The autumn selling season is under way and it has hit “home runs” for the vendors in the first real week of result reports. Whilst there were only 246 auctions with a clearance rate of 70% there were over 600 private sales reported by the REIV. Looking at the auction numbers coming up in the next two weeks, The REIV is guesstimating 500 and 670 auctions, the similar weekends last year had 1138 and 1006. This is over 35% less auctions. This number will only be significant if the numbers of private sales don’t exceed last year’s sales for the same period (reported as 729 and 759 last year).
We know that first home buyers are driving the property market substantially at the moment. Tim Colebatch of the Age reports a surge in new loans to first home buyers: “The bureau’s [Australian Bureau of Statistics] figures showed almost 40 per cent of all people taking out loans to buy a home in December were first-home buyers.” We also know that whilst rental accommodation is hard to come by, if you have a deposit you can buy a property for the same cost as renting.
As interest rates are still expected to ease a little more, buying property will be one of the safest, cheapest and easiest forms of investment. Why pay rent when you can buy a home that history shows can have double digit capital growth each year (since 1980 some of the better suburbs in Melbourne with medians below $500k have had better than 10% per annum growth in their median prices [Valuer General])
We have been talking about median prices in suburbs under about $700k rising this year. Looking at sales results over the weekend we saw multiple bidding at every auction our advocates attended over the weekend. We attended auctions in the northern suburbs, Bayside, Inner Melbourne and the outer eastern suburbs. Just as a side note there was a distinct lack of auctions throughout Melbourne’s southern suburbs but we still had good results through private treaty negotiation. Of the auctions we attended our advocates have reported consistently of multiple,” on the market” bidding.
Investors who have equity in their current properties and anyone who has about $80k or more in their superfund should start talking to their financial advisors about direct property investment. If you do not have a financial advisor, please give us a call and we can recommend a number of excellent people.
Supply and Demand are the quintessential factors in price movement. We are going to see demand increase substantially this year, and if supply does not keep up, and it certainly is not looking that way at the moment, then prices will rise!!! Using the right buyer advocate to help you through the most important purchase of your life will be the best investment you have ever made. Please call us for a no obligation meeting and we can discuss all aspects of any property purchase you are considering.
Ian James