Hi,
The Domain auction clearance rate came in at 55% over the weekend from a solid number of auctions. There were 469 auctions reported, with 257 properties selling under the hammer, 94 withdrawn and 118 passed in. That’s well down on the 72% final clearance rate recorded for the same weekend last year. The REIV also reported another 412 private sales.
Domain also released its latest House Price Report last week, showing Melbourne’s median house price fell 3.1% over the June quarter to $1,045,205, while the median unit price remained relatively stable at $587,137.
Melbourne’s median house price is now below Sydney, Brisbane, Adelaide and Perth, which I find astonishing. But there is no doubt Melbourne has faced some significant headwinds over the past five years, and many of those challenges remain while the current state government is in office.
So, have we reached the bottom of the property cycle?
I think we’re getting close, but I’m not convinced we’re quite there yet.
A lot will come down to what happens with interest rates next month. At the moment, I’d say the chances of another rate rise are about 50/50.
The RBA has made it clear it remains committed to bringing inflation under control, and the June quarter CPI figures, due to be released this week, will have a significant influence on its decision on 11 August.
My feeling is that if we do get another interest rate rise, it could mark the period where Melbourne finds the bottom of the cycle. If rates remain unchanged, then there’s every chance we’ve already reached it.
The truth is, no one knows exactly where the bottom of the market is until after it’s happened. By the time everyone agrees the market has turned, prices have usually already started moving.
What I can say is that buying conditions are as good as they’ve been for a long time. Buyers have more choice, greater negotiating power and less competition than we’ve seen for several years. If you’re a first home buyer, investor or upsizer, I think the current market presents some excellent opportunities.
Once interest rates stabilise, the Victorian election is behind us and confidence begins to return, I believe Melbourne’s property market will start to wake up again. It won’t happen overnight, but confidence has a habit of returning much quicker than most people expect.
Have a great week.
Kim Easterbrook – Managing Director
