Hi,
The REIV clearance rate again remained in the 70%’s demonstrating some resilience in the Melbourne Property Market, even with some negative media reports last week. 734 auctions were reported to the REIV with 394 selling at auction, 162 before auction and 177 properties passed in resulting in a clearance rate of 76%. As a comparison, this time last year there were 651 auctions resulting in a clearance rate of 80%. In addition, there was a strong number of private sales being 288 for the week.
PropTrack released their May 2024 Home Price Index data and showing that national home prices have grown again for 17 months in a row. It must be noted that the growth was minimal, sitting at 0.3% for the month of May, but annually, prices have increased on average 6.68% across the country. Capital cities have grown on average 7.22% and regional areas 5.30%. Leading the charge is Perth with an annual growth of 20.58%, Adelaide 14.49%, Brisbane at 13.69%, Sydney at 7.01% and Melbourne property prices only growing 0.87% according to PropTrack.
What remains unknown is will this trend continue? Higher interest rates are pushing buyers to lower their budgets but immigration and population growth is causing an imbalance between supply and demand. Melbourne (and to be fair so have other cities and towns) has had a surge of investors leaving the market as a result of higher running costs. But Victorian investors have been hit with higher costs not only due to higher interest rates, but also hefty land tax bills and legislation that requires rental properties to meet minimum standards. The fact that we have not seen a drop in prices due to the increase in supply can actually be seen as a positive and once this offload surge eases, we could again see an imbalance between supply and demand.
The Australian Bureau of Statistics released their April findings showing building approvals fell by 0.3% with detached house approvals down 1% and higher density dwellings down 7.5% compared to the same time last year which is the lowest total for a 12 month period in almost 12 years. The National Housing Accord target is to build one million homes over the next five years from mid 2024 but new home approvals across Australia are sitting at 163,500 for the past 12 months. It is becoming more and more unlikely that this target is achievable which is crucial to ease Australia’s housing shortage supply.
Have a great week!
Kim Easterbrook – Managing Director
Melbourne Property Market Update
Hi,
The clearance rate has remained steady at 76% on 656 properties that went to auction over the weekend. 349 properties sold at auction, 149 selling before auction and 158 passed in. In addition, there were 297 private sales. In comparison, there were 750 auctions reported to the REIV for the same weekend last year, resulting in a clearance rate of 80%.
The clearance rate continues to be in the 70% range which indicates we are in a balanced market however buyers are ensuring they are ticking a lot of boxes before making the leap into purchasing. In a heated market, buyers are compromising on location, condition, orientation and so on just to get into the market. In the current market, all of these items are coming into consideration before a buyer is willing to commit to purchasing the property and after they have decided to purchase, most buyers are cautious of the price they are prepared to pay.
The big four banks have revised their interest rate forecasts and believe the cash rate has peaked at 4.35%. All agree that the RBA may start cutting interest rates at the end of this year but potentially could be sooner if the economy slows down too much in an effort to avoid a recession. CBA, Westpac and NAB are all predicting that interest rates will decline next year to around 3% cash rate. These predictions come as Australian wage growth unexpectedly slowed in the first quarter of this year and is showing signs the labour market is finally starting to soften.
6 Dean Street, Kew attracted a huge crowd at auction on the weekend. The four bedroom, two bathroom, single level home on 615 sqm was quoted $3,000,000 to $3,300,000 prior to auction. It was a popular home and attracted competitive bidding from 6 parties to sell for a huge $3,990,000 under the hammer.
Have a great week
Kim Easterbrook
Melbourne Property Market Update
Hi,
The clearance rate has remained steady at 76% but on a lower amount of auctions reported to the REIV. 596 properties went to auction over the weekend with 331 selling at auction, 120 selling before auction and 145 passing in. In addition, there were 297 private sales. In comparison, there were 743 auctions reported to the REIV for the same weekend last year, resulting in a clearance rate of 77%.
The Federal Government is overhauling the migration system as it moves to reduce pressures caused by population growth, one of them being the housing shortage crisis. In 2022-23, the net overseas migration intake was at a record level of 528,000. This of course was a Covid-19 catch up however it has contributed to rising inflation and housing unaffordability.
We have an ongoing housing shortage in Australia with is contributing to higher rents and high property prices. It is now harder than ever for a first home buyer to purchase a property with cost of living pressures making it impossible for many to save for a deposit. Population growth is even making this harder as demand outstrips supply.
It is predicted that overseas migration will decline to 395,000 in 2023-24 and again further reducing to 260,000 in 2024-2025. Whilst this will not solve the housing issues in this country, it will hopefully assist in allowing some kind of catch up in building more houses which should in turn lower the pressure on rent prices and property prices.
But even then, whilst we have strong population growth (which these lower numbers still are), then it is very unlikely we are going to be in a situation where supply outstrips demand and therefore property prices and rents should continue to remain high.
Lisa O’Connor (one of our Senior Buyer’s Agents) had success at a competitive auction on the weekend securing a large, renovated, two bedroom, two bathroom, one car park for her brother and sister clients. The property was quoted for $800,000 to $850,000 prior to auction and had competition from five bidders at auction, all of whom appeared to be first home buyers. Good quality properties, no matter what the asset type (being apartments, villa units, townhouses or houses), if they are ticking all the boxes in terms of a great location, ideal orientation, renovated and large in size… they will likely to be in high demand and therefore will result in competition from multiple buyers.
Have a great week
Kim Easterbrook
Hi,
The clearance rate dropped slightly to 74% on the weekend with 682 auctions held in Melbourne. 378 sold at auction, 129 sold prior and 175 passed in. In addition, there were 177 private sales. In comparison, there were 619 auctions held on the same weekend last year resulting in a clearance rate of 77%.
CoreLogic released their monthly data which demonstrates that property prices in Australia have increased for the 15th month in a row, with the median house price increasing by 0.6%. There is no sign of this easing in the future with demand for housing high and supply being limited. Sydney continues to be the most expensive city to buy property with the median house price being $1,400,000 (houses increased 9.6% for the year). This is significantly higher than any other city in the country with Melbourne in second place having a median house price of $941,698 (house prices increased 3.0% for the year) and Brisbane coming in at a close third with a median house price of $920,046 (house prices increased at 15.9% for the year).
Even amongst the interest rate rises, inflation (affordability issues) and landlords selling their investment properties which has given a slight boost to supply, property prices in general have been resilient and in fact across all capital cities (except for Hobart), property prices have risen over the past 12 months.
A family home in Cheltenham was very popular at auction on the weekend. The sub-$2,000,000 family home market is in demand as many buyers have had to decrease budgets due to higher interest rates. The updated three bedroom, two bathroom home with a north facing rear attracted five bidders at auction. The property was quoted at $1,350,000 – $1,450,000 prior to auction and sold for $1,505,000 which was $55,000 over the reserve price.
Have a great week
Kim Easterbrook
Hi,
The auction clearance rate jumped again to 79% on 544 auctions across Melbourne. 306 properties sold at auction, 122 sold before auction and 1 sold after auction. In addition there were 147 private sales. Very similar numbers to last year where there were 537 auctions reported to the REIV resulted in a clearance rate of 79%.
Australia’s population is growing at record rates according to the Australian Bureau of Statistics. In the year ending 30th of September, 2023, the country’s population grew by 659,800 (2.5%). 111,000 people was a natural increase and 548,800 was a result of net overseas migration. This is an increase of 206,500 from the previous year.
Broken up into states, Western Australia is leading the charge with an overall population increase of 3.3%, then Victoria with an increase of 2.9%, Queensland increased 2.7%, New South Wales increased 2.3%, ACT had an increase of 2.1%, South Australia increased 1.7%, Northern Territory, 0.7% and Tasmania, 0.3%.
This population growth is putting huge pressure on the housing market and is far out-running the dwelling approval rates which are below pre-pandemic levels. National Cabinet agreed to an ambitious new national target to build 1.2 million new well-located homes over 5 years which is a level never achieved before but it has been argued that only half of these homes would be finished in within that timeframe.
Ongoing supply issues across the country is what is maintaining/increasing property prices to where they are at, even with the interest rate rises. Rents are surging and likely to continue to do so as it is getting harder for people to enter the property market.
Over the weekend, a townhouse in Newport sold well above reserve with 2/176 Woods Street going to auction. The three bedroom, two bathroom townhouse was listed at $750,000 to $790,000 prior to auction and attracted five bidders at auction. The property sold for $902,000 under the hammer which was well above the $795,000 reserve.
The most expensive sale for the week was at 5 Redmond Street, Kew which is a five bedroom, four bathroom modernist architecture design located close to the Yarra River. The property was quoted at $4,300,000 to $4,700,000 prior to auction and sold for an undisclosed price.
Have a great week
Kim Easterbrook
Update from Chris Devlin, Managing Director – Quora Financial
The Lending Market remains buoyant though the market reflects two distinct tactics ultimately designed to save money. That’s the conclusion we drew from interviews with three major lending partners last week.
Group One are Buyers. They are trying to purchase property now while the market is softer due to high interest rates and other inflation pressures. They’re trying to secure their property for a better price. They’re not wrong. The correlation between property prices rising when interest rates drop is assured. Borrowers spend more for the same property when their borrowing capacity increases. Group One have concluded that they can withstand the high-interest rates now and is hoping interest rates will fall after they secure their new property. 20% of new loans are ‘approvals in principal’ and 35% of new loan approvals are property purchases with a Contract of Sale in place already.
Group Two want to start their interest rate cuts now. They reflect the existing market’s desire to save money anywhere they can. The major lenders have noticed that offset balances market-wide are reducing while simultaneously credit cards are not being cleared monthly as often as they had been up to 18 months ago. Existing mortgage holders want to save money anywhere they can and will interrogate their mortgage interest and fees to help. A rate drop of just 0.1% or 0.2% is often enough to trigger a refinance for borrowers with an average Australian mortgage size of $624,000.00. 40% of current loan approvals are for refinances.
As always, the lending market represents opportunity. Are you choosing Red or White wine?
Chris Devlin, Managing Director – Quora Financial
Hi ,
The auction clearance rate dropped to 75% last weekend on 518 reported REIV auctions. Of the 518 auctions, 289 sold at auction, 100 before auction and 129 passed in. The same weekend last year produced a clearance rate of 79% on 598 auctions. In addition, there were 161 private sales.
The higher end of the market continues to perform well with 11 properties last month selling for over $10,000,000. Whilst the middle tier of properties seemingly have less buyers due to higher interest rates, the $10,000,000 plus market is coming through unscathed due to the amount of buyers not needing a loan to purchase.
On the flip side of this, the lower end of the property market is also generally competitive due to more buyers lowering their budgets to take into consideration the higher interest rates and this is where largely a lot of the mortgage holders are.
The REIV released their March quarterly data this morning showing that median house price in Melbourne actually rose 2% for the quarter with houses in Regional Victoria decreasing by 1.5%. It is the locations where most of the holiday homes are located seem to be leading the charge in declining property prices… eg Mornington Peninsula, Torquay and so on. A few reasons are contributing to this, one being the demand has reduced significantly post-covid period, rising interest rates is making it harder for people to hold onto a second ‘lifestyle’ property, and also land tax is a contributing factor.
Slowly but surely buyers seem to be have a stronger interest in unrenovated properties. Build costs have stabilised and competition on renovated properties has been high. 92 Ireland Street, West Melbourne was quoted at $1,000,000 to $1,100,000 prior to auction with strong bidding pushing the price to $1,231,000 which was $81,000 over the reserve.
The highest sale for the week was 46 Heyington Place, Toorak (5 bedroom renovated home on 1,018 sqm of land) selling for $17,500,000 off market.
Have a great week!
Kim Easterbrook
Geelong Property Market Update from Vicky Whittaker
According to the Heron Todd White property clock, Geelong has officially hit the bottom of the property market; meaning Geelong is currently at the lowest price point and an upward swing in prices is predicted.
Geelong currently has 30% more stock on the market compared to this time last year. This is giving a greater selection of properties for investors and owner occupiers which results in more room to negotiate, helping eliminate the emotional or impromptu purchase.
Geelong attracts investors and homeowners alike, with families aspiring to take advantage of prestigious schooling opportunities plus an enormous selection of housing configuration for lifestyle living and everything in between. Geelong offers great diversity being on the doorstep of Torquay and the Great Ocean Road, plus easy access to metro, the Bellarine and country Victoria. There is an abundance of job opportunities, with Work Safe offices, NDIS, Cotton On, Barwon Health and TAC being among the largest employers in the Geelong Region.
There is plenty of planned infrastructure in Geelong with the Geelong Ring Road expansion, Geelong Convention centre, housing and commercial developments in central and outer suburbs plus schooling, kinder and child care services. Partner this with an easy 50 minute commute to Melbourne CBD’s bustling social, culinary and professional possibilities.
With many investors selling up, rents should continue to rise as vacancy rates drop to the lowest levels in history. With increase in supply and rising rents, this might be as good as time as ever to get into the Geelong property market.
Vicky Whittaker – Senior Buyer’s Agent (Regional Victoria)
Hi ,
Melbourne property auction numbers are lower due to the school holidays with 436 auctions being reported to the REIV on the weekend. 231 sold at auction, 103 before auction and 102 passed in resulting in a clearance rate of 77%. In addition, there were 306 private sales.
CoreLogic released their March quarter property price data and it shows that Australian property prices have increased for the fifth consecutive month to bring the median house price to $772,730. Across the quarter, Perth prices increased by the highest rate of 5.6%, followed by Adelaide at 3.3%, Brisbane at 3% and then Sydney by 0.9%. Melbourne was the only capital city that saw a marginal dip of -0.2% for the quarter.
This would appear surprising due to the cost of living pressures and rising interest rates, but our population is growing at a rate not seen since the 1950’s and building approvals are down.
That being said, there has been a real shift in what purchasers are buying and the lower end of the housing market is the segment that is performing the strongest. Buyers cannot access the amount of money from the banks they previously were able to and this has resulted in purchasers looking for smaller properties, unrenovated homes and also opting to move further out.
In Melbourne’s West, 44 Soudan Road, West Footscray went under the hammer. West Footscray has long been an area sought after by investors and young families. The renovated, three bedroom, two bathroom home on 464 sqm was quoted for $1,200,000 to $1,250,000 prior to auction. Strong bidding pushed the price to $1,357,000 after being announced on the market at $1,310,000.
On the other side of town, 8 Farm Road, Cheltenham is a large, renovated family home located on a secondary main road. The property was quoted at $1,500,000 to $1,600,000 prior to auction and three buyers participated. The property was announced on the market at $1,600,000 and sold to a bidder on their first bid of $1,601,000.
The most expensive property that sold at auction on the weekend was a large modern house in the Glen Waverley Secondary School zone selling for $3,780,000.
Have a great week!
Kim Easterbrook
Hi,
The auction clearance rate dropped slightly to 74% on the weekend as a result of a huge Super Saturday. There were 1,106 auctions reported to the REIV with 605 selling at auction, 215 sold before auction, 1 sold after auction and their were an additional 153 private sales. In comparison, there were 970 auctions last week resulting in a 78% clearance rate and 974 auctions on the same weekend last year also resulting in a 78% clearance rate.
The number of properties on the market are at high levels for this time of year with one of the contributing factors being landlords wanting out of owning investment properties in Victoria. Some landlords are selling in order to cash in and pay their owner occupier debt, but others are selling due to the increase in holding costs and one of those factors being land tax.
8,739 properties were listed of for sale in January and February compared to 5,811 last year with less than a third of these being snapped up by investors. With vacancy rates already sitting below 1%, this could prove to be disastrous for renters who may be forced to either live in smaller properties or move further out (even to regional centres). On the flip side of this, it may prove good news for landlords who are entering the market, or holding on to their investment properties as rents should continue to rise.
Whilst it doesn’t seem that the State Government has a reform of land tax on their agenda, a discussion around a reform of stamp duty has surfaced. This would involve abolishing stamp duty in favour of an annual tax which will assist home buyers to enter the market sooner. Currently, stamp duty is approximately 5.5% to 6% of the purchase price which needs to be paid outright, on top of the deposit when the property is purchased. This delays some buyers from purchasing due to the time it takes to save for the stamp duty and in some cases, actually discourages a buyer from purchasing at all.
First home buyers were out in force trying to secure an apartment at 2/9 Fordholm Road, Hawthorn. The two bedroom, one bathroom, one car mostly original apartment was quoted prior to auction for $570,000 – $600,000 with the quote range lifting to $600,000 to $635,000 during the campaign. The property attracted five bidders at auction with the property selling for $735,000 on a $630,000 reserve. The property was on the market last year for $715,000 and didn’t sell.
The most expensive sale for last week was a six bedroom, four bathroom, six car period home on 1,940 sqm of land. 16 Rothwell Street, Ascot Vale sold for $7,250,000.
Have a great week!
Kim Easterbrook
Hi ,
The auction clearance rate produced a solid 78% on the weekend on a reported (to the REIV) 885 auctions. 508 properties sold at auction, 179 sold before auction, 3 after auction and 195 properties passed in. In addition, there was a very high number of private sales, 436 in total. In comparison, a similar amount of properties went to auction on the same weekend last year resulting in a clearance rate of 73%.
The weekend’s auction clearance rate was a little higher than expected with Melbourne’s property market still feeling somewhat patchy. Buyers are still a little spoilt with choice and some vendor’s are having to adjust expectations to sell their property. That being said, 508 properties selling at auction and 436 private sales are very strong numbers and demonstrates we are in a very active market.
Feedback from some selling agents is that there are still many buyers who have just started their search and are in the ‘research’ phase and others who are attending auctions but will not bid as they do not feel confident in buying without a ‘subject to finance’ clause. Some potential buyers are attending auctions in the hope the property passes in and then hoping to put themselves into a position where they can negotiate that clause. Buyers who attend auctions who are willing to buy ‘unconditionally’ are in a much stronger buying position.
The rental market is still proving very difficult for tenants. SQM Research released vacancy rate data for February showing that Melbourne’s vacancy rate has further decreased to 1.0% from 1.1% in January and 1.1% for February 2023. To achieve a balanced rental market, vacancy rates should be sitting around 2% to 3% so we are quite a way away from that. Rents increased by an overall average of 1.5% in February and have increased an average of 12.6% (for both houses and units) for the previous 12 months.
The auction of 106 Lennox Street, Richmond attracted four bidders but only sold slightly above the reserve price. The two bedroom, one bathroom requires work but the floorplan has been structurally updated in the past. The property was quoted for $900,000 to $990,000 prior to auction and sold for $1,005,000 under the hammer.
The most expensive sale for last week was a five bedroom home in Mount Eliza. 56 Glen Shian Lane is a five bedroom, four bathroom, modern home with a four car garage set on over an acre of land boasting expansive views of Port Philip Bay. The property sold for $7,528,000.
Have a great week!
Kim Easterbrook
Hi ,
The auction clearance rate is remaining consistent with 746 auctions reported to the REIV. 472 properties sold at auction, 91 sold before auction and 183 passed in resulting in a clearance rate of 75%. In addition to this there were 161 private sales. The final clearance rate for last weekend was 78% on a huge 1,159 auctions. The same time last year, the clearance rate of 77% on 757 auctions.
The clearance rate in the mid 70’s suggests we are in a balanced market, however it does feel a little different to that on the ground. Stock levels are high, and new listings are continuing to be loaded online to levels that have not been seen for quite some time. Whilst many vendors may not disclose the real reason for selling, but this partly could be to do with the increase in interest rates and unaffordability. This also could be partly due to some vendors not wanting to hold off anymore and there is certainly a sentiment of ‘let’s just get on with it’ out there.
Whilst some auctions are competitive, some are not, many are passing in and selling immediately afterwards. More times than not there are only one or two buyers circling a property and therefore a vendor will be more open to selling before auction. Some ‘expressions of interest’ campaigns are also not selling at the deadline and are being extended out with price adjustments. We are also seeing many properties sell ‘subject to finance’ and this is due to a lot of the current property buyers are new to the market and are still waiting on their finance approval.
So whilst the auction clearance rate looks like we are in a balanced market on paper, the feeling on the ground is that we are more in a buyers market than a sellers market (generally speaking). My feeling around this though is it could be short lived. There are a lot of buyers out there actively looking. But they currently have a lot of choice and not a lot of urgency to buy. If stock levels tighten again (which they are likely to do at some time in the future), then the market could easily shift from a buyers market to a sellers market.
The villa unit market continues to be strong due to its more affordable price point in the market. 8/2 Lisson Grove, Hawthorn is a well located but small (and dated) two bedroom villa unit and was quoted $700,000 to $750,000 before auction. Three bidders tried to secure the property with the property selling $85,000 over reserve for $835,000.
9 Bendigo Avenue, Elwood sold before the expiry of its ‘expressions of interest’ campaign. The sale smashed records for the suburb with the five bedroom, five bathroom, 8 car basement home selling for $17,050,000 far exceeding the previous house record of $10,000,000 set in 2022.
Have a great week!
Kim Easterbrook
