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