Over the weekend some agents defied protocol and ran open for inspections and even auctions before 1pm on Saturday. I would have preferred to give the day its due recognition but others didn’t. I think this is disappointing.
For the full week however sales were up dramatically over the same week last year. This year REIV has reported 865 sales and the corresponding week last year only 694. This is just short of a 25% increase. We can assume this trend will continue during the foreseeable future.
Last week there was talk of the First Home Owners Grant (FHOG) not continuing, then it was going to continue, then it was going to change form, then only the “boost” was going to change!!!!! When dealing with politicians, who knows what they will really do until its done, and then who knows what they will change when they have said they won’t!!!!!
It is easier to work out what is likely to occur if the FHOG stays or if it goes. Firstly, if it stays in the same form there will be a continuing push for people to purchase property. This will continue to affect the sub $500k market the most. However, plenty of people who are selling their properties under $500k and are getting more than they had anticipated, and are now purchasing in the $500k – $1M range. These successful vendors now have a little more money than they anticipated and they are using it to purchase their second house. The flow on effect of the FHOG will be felt much stronger in this higher market, the longer the grant is in place. The other catalyst for this mid range is interest rates. Whilst I can remember paying 17.5% for my family home in the 80’s, 5% that we pay now seems almost like free money.
If the grant stays in a changed format which only assists those who are building, and I believe this the most likely, then there may be a stabilisation of property prices of established properties under $500k but I doubt there will be any drop. First home buyers have gone from around 17% to nearly 25% of the market. The majority of these would have been buying new house and land packages in outer lying suburbs. These suburbs have shown large growth over the last six months almost solely due to the FHOG. If the grant does not continue it is these suburbs that will bear the brunt of any price decrease in property market.
In short; whether the grant stays or goes there will be little significant change to the established property market within 20kms of the CBD. Conversely, there could be a substantial drop in price for any of the outer lying (new estate) suburbs. It is not only first home owners that are driving the inner city market. Only last week we saw the population growth of Melbourne is still exceeding all other capital cities in Australia. We still do not have enough dwellings to house our existing population, let alone our growing population. We still have low interest rates and will have until we begin to come out of this recession.
Is it the right time to buy? Properties in the inner 20km will not drop in price in the near future, regardless of the FHOG. If you are secure in your job, have equity or a deposit, now, like always is a good time to buy property. If you would like more information, or you are in the market to purchase at the moment, please feel free to contact us for a no obligation meeting.