transformation of regional hubs

Tuesday, December 12, 2017

Australia is one of the most urbanised countries in the world with 67% of our population living in a capital city today. However, as house prices in major cities like Sydney and Melbourne become more expensive and industry seeks cheaper bases of operation – bringing hundreds of jobs with them, many Australians are embracing smaller cities as a great place to live and work. 

Most of these small cities are formerly regional industrial hubs close to our capitals that have transformed into attractive lifestyle centres offering more affordable housing, employment opportunities, a strong sense of community and a more relaxed way of life. 

New transport and roads infrastructure has brought these regional cities closer to the capitals, enabling locals to commute and earn a big city income while enjoying a small city lifestyle that includes far more affordable housing. Telecommuting is also enabling more people to base themselves in lifestyle locations. 

As revealed in our McGrath Report 2018, Wollongong and Newcastle in NSW, Geelong and Ballarat in Victoria and Toowoomba in Queensland, are among the most important key regional markets to have transformed themselves over the past 20 years from old industry satellite towns to attractive regional cities. 

According to the Victorian Government’s Regional Network Development Plan, 40% of all regional growth to 2031 will be in the cities of Geelong, Bendigo and Ballarat. 


Median house price $720K, up 15.2% over the 12 months ending June 2017

Located 80km south of Sydney, Wollongong was once a blue collar industrial town but today it is a coastal lifestyle centre known for its pristine beaches, leading university and arguably the most appealing commuter housing market for families priced out of Sydney. 

It has always been a major export location for coal and other goods and also home to steel manufacturing but the city is shedding its industrial reputation.  Key sectors now include IT, business service and finance, education and research, health and tourism. 

Wollongong’s population increased by 10.5% over the decade to 2016, the latest Census shows. 

The University of Wollongong is one of Australia’s top ranked universities, employing 1,000 people full time and educating 23,000 students per year – 41% of which are international students. Its Master Plan 2016-2036 will elevate the university’s role in Wollongong’s economy and provide an even bigger hub of employment. 

Price growth is being largely driven by Sydney families, local upgraders and a move to encourage immigration outside capital cities through the Regional Sponsored Migration Scheme. 

In the 2017 NSW state budget, $15M was allocated towards planning a 35km extension of the F6 through southern Sydney to Waterfall to relieve congestion and provide a faster journey for Wollongong to Sydney commuters.  


Median house price $570K, up 11.8% over the 12 months ending June 2017

About 160km north of Sydney, the population of Newcastle was 155,411 at the last Census and the City of Newcastle predicts it to exceed 180,000 people by 2036. 

Newcastle has been undergoing a construction boom, as evidenced by the massive redevelopment of the old Royal Newcastle Hospital site into the $100M Arena Apartments due for completion this year. 

The value of construction approvals topped $1B for the first time in FY17, according to Newcastle Council. Among the approved projects were the Verve Residences, two 19-storey towers with 197 dwellings; a new hotel on King Street; and the $88M redevelopment of Westfield Kotara. 

Major recent projects include the largest regional courthouse in NSW, a new $95M city campus for Newcastle University, the Hunter Expressway and the $500M light rail and transport interchange expected to be completed in 2019. 

While Darby Street in Cooks Hill and Beaumont Street in Hamilton remain the city’s eat streets, great restaurants are popping up everywhere. A former Tooheys warehouse is now a craft beer café, The Grain Store; and an old bank is now home to fashionable drink spot, Reserve Wine Bar. 


Median house price $325K, up 4.8% over the 12 months ending June 2017.

The historic city of Ballarat, located 105km north west of Melbourne and famous for being the heart of Victoria’s gold rush, was previously a manufacturing region. Today, more people are working in professional service with hospitals the biggest employer followed by school education and cafés and restaurants. 

Ballarat is one of Australia’s fastest growing inland cities with 101,686 residents today and a projected population of 145,197 people by 2036, which is massive growth of about 36%. 

Ballarat is still home to McCain Foods, which announced a $57M revitalisation of its potato plant in June 2017; as well as Mars Incorporated, which employs more than 2,000 people; and train builder Alstom Australia. 

In its last budget, the Victorian Government announced it would move 600 jobs from eight departments to Ballarat. Construction is expected to start on the GovHub office at the redeveloped Civic Hall site in 2018. 

Steeped in gold rush heritage, Ballarat provides many weekend family activities at historical museums such as Sovereign Hill and Kryal Castle. Lake Wendouree offers many attractions and recreational activities including the Ballarat Botanical Gardens, Steve Moneghetti walking and running track, cycling trails, bird watching, a playground and barbecue facilities. 


Median house price $445K, up 2.4% over the 12 months ending June 2017.

With its spectacular beaches and cosmopolitan shopping precincts, Geelong is increasingly luring Melburnians to the coast. About 75km south west of Melbourne, Geelong has had astounding population growth of 18% over the past decade alone. 

Factors driving this growth include the relocation of government workers from Melbourne and the revitalisation of the CBD with new eateries, bars and retail outlets. Corio Street’s former wool exchange is now an entertainment complex with a good roster of Australian bands. 

Geelong was once amongst Australia’s largest manufacturing centres but this has changed significantly with the closure of Shell’s Corio oil refinery, Ford’s Norlane plant and Alcoa’s Point Henry aluminium smelter. In their place, service industries including health and education have grown, with Deakin University climbing up the world rankings. 

WorkSafe Victoria’s headquarters are coming to Geelong, with more than 700 workers to be based in a new building on top of the 90-year-old Dalgety and Co. Ltd in the CBD from 2018. A new headquarters for the National Disability Insurance Agency will also be established in Geelong, employing 450 people. 

Nearby Avalon Airport is seeking to expand its domestic operations and commence international flights with Federal Government backing, creating more jobs and business opportunities in the region. 


Median house price $375K, up 2.2% over the 12 months ending June 2017

Toowoomba, located 125km west of Brisbane, has developed into a strong and thriving regional centre of Queensland where the local population has surged over the past decade from 90,199 to 160,779 people, the latest Census shows. 

Known for its beautiful parks and gardens (the city hosts a Carnival of Flowers every September), Toowoomba is being further revitalised by a new airport and new roads diverting big trucks away from the city centre. 

There are several multi-million dollar infrastructure projects in the works, including the 41km Second Range Crossing bypass due in 2018; and the Inland Rail direct freight link from Brisbane to Melbourne expected by 2020. Construction on the $235M InterlinkSQ rail transfer centre will also start in 2017. 

Accessibility to the area has been improved by the 2014 opening of Brisbane West Wellcamp Airport, about 15km from the Toowoomba CBD. The airport provides exciting business opportunities, with the $35M Integrated Milk Project being built at the adjoining Wellcamp Business Park to take milk products directly to Asia. 

The Toowoomba region is also on the way to becoming Australia’s solar energy capital. A $200M solar project with the potential to generate about 100MW of electricity – powering 32,000 homes, will be built at Yarranlea in 2018. A 100,000-panel solar farm near Oakey is expected in 2018 and the $1B Bulli Creek Solar Farm near Millmerran is expected by 2025. 




Biggest property boom winners

High hopes for property in our nation’s capital

South East Queensland – property hotspot

The Melbourne property market outlook

An overview of the Sydney property market

Top 5 suburb picks for greatest capital growth potential

Australia’s top retirement destinations

Time to take stock of housing debt

Spring property so far

Australia's population growth hot spots

Record level of $1 million-plus sales

Stamp duty cuts working for first time buyers

How to rent with a pet

Winter wrap-up – prices levelling out

Tips for Spring sellers

Lack of pet-friendly homes to buy or rent

More kids in public schools raises property prices

More sellers are choosing auctions

Why more Sydney and Melbourne home owners are selling now

Investors depart, first home buyers return

Census insights into property

EOFY property round-up

Sydneysiders moving out

What the NSW Budget means for home owners

Changing nature of apartment developments

NSW affordability package: Stamp duty savings

South East QLD: The value lifestyle choice

Don’t panic! The property bubble isn’t about to burst!

Are Sydney and Melbourne at their peak?

How the Federal Budget will impact property

Australia's most affordable suburbs

Sydney and Melbourne decouple

Capital city hot spots of the past 5 years

Goal posts move on interest-only loans

First quarter results: Which city took top spot?

New first home buyer assistance in Victoria

The affordability challenge

Sydney and Melbourne investors should consider rental yields

The rise of parental buyers

Autumn auction season kicks off strong

Average capital gain a quarter of a million

Is it time to fix your loan?

5 ways to win at auction

Property in 2017: What you need to know

Why renting is on the rise

The next big tech trends in real estate

No place like home: Aussies stay put for longer

Top 10 suburbs for price growth

Prestige property and off market selling

Is the Asia story over?

Canberra’s remarkable price growth turnaround

Brisbane market affordable and resilient

Melbourne more appealing than ever

McGrath Report 2017: Sydney prices still to rise

Top 5 suburb picks: East Coast capitals

Sydney buyers head to South Coast

Big opportunities for first home buyers

Strata law overhaul to improve apartment living in NSW

More gain than pain in real estate

Confidence lifts in prestige property market

Property hotspots: Key regional markets

The world's most liveable cities

Property to Spring into action

Why is off-market selling on the rise?

Suburbs with million-dollar medians

Property hot spots of tomorrow

What the rate cut means for the property market

10 ways to give your home a facelift

Buying apartment blocks with your SMSF

Election outcome to boost market activity

How to buy before the boom

New property trends: multi-gen living

EOFY checklist for property investors

Banks lend a hand to investors

Queensland's golden property triangle

Neighbours cash in on ‘megalot’ land deals

Sydney's auction clearance rates soldier on

Property sellers beat the winter blues

Property buyers want a sea change

A golden era for property buyers

Record numbers of property investors make a profit

Hot spots in the reno boom

How lenders differ on loan approvals

Our number 1 population growth city

Where to find the most affordable suburbs

Property oversupply an opportunity for buyers

The most desirable features of a home

Rental growth vs capital growth

Negative gearing changes a wealth killer for average Australians

Do prices double every 10 years?

Sydney’s next major hot spot

Million dollar suburbs

Property markets state of play

Million dollar suburbs

Property markets state of play

Apartment living on the rise - literally

Working in SoHo

Lessons for property investors in 2016

Is the Sydney property boom over?

The rise of the junior investor