Bloomberg News

Millionaire’s Harbor Mansion to Test Australia Luxury Homes

September 28, 2011

(Updates with suburb price declines in ninth paragraph, quote from Moody’s in 11th.)

Sept. 28 (Bloomberg) -- A mansion with a 4,000-bottle wine cellar in one of Sydney’s most exclusive waterfront suburbs is seeking a record A$50 million ($49 million) in a test of Australia’s luxury property market.

Prices of homes costing more than A$15 million have declined about 15 percent, said Michael Dunn, principal at property broker Richardson & Wrench Double Bay, one of the agents marketing the five-bedroom house in Darling Point in the city’s east. The number of potential buyers has dropped to one or two per property, from five or six before 2009, and homes that once sold within 90 days now take about 120, Dunn said.

Home prices in the top 20 percent of capital city suburbs when measured by the median sale price fell 5.7 percent in the six months to July, according to figures from real estate researcher RP Data. That’s more than double the 2.7 percent decline in the lowest 20 percent by sale value and a 2.6 percent drop across the middle 60 percent.

“Nobody suggested that getting a record price would be an easy exercise in this climate,” Dunn said in a telephone interview Sept. 26. “But these sorts of properties sell in good times and bad.”

The most expensive house sold in Sydney is Coolong on the waterfront in Vaucluse, which fetched A$45 million three years ago.

Sydney’s top-end homes cost 590 pounds ($922) a square foot, London-based Savills Plc said in a report last week accompanying its billionaire property index. That places them 10th on a global list topped by Hong Kong, Tokyo, Paris and London.

Price Declines

“The trend of value declines has actually worsened at the top end of the market over the months leading up to July, so a recovery doesn’t appear to be on the cards just yet,” Tim Lawless, national research director at RP Data, said in an e- mail yesterday.

Australian homeowners are increasingly pessimistic about the housing market as rising unemployment and constrained sales dampen growth expectations, a National Australia Bank Ltd. survey showed today. Home prices fell 2.4 percent in the third quarter and are expected to fall 1 percent over the next year, Australia’s fourth-largest lender said in an e-mailed report.

Prices in Sydney’s eastern suburbs, among Australia’s most expensive, have dropped 10.5 percent in the year to June 30, Moody’s Investors Service said in an e-mailed report today. Home prices in inner Melbourne have crumbled 14.9 percent, and central metropolitan Perth has seen values slump 12.5 percent, the ratings company said.

Rising Delinquencies

The ability of Australian homeowners to keep up with mortgage payments declined over the past year, according to Moody’s. The national delinquency rate rose to 1.67 percent from 1.36 percent between March 2010 and June this year, while the number of regions with mortgage performance classed by the risk assessor as “poor” or “very poor” increased fourfold to 28 out of 65.

“Despite Australia experiencing a mining and resources boom, many more borrowers are falling behind in their mortgage repayments,” Moody’s said in the report. “This paradox is due to the fact that mining generates fewer direct jobs than other sectors of the economy, Queensland’s heavy reliance on a weak tourism industry and strained household budgets due to increased food and utility costs.”

Top-End Buyers

The S&P/ASX 200 share index has plunged 15 percent this year as the sovereign-debt crisis in Europe roils markets.

The uncertainty and seven interest-rate increases in Australia between October 2009 and November 2010 has kept buyers sidelined even as more houses are coming onto the market. The number of homes listed for sale across the country jumped 23.6 percent in August from a year ago, according to SQM Research Pty, and the number of sales is 18 percent below the five-year average, RP Data said.

“We aren’t likely to see a dramatic improvement in buyer numbers in the top price brackets until we see some renewed stability in equity markets and both consumer and business confidence levels,” Lawless said.

Australian business confidence plunged last month to the lowest level since April 2009, a National Australia Bank survey published Sept. 13 showed. Consumer confidence rebounded this month from a two-year low as the central bank indicated it will keep the developed world’s highest borrowing costs on hold.

Lloyd Wright-Inspired

The Darling Point mansion belonging to William Tyree, the millionaire founder of closely held transformer manufacturer Tyree Industries, is set on 1,800 square meters (19,375 square feet) of land. The Frank Lloyd Wright-inspired home opens up to tiered gardens and lawns that lead down to a boat pen.

The sale will be the highest in Sydney this year, said Ken Jacobs, managing director of Ken Jacobs Real Estate, who is also marketing the mansion.

Jacobs is also working on the sale of Amaroo, a six-bedroom waterfront home on Bayview Hill Road in Rose Bay, another eastern suburb. While he declined to comment on a price he’s aiming to sell Amaroo for, another home in the street holds the record for the most expensive in the suburb, at A$18.2 million.

“It’s always difficult at the top end, but there are certainly anti-cyclical buyers out there who see real estate as a good place to invest,” he said.

--Editors: Malcolm Scott, Garfield Reynolds

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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