A “new breed” of buyers dominated by investors and people upgrading their properties has caused a surge in demand for residential real estate nationwide, according to Australasia’s largest real estate group, Ray White.

Ray White Deputy Chairman Sam White said auction clearance rates in some suburban Sydney markets had been over 90 per cent over the past two weekends and there had also been strong activity in other capital cities.

Mr White said the rush for property was not being dominated by first home buyers trying to capitalise at the eleventh hour on the boosted First Home Owner’s Grant, which has been reduced from today.

He said the market was being boosted by people upgrading their homes and property investors who were now more confident about the Australian economy.

“You look back and it was only in March when everyone was saying we’re on the edge of the Great Depression and we had all those horrible headlines,” Mr White said.

“But I think consumer confidence is returning with the realisation unemployment is not going to get to predicted levels now and I think that’s feeding people’s confidence.”

Mr White said an indication of the new confidence in the residential real estate sector was in evidence at a Ray White in-room auction at Turramurra on Sydney’s north shore last weekend.

“We had more than 100 people, including over 30 registered bidders, pack into the auction room to see just two homes go under the hammer,” he said.

“A Wahroonga home sold for $1.302 million, $52,000 above reserve, while a West Pymble property sold for $65,000 above reserve at $1.055 million.

“These results show the upsurge is not just due to the expanded First Home Buyer Grant scheme being pared back from September 30. First home buyers aren’t looking to purchase properties over $1 million.

“What we are seeing is a new breed of buyer who is confident about the state of the economy and appreciating that there is a lot of affordable housing available, particularly between $1 million and $1.5 million.
“The whole world’s saying the Australian economy is in pretty good shape and those sentiments have had an impact on people’s confidence.

“We are seeing a lot of investors returning to the market and people deciding to upgrade their properties because home mortgage rates have also stayed low.”

Mr White said tighter lending criteria by the major banks had made it harder for first home buyers to obtain housing finance in the last four to five months.

“What the boosted First Home Owners Grant did was start to put confidence back into the market and as that’s flowed through you’ve seen people upgrade to their second home and so on,” he said.

“Investors have come back into the market in the last four to six weeks, fundamentally in Sydney and the other capital cities.”

Mr White said even the prospect of the Reserve Bank of Australia (RBA) lifting official rates from their current level of 3.0 per cent during the next few months was unlikely to have much impact on the property market.

“I think we can afford a couple of interest rate rises as the confidence in the economy and the market will override that,” he said.