Hi,
The clearance rate jumped into the 80%’s over the weekend and whilst too early to tell, it may suggest Melbourne’s Property Market might be turning the corner. There were 496 auctions reported to the REIV on the weekend with 286 selling at auction, 122 selling before auction and 88 properties passing in. In addition, there were a huge amount of private sales being 392.
The sun has started shining, word has it that interest rates will go on hold this week and there is a feeling of optimism back in Melbourne’s Property Market. Not all open for inspections were busy, but some that were priced well achieved huge number of buyers through. More buyers appear to be circling. As mentioned in previous week’s, we have been receiving strong enquiry from intestate investors wanting to purchase investment properties in Melbourne (and Victoria) as they are viewing the downmarket as an opportunity to buy. It just feels like we might be turning the corner.
Good news from last week that it looks like interest rates will go on hold tomorrow. Whilst total inflation increased from 3.6 per cent in March quarter to 3.8 per cent in the June quarter (RBA had predicted this) but ‘trimmed’ inflation fell slightly in the June quarter. There is more talk about interest rates being cut by the end of 2024 due to disinflation being on track, but really that won’t be known until the next quarter of inflation data being released which would need to show that disinflation is on track and inflation being back in the target range in the desired time frame.
My team attended an unusually competitive auction in Boronia on the weekend. 48 Albert St, Boronia is a three bedroom, two bathroom original home on 1,180sqm. The property was located on a main road with a large school across the road and the crowd mostly appeared to be owner occupiers rather than developers. A huge crowd of over 100 people attended and the selling agent indicated there were 60 requests for contracts during the campaign. A number that is unheard of, especially in the current market. There were so many bidders we lost count but we believe there were 13 to 14 bidders in total, the property was announced on the market at $770,000 on a price quote range of $700,000 to $770,000 and sold for $970,000.
On the other side of town, a single level townhouse at 2/35 Alfred Street, Beaumaris was quoted at $1,200,000 to $1,300,000 prior to auction. The auction attracted a few bids but then the bidding stalled at $1,240,000, the auctioneer came out after a long half time break and announced the property on the market with the property immediately selling to the highest bidder.
Have a great week!
Kim Easterbrook – Managing Director
Hi,
The REIV reported a decrease in the clearance rate to 75% on what was a low volume, cold auction weekend. 466 properties went under the hammer across the city with 239 properties selling at auction, 109 before auction and 118 passing in. In addition, there were 153 private sales. In comparison, the same time last year resulted in a clearance rate of 74% on 559 auctions and the final result from last week came in at 83% on 473 reported auctions.
The Melbourne Property Market has been exceptionally quiet over the past few weeks. Auction numbers are down, new listings are low and most Selling Agents (and a lot of Buyers Agents :)) had departed Melbourne’s cold weather to have a half time break before tackling the second half of 2024. This is not unusual and happens every year. Now that most schools are back, we are expecting the amount of new listings to increase over the next five weeks leading into September, where it will quieten down again due to the AFL football finals.
As we know, Melbourne investors have been exiting the property market in droves over the past six to twelve months, but interestingly, we have noticed an increase in Melbourne investor enquiry who are now looking at Melbourne as a market to purchase in. These savvy investors buy when the market down, and there is no doubt we have been in a tough property market this year. But with vacancy rates at very low levels (which will worsen), rents rising and prices down, some investors are now considering purchasing in Melbourne due to the rare opportunity to buy in a down market. Geelong is also an area of high interest as it offers a more affordable price point and slightly higher rental yield and also has very low vacancy rates.
A couple of strong auctions results to report over the weekend.
97A Flinders Street, Thornbury went under the hammer on Saturday and was a very active and competitive auction. The well located, three bedroom, two bathroom home with a north facing rear was quoted at $1,350,000 – $1,460,000 prior to auction. The auction attracted five bidders with the property being announced ‘on the market’ at $1,550,000 and selling well above reserve for $1,681,000.
A surprising and interesting auction was the property at 1-8/24 Walsh Street, Ormond. The property is a block of 1960’s apartments in need of work. Land size is 858 sqm. Usually difficult to sell, the auction attracted five bidders and more interested parties who did not put up their hand. The property sold for $3,050,000 which was $530,000 over reserve. The buyer pool were investors and builders looking to renovate and sell.
Have a great week!
Kim Easterbrook – Managing Director
Hi,
The REIV reported an increase in the clearance rate to 78% which is a solid result considering the amount of properties that went to auction. 602 properties went under the hammer across the city with 329 properties selling at auction, 138 before auction and 135 passing in. In addition, there were 153 private sales. In comparison, the same time last year resulted in a clearance rate of 75% on 638 auctions and the final result from last week came in at 79% on 824 reported auctions.
The Melboune auction clearance rate over the past few weeks has shown some improvement which is now sitting in this high 70%’s and many agents have been reporting lowish stock levels in the months to come. There is no doubt the property market here is patchy, and investors have been selling up in droves. Many vendors have needed to drop their price expectations in order to sell their properties. But interestingly, we had a number of enquiries from new investors (mostly intestate) considering Melbourne as a strong option for them to invest. The market is down, in fact Melbourne has been lagging behind most other capital cities in terms of capital growth over the past 12 months. Melbourne still has strong population growth and a rental crisis which should continue to push rents in an upwards direction.
Investors considering Melbourne are cautious and are considering properties where the land value is not too high to ensure that the land tax bill is not excessive. Also renovated properties are the preference to keep the rental minimum standards compliance costs to a minimum. So whilst population growth and rental demand is high, Melbourne may just be a good option for some investors. We know markets go in cycles, and if the clearance rate continues to stay in the mid to high 70%’s, the Melbourne property market could have hit the bottom of the “property cycle clock”.
There will be no market wrap for the next three weeks as I will be taking a little trip away with my family. The Elite team will be here so it will be business as usual and we are always here to assist with your property needs.
Have a great week!
Kim Easterbrook – Managing Director
Hi,
The REIV auction clearance rate remains steady at 75% with 631 auctions reported over the weekend. 324 properties sold at auction, 150 before auction, 157 properties passed-in and there were an additional, 282 private sales. In comparison, the same weekend last year, there were 713 auctions resulting in a clearance rate of 77%.
Over the past 12 months, there has been a significant increase in investors across the country selling their investment property(ies). This has largely been driven by the increased cost of holding an investment property with higher interest rates and taxes not being covered by the rental income. Investors have also been opting to sell their investment properties to cash in the equity to pay off their owner occupier debts. Mortgage repayments on properties have dramatically increased over the past 18 months and home owners will do everything they can to ensure they can keep their home, and in many cases, selling their investment properties has been the best solution.
However, there is another way of buying investment properties (residential and commercial) and that is via a self managed super fund. Over the past 12 months, there has been an increase of 11% in SMSF lending and this could largely be due to fact that people still want to have an investment property, but they don’t want it to come at a cost of their lifestyle. A SMSF is a private super fund that you self manage and your super contributions are put into the SMSF to raise a deposit for the purchase. Banks will then borrow money within the SMSF to allow the fund to purchase property (there are some criteria that must be met in order for the property to be an acceptable asset).
This tool can also be great for business owners who can purchase a commercial property through their SMSF and then rent it back through their business with some significant tax advantages in doing so. Although, it doesn’t just have to be a business owner who can do this, anyone (with the financial capacity to do so) can set up a SMSF and purchase an investment property. Whilst this can be a great tool for some to enter the investment property market, it isn’t for everyone as the costs in setting up the SMSF are high and strict audits are to be conducted on an annual basis of the fund (which is also an added expense). Banks also require larger deposits to purchase a property and the interest rates are higher. So it is important to speak to a professional who specialises in this area before deciding it is the right path for you.
In regards to the general feeling within the current property market, June/July are usually very quiet months of the year. It’s cold, people don’t really want to be out and about, and vendors feel their properties are not looking their best and are holding off until Spring. That being said, we have had a very busy month of buying thus far at Elite. Both securing off market and on market properties, whether by private sale, expressions of interest or at auction. So whilst it is quiet, transactions are still occurring and buying conditions at the moment are positive for buyers.
Have a great week!
Kim Easterbrook – Managing Director
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
