2019’s First Litmus Test
With a mini auction break this coming weekend for most of inner city and inner suburban Melbourne due to the Victorian Labour day long weekend it’s the perfect opportunity to look at how the property market performed through February, the first true test for 2019.
The auction clearance rate across Melbourne year to date it stands at 56%. The Stonington auction clearance rate rests fractionally stronger at 58.73% with South Yarra, Toorak, Prahran and Windsor all in excess of 60% according to the REIV.
The number of buyers inspecting homes throughout February was extremely strong with many posting more than 30 groups through a single inspection. This resulted in solid competition with multiple bidders at a number of properties best highlighted at 6 St. Malo St, Prahran – 5 bidders, 16/47 Denbigh Road, Armadale – 4 bidders, and 18 Pridham Street, Prahran – 3 bidders.
CoreLogic reported in February that home prices were lower than a year ago in five of the eight capital cities in February. Prices fell by the most in Sydney (down 10.4%); Melbourne (down 9.1%); Perth (down 6.9%); Darwin (down by 5.3%) and Brisbane (down 0.5%). But prices are still positive in Hobart (up 7.2%), Canberra (up 3.4 %) and Adelaide (up 1.0%).
This begs the question - Did you actually become poorer over the last 12 months?
Commsec reported in December 2018 when analysing national CoreLogic data that around 4% of all existing housing comes on to the market during any one year, so you would have to have a look at those sales and ask whether they sold at a loss. Data suggests that 7.2% of houses were sold at a gross loss, whilst for units, it was 14.3% over the past year (a large majority off the plan resales). So, is there reason for panic? Well, looking at the past twenty years of data, there are always some dwellings sold at a loss – never has the number been zero. For houses, it ranges between 2% and 13%, whilst for units, it’s between 6% and 18%. But if you are “normal” and don’t turnover your dwellings on an annual basis (or you are not driven by tax reasons), housing does not make you poor. You just need to be patient!
With the Reserve Bank of Australia continuing to keep the interest cash rate unchanged at 1.5% (a record-breaking streak of thirty consecutive months) lending is still extremely affordable. With great opportunities for first homebuyers to get into the market without paying any stamp duty and exciting prospects for young families to upsize in the currently climate we feel there is genuine optimism from buyers and this should translate into strong interest for local property as we head toward Easter.