With the Liberal Party pulling off a surprise win in the election, property owners around Australia can now breathe a sigh of relief as the threat of Labour’s proposed policy changes to Negative Gearing and CGT discounts are no longer playing on the minds of investors. Investors are a much-needed segment of property buyers, and without them being active in the market we see reduced demand and softening of prices and consequently, the quality stock doesn’t come up for sale.
Typically homeowners and buyers alike, will “sit on their hands” in the lead up to an election and wait for a result before they make a decision on whether to buy or sell. Now that we have a result, and it isn’t all doom and gloom, we expect to see more stock now coming onto the market. This will give buyers more choice and not have as much competition on what is currently a low volume of properties for sale.
Another factor which is now playing into the hands of buyers and sellers is the looming reserve bank interest rate cut. Widely being tipped for June or July, and another within 12 months, if passed on by the banks it will make borrowing money cheaper and add some additional impetus into the market with additional buyers entering.
And lastly, APRA has also just announced that it has sent a letter to the banks allowing them to loosen their loan servicing formulas down from the 7% interest mark to just 2% above the variable rate. This change to servicing tolerances will allow more credit to flow back into the market and is also a positive for the market.
So our tip at BuyerX is that the property markets in Melbourne and Sydney will recover from the current lulls and make some headway into the second half of the year. With affordability improving and now debt being cheaper, we’ll likely see an increase in activity from upgraders and first homebuyers.
If you are looking to upgrade your family home, please get in touch for a free chat to see if we can help.
Good upgrading opportunities in the Melbourne property market appear to be available for clients looking within quality inner-city areas as reported by BuyerX.
When asked of the upgrading opportunity, Tim Picken of BuyerX – Boroondara & Stonnington, highlighted the following examples:
- 20 Hodgson St, Kew which was valued back in May 2018 at $2,800,000 and sold in Jan 2019 for $2,030,000.
- 62 Berkeley St, Hawthorn which sold last month at $2,800,000 – now under 3000 per sqm. Last year this area was selling 4000-4500 per sqm.
*Hawthorn house values have contracted by 23% over the last 12 months.
“We have seen sharp declines in the last 6-12 months in key areas like Kew, Canterbury, Camberwell, Toorak, and Malvern. Properties that are land value have dropped close to 25% in some cases. Flexible credit and the Asian market have been the key drivers to the growth and with them now being restricted we are seeing some really good value in A-grade locations. This is an ideal time to look to get some strong capital growth when buying at a discounted level. Property fundamentals haven’t changed and as the dollar drops and the banks loosen their credit restrictions, these opportunities won’t last long” according to Tim Picken.
Nuno Raimundo of BuyerX – Melbourne Inner North, saw the following example at 497 Dryburgh Street, North Melbourne that sold recently for $2,108,000 after the initial quote of $2.5m -$2.7m.
Nuno said “In light of recent substantial drops in the “upper end” properties of the inner city market. It is the perfect time to either be upgrading to a bigger property or even to relocate to a suburb that has been out of reach for 5+ years. Timing is key, secure a better property first and then place your property on the market when there is less stock in the Autumn/Winter period, where statistically auction clearance rates go up and prices hold.”
The Best Performing Melbourne Suburbs of 2018
The Worst Performing Melbourne Suburbs of 2018
- Data sourced from Corelogic RP Data