Whilst we didn’t quite get there according to the REIV Clearance rates, 79% is a very close thing. The last 80% clearance rate announced after the weekend results was in April 2010. With clearance rates on the rise, stock levels lower than last year and a very good chance of further interest rate cuts in the near future, the property market fundamentals are all pointing to property prices rising. And this is exactly what the Reserve Bank want to see.
Prices will rise over the next few months, and the rise will slow down through winter, but it’s more than likely to pick up again by September. In 2010 everyone said the bubble had to burst. The intellectual media commentators were all saying “Don’t Buy” “property prices will fall!” But they haven’t and they rarely do. If you are still awaiting the 40% turnaround some learned commentators claimed would occur you would have missed the 59% growth of the median price in Melbourne property. In 2010 the Melbourne median price was $420,000 and the latest REIV median price is $669,000. Please note there are some sectors of the market place than are not performing anywhere near these levels, and indeed many properties bought “off the Plan” over the past three years are worth a lot less than what their owners paid for, but that is a storey for another day.
It will be difficult to purchase over the next few months. But waiting it out is not the answer unless you are expecting an unbelievable windfall. Nobody would assume your investments outside the property sector will increase as much as the property market in Melbourne will. So what do you do?
Persevere! You will have many setbacks along the way. Properties that you think will be in your budget may go well over, but not always. Start looking at properties that will be suitable to your needs and don’t try to stretch too far. For first home buyers that cannot get what they want now, think about buying an investment property. It is possible to purchase revenue neutral properties at the moment. These are not difficult to find, but make sure they have good growth prospects. There are plenty of properties in the market place that will pay a higher rent than what you will pay back to the bank in interest but if the value of the property is not increasing then the benefits are limited.
If you want help, seek the guidance of a professional buyers advocate. If you are trying to buy and not able to secure the property you want, feel free to give us a call for a chat.
Ian James
Director
JPP Buyer Advocates