While the effects of ten consecutive rate hikes tempered median house prices across Melbourne, the falls are significantly less than predicted.
Prices were forecast to decline between 10-15%. However, the median 12-month decline1 in Melbourne for homes has only been 5.99%. and for units 5.34%.
Closer to home, the City of Banyule’s 12-month median house prices decline2 was even less at 4.9% and median unit price just 5.2%.
Opportunities for savvy buyers and investors
As the rate of decline for property prices eases, it’s creating an opportunity for buyers to enter the market before the end of the downturn.
For some people, the exceptionally tight rental market in combination with cost of borrowing increases, it is now potentially a more financially viable option to purchase a unit, rather than rent.
We are also seeing investor activity returning due to higher rental yields and valuations creating a more enticing proposition.
Vendors
Vendors have understandably been waiting to see how the interest rate rises would affect housing prices and perhaps held off making any decisions.
Now, vendors are becoming active. Over the last 1-2 months, we have seen vendors seeking appraisals and listing their property without delay. They have observed that the market is steady with clearance rates consistently at around 65-75% Melbourne-wide with the Miles clearance rate performing consistently well above this. Additionally, buyers are also becoming more active and confident in making property decisions.
Property demand expected to increase.
Development delays could lead to fewer properties being built over the coming years, further exacerbating supply and pushing up property prices.
What’s more, the federal government’s immigration program is set to increase and will place even more pressure on available stock and further drive demand.
And finally, Victoria is on track to record the highest population growth of any state and is expected to add 1.8M new residents in the next 20 years.
Interest rates
Returning to the topic of interest rates, our view is that they will decrease in 12 months from their current levels. However, this will be highly dependent on inflation coming down to the RBA targeted range of between 2-3%. The easing in global price pressure is already underway3and is expected to flow through to domestic prices over time.
In conclusion, our advice to vendors and buyers is to seek data about the real estate market from reputable sources, and make informed decisions. Don’t be swayed by negative news conveyed by media outlets.
On the Market
A 3 bedroom, 2 bathroom fully renovated California bungalow on 644 sqm of land. This home has been luxuriously appointed and features a chefs kitchen complete with a butler’s pantry, polished oak and concrete flooring. Stacker doors open up into a large alfresco area and lush fully landscaped gardens. The perfect family oasis located moment from Eaglemont Village.
How has your property performed?
In a market that is constantly evolving, having experience is crucial. The Miles team stand out as Banyule’s most well-established and time-tested real estate professionals. If you’re curious how your property is performing in the current environment, please contact us and we will be delighted to provide you with a market appraisal and our expert insights into the local market.
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