The 2011 real estate market has opened. Like all years, it will begin like a huge locomotive. It will slowly gain traction, and then begin to pick up speed before its momentum will carry it through to Easter. The REIV have reported a 54% clearance rate when taking into account all auctions since 20th December 2010. This weekend’s clearance rate was 51% however out of the 126 auctions, 48 have not been reported.
Whilst there were substantial swings and roundabouts throughout last year, as predicted, (Overall, 2010 will bring us a fresh round of record prices. I think we will see at least 10% – 15% upward movement in the inner city and established suburbs around Melbourne – market comment 14/12/2009) the house price median according to the REIV increased by 11.4% from December 2009 – December 2010 and apartments for the same time moved 9.3%. For the first time ever, the median house price of Melbourne exceeded $600,000.
For an opening weekend there was a good result in Highett on Saturday. A unit expecting high $400’s went on the market at $500k and sold at $506k. Whilst I do not expect this property to set a benchmark of any kind it was a good result for the vendor.
Floods: Do not expect anything but political point scoring to come out of the Australian floods. Usually, after a natural disaster of this scale, the economy dips marginally and then comes back strongly as the government spends the money on rebuilding.
Interest rates: I cannot see any movement this month. All other bets are off. I believe there will be one rise between now and June, and it will depend on how much the banks pass on as to whether there will be more. The more interest rates move, the more pressure there will be on homes in “New Estates” and rises in interest will put pressure on landlords to raise rental rates. This will actually have an effect of raising prices in inner city suburbs not lowering them.
Finally, our overall economy is still booting along nicely thanks to China and it also looks like the US is slowly emerging from the GFC, however, do not be complacent about what is happening in the Middle East. Egypt controls the Suez Canal and a substantial amount of oil is carried by ships through this canal every day. If it were interrupted and ten to fifteen days were added to the shipping time to go around, then this could potentially slow world economic recovery. This may have an effect on interest rates or exchange rates and then by extension, on property prices.
Anyone considering a property purchase this year should be looking for expert advice. Please feel free to give us a call or drop in for a chat