“Well, has the real estate market suddenly re-bounded?” or “Has the market downturn been overcooked?” These are some of the headlines which have been circulating during the last few weeks which has been quite interesting…
Although, there’s some “faint” positive signs suggesting that Melbourne’s real estate market may be on the move again, it’s far too early yet to be making calls like that. There are a myriad of other things at play out there which definitely have the potential to ‘impact the residential real estate market even further. So, to be fair you need to put everything into perspective – you can’t really trust what the TV or the newspapers are saying. Newspapers must be sold every day and they will write almost anything, even if it means distorting the truth so their story gets published. Anyway, you just need to be very careful sometimes in terms of what you read or what you see on TV because it’s not always accurate.
Over last weekend ending 24th February 2019, there were 830 reported auctions held in Melbourne, showing an auction clearance rate of only 53% according to the REIV. At the same corresponding weekend last year (February 2018) there were 1,403 reported auctions with a very healthy auction clearance rate of 71%. Another interesting statistic is, if you look at the weekend ending 28th October 2018 (only a few months ago), the auction clearance rate was 52% but there were significantly more auctions – almost 400 more auctions on the day compared with last weekend.
Is “53%” a good number? No, not if you’re a seller as it still reflects a buyer’s market! However, if you’re a buyer (especially first home buyers) you’ll be laughing! But, some other good news – a number of mortgage brokers we’ve spoken to have said that it appears to be a bit of investor activity at present, and selling agents have suggested that auction attendance rates are on the rise with much better numbers of people compared with last year. If this information is indeed accurate, then that’s certainly encouraging news on the horizon…
The great news for February 2019 is that the Royal Banking Commission of Enquiry has now finished. Without doubt this enquiry was certainly the main factor why we saw all of those huge drops in house prices which occurred most of last year. Most mortgage brokers are very happy to see the end of that enquiry and it seems as business as usual now – fingers crossed! Although, the enquiry has now concluded, prospective buyers seem to be still adjusting to the “new regime of bank lending”, where it’s sadly becoming far too bureaucratic and too many hurdles for borrowers to jump over. But, hopefully over time, borrowers will become better at arranging their finance, leading to them bidding more confidently at auction compared to 2018.
So, what’s likely to happen to Melbourne’s property market over the next few months? STEADY AS SHE GOES! Prices will be subdued for quite some time, given there’s a federal election in May and, of course, those pending capital gain tax & negative gearing changes if there’s a change of government. But who knows?
Finally, a buyers’ market presents all kinds of buying opportunities for many property buyers. But, what is the buyer’s biggest challenge? Well, often lower house prices can actually make the buying process much more complicated and confusing for buyers. A vast majority of buyer’s will choose or select a property based on its price rather than its quality. That’s often the reason why the property doesn’t perform well in terms of capital growth. A buyer’s market essentially camouflages the good properties from the bad properties, making it much more difficult for a buyer to select the right property. As such, there’s always that hidden danger for buyers to either buy the wrong property or overpay for a property because they are fooled by the lower price. Happy house hunting guys!
MY TIP # Don’t squander the amazing buying opportunities you’ve got right now! Always think long-term. Otherwise you’ll regret your inaction or indecision when prices start going up again. That’s why you need to do something about it today! How many times have you heard people say ” Once prices come down I will buy.” So, where are all those people today?
Happy property buying guys and girls!