What a mixed week!! 72% clearance rate over the weekend and nearly 1000 sales for the week. The turnover exceeded $600M for the second week in a row. Sounds like people are moving on with their lives despite the AFL finals and the absolute farce our federal election process has become.
Whilst the election of the century progresses to see whether Julia Gillard will out bid Tony Abbot to form government for what will probably be less than 12 months, investors have begun buying strongly again. There is an old adage to remember when purchasing Real Estate: When you know you are going to lose, stop bidding!! You are only elevating the next comparable to the property you go after next. I wish Julia and Tony understood this concept.
According to RP Data, Victoria has around 40,000 dwellings on the market, with about 10,000 new each month. This would usually mean with the expected lift in stock levels in October, prospective purchasers may have an easier time than usually. But anecdotally, after speaking to many Melbourne Real Estate Agents within the 20km radius of the CBD, there is nowhere near enough stock coming onto the market to supply the usual influx of purchasers.
We know the oversupply of stock in the $750k – $1.5M during winter has rebalanced itself due to lack of new listings, and the inner city apartment market under $500k, a staple product for first time investors, has all but dried up. If we do not see a dramatic influx of new property, we are likely to see price increases of 3- 5% on 1 and 2 bedroom units, that are well located, during October and November.
The massive jump in March/April and the rebalancing in July/August have basically wiped each movement back to neutral and this means a further jump of 5% during the spring selling season would not be abnormal. As an unfortunate consequence we will probably see another interest rise from the RBA, probably October or November. I would be very surprised if we see a rise this week as unemployment figures and housing finance are not out until after the RBA meets.
If you are considering a property purchase please do not hesitate to give us a call or come in for a chat. There is no obligation and our first meeting is free.
Ian James