As we can see from the weekends 66% clearance rate, the market is continuing its balanced state. This means we can assume to see a very small consistent growth that will be imperceptible on a weekly basis but at quarter’s end will be close to 3%. After 6 months the $500k properties you can purchase now will be pushed to up towards $525k – $535k. It will not be enough to get the bank to refinance, it will not be enough to sell and make a profit: stamp duty, solicitors’ fees and selling fees would easily eat up any profit on that short a term. However, anyone thinking property prices will be 3%-5% lower by September will be sadly mistaken.
The Herald Sun have said there were 8612 properties up for sale or auction in Greater Melbourne. This is down from the previous week of 8649. For the prices of properties to begin to retract, we will need to see clearance rates in the 50 – 60% bracket and we will need to see the total numbers of properties on the market increase significantly.
For those that follow the clock theorem, I believe we hit 6 o’clock at Christmas. We will see reasonable growth through the first half of this year and an accelerated growth in the latter half of this year for Melbourne’s top third of performing suburbs. Around the middle of the year we will see whether the governments first home buyers discounted stamp duty will reinvigorate the “New Estate” sector. I am uncertain as to whether this will be significant. Developers are still not being well funded as banks have better options in the average mum & dad borrowing 80% for a standard house. Finance is still in short supply worldwide and banks are continuing to mitigate risk.
There were some exceptional results on Saturday. 5 Gaynor Court sold under the hammer $2.743M. This was after a third bidder entered the fray after arriving just before the auctioneer wrapped up proceedings at $2.685M. The third bidder asked the auctioneer what the last bid has been and the auctioneer made a good natured comment that $2.7 would be a good bid and seemed rather surprised when he received a positive response. The bidding went back and forth but was finally won by the original bidder.
The lower end of the market, $400k – $700k is not getting ridiculous prices, however it is getting good results. 3/11 Selwyn Street Elwood sold over the weekend at $450k. This was as predicted as was 12/7 Dickens Street Elwood. We estimated this to be a low to mid $500’s property and it sold for $541k. No surprises here!
If you are considering purchasing a property this year why not come and have a chat. There is no obligation and the first meeting is free.