928 reported sales to the REIV this Queens Birthday holiday weekend is up just under 50% on last years reported numbers. This typifies the overall trend for the year to date. There has been a rise of well over 15% in turnover numbers this year to date according to the published REIV figures.
If we then listen to most of the real estate agents in Melbourne and Geelong, we find that there is also a dramatic increase in buyer demand. Fuelled by the First Home Owners Grant, Bonus and Boost which, thanks to the Victorian State Government, will be around a lot longer than anyone imagined, as well as our escape from the ‘technical’ recession, demand for property is going through the roof.
The stock markets have had a long sustained rally, and this may been seen as the turning point for the Australian economy. If so, more and more people will want to get their money out of bank guarantees and back into earning better returns. There has already been an upsurgeance of investors into the property market in the lower end around the $300k – $500k range. When you add this to the first home buyers in this range, it has pushed prices up in the vicinity of 5%- 10% this year already.
With the resurgence of the stock market we also expect to see a further push back to the mid range market $800k – $1.5M. Families that have sold their homes in the $500k range, and who are feeling quite secure in their employment future are flooding into this mid range family market. With little exception, throughout Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside there have been very few times in the last 3 months that multiple family homes have been on the market at any one time in this range. When these individual properties do hit the market, competition is fierce and prices are being driven up dramatically.
Even the market over $2M has come back strongly over the past 3 months. Each property we have gone after that has stacked up as a good property, on good land, in a good location has seen three four and five people vying for the purchase. If we look back twelve months, selling agents were ringing us weekly with properties to sell as they had no enquiry from prospective purchasers.
So where to from here!
We assume there will still be plenty of fallout from the Global Economic Crisis later this year. We assume unemployment will rise above its present level. And we assume people are still nervous about jumping back into the stock market at the moment. That leaves direct property investment still on top of most people’s “safe investment” lists. The FHOG might continue to elevate the new estate prices in the outer suburbs, thanks to the State Government Bonus for first home owners who are building, they will not have the same net effect on the inner suburbs. This will continue to be dominated by buyers of second and subsequent homes and property investors. Whilst we can continue to develop huge tracts of land out past Pakenham, Craigieburn and Werribee, there are no more such divisions happening within 20km of the CBD. Property prices in these areas, whether flats, units, townhouses or large blocks of land must rise and continue to do so for the foreseeable future as the demand massively outstrips supply. It would take a reversal of all of the indicators (stock market, unemployment, growth of our economy) to change this.
Properties in areas such as North Melbourne, Collingwood, Richmond, Prahran, Windsor, Elwood, East Melbourne and South Melbourne will show tremendous growth with small flats in smallish complexes.
Banyule, Manningham, Moreland, Stonington, Boroondara, Port Phillip and Bayside will continue to show a resurgence for $million family homes. However, I see the biggest upward movement to be potentially sub-dividable land in the suburbs that have great infrastructure, parks, gardens, good shopping precincts and public transport. Plenty of families will be buying homes that in 5, 10 or 15 years will be subdivided down to townhouses.
The ABS has shown us the average amount of people per dwelling is down to 2.4 and if there is no change to this trend I can see a lot more townhouses in our future.
If you are thinking of purchasing a home to live in or want to buy an investment property, feel free to give us a call for a no obligation chat.