The market continues to be strong for good quality properties in high demand locations. Buyers are still out in force and most properties are selling well. Although it is fair to say that when you look at overall median prices at a state level Melbourne’s housing market has been stuck in the slow lane for the past four years, with every other major capital outpacing it.
Australia’s median house price has hit a record $1.113 million, as the latest data reveals a mixed capital-city market with staggering price growth in Brisbane, Adelaide, Perth and Sydney, and a small decline in Melbourne.
Against a backdrop of high interest rates, inflation, and the worsening cost-of-living crisis, the latest Domain House Price Report, released last week, shows the combined capitals’ median house and unit prices have jumped to record highs.
Brisbane and Adelaide’s median house prices have soared past $900,000 and are expected to hit the $1 million mark by the end of this year, potentially putting them on par with Melbourne, where the median house price is now $1.032 million.
Others may look at this and decide to buy in areas whereby the growth trend has been stronger but to do so is simplistic and fails to properly acknowledge the market dynamics and where each state/area is in the property cycle. Should prices continue to head higher at a quicker pace in other states, eventually the money will move to more affordable areas, particularly when you consider where the work is and Melbourne’s standing in the international community. Also if decisions are made due to the government policy at the time, this also changes either by a change of government or by the groundswell for change.
Indeed the Domain chief of research and economics Dr Nicola Powell says “I’d say Melbourne will eventually be perceived as being undervalued simply because of all the massive growth in the other cities. Once we get to the next price cycle, Melbourne’s foundations for skyrocketing prices will be there.”
So our advice would be to buy and invest for the long term and to take advantage of the great opportunities our great city has to offer.
Insights
Source: Corelogic 2024
The national quarterly pace of growth has accelerated from 1.4% in Q4 last year to 1.6% in Q1 2024. Although housing values are rising faster than at the end of last year, the quarterly trend of growth has halved relative to the middle of last year when home values were rising 3.3% quarter-on-quarter.
“Rate hikes, cost of living pressures and worsening housing affordability are all factors that have contributed to softer housing conditions since mid-last year. However, an undersupply of housing relative to demand continues to keep upwards pressure on home values despite these headwinds,” Mr Lawless said.
Other highlights from the CoreLogic Monthly Housing Chart Pack include:
- CoreLogic estimates the combined value of residential real estate to be $10.3 trillion at the end of March.
- National home values rose 1.6% in the March quarter, the largest quarterly increase since the three months to November (1.9%).
- Despite an uptick in the quarterly growth trend, the annual growth trend ticked lower in March (8.8%), down 20 basis points from the 9.0% rise seen over the twelve months to February.
- Growth in regional dwelling values has continued to outpace growth across the capitals for the third consecutive month, with regional values up 1.8% over Q1 compared to a 1.5% rise across the combined capitals.
- Perth continues to lead capital growth performance in the greater capital city markets, with values up 5.6% in the three months to February and up 19.8% over the past year.
- National sales activity continues to trend higher, with an estimated 48,793 sales in March, taking the annual count to 506,612. This is 6.0% higher than the numbers seen over the year to March 2022 (477,757) and 4.8% above the average annual volumes seen over the previous five years.
- The time it takes to sell a home continued to trend slightly higher in March, with the median time on market rising to 36 days in Q1. While up from a recent low of 27 days in the three months to September, national selling times are still roughly in line with those seen this time last year (34 days).
- National vendor discounting rates compressed through the year’s first quarter to -3.6%, down from -3.8% in December. Over the three months to March, capital city vendors were offered a median -3.1% discount to secure a sale, while regional vendors offered a larger -3.9% discount.
- Following the usual season patterns, auction activity across the combined capitals trended higher through March, peaking in the week before Easter (March 24th, 3,519) with the busiest auction week in almost two years.
- The additional auction numbers tested demand, with the capital city clearance rate continuing to trend lower through March, averaging 66.4% over the four weeks ending March 31st.
- Australian rent values continued to trend higher in March, up 1.0% over the month and 8.6% over the year to March. The annual rental growth trend has been drifting upwards since October (8.1%), led by a re-acceleration in house rents, from 6.8% over the year to September 2023 to 8.4%.
- Dwelling approvals continued to slide lower in February, with just 12,520 new dwellings approved. This was driven by a -20.8% decline in the more volatile unit segment, while house approvals rose 10.5% compared to January.
- The value of new housing finance commitments rose 1.5% in February, led by a 4.8% increase in first-home buyer lending. Compared to the same time last year, new loan commitments were up 13.3% in February, with investor and first-home buyer financing up 21.5% and 20.7% year-on-year, respectively.
Source: Core Logic
Property Management Update
Australian rent values continued to trend higher in March, up 1.0% over the month and 8.6% over the year to March. The annual rental growth trend has been drifting upwards since October (8.1%), led by a re-acceleration in house rents, from 6.8% over the year to September 2023 to 8.4%.
With monthly rent increases outpacing increases in housing values, gross rent yields inched three basis points higher in March. At 3.75%, this is the highest national gross rental yield since October 2019 (3.77%).
RENTAL MARKET UPDATE
Victoria has a dynamic rental market with a significant demand for rental properties. Factors like population growth, student influx (Melbourne is a major student city), and job opportunities influence this demand, yet there are not enough rental properties available.
As the rental crisis continues, current data shows that on average renters are paying $65 per week more on their rental compared to just one year ago. In March this year, typical rents surged to $560 a week from $495 per week in March 2023. That’s a 13% increase in 12 months.
Demand is still high and open homes are seeing many groups attend. The great news for our rental providers is that our owners get to decide who the best applicant is for their property however the bad news for many is that only 1 applicant is successful, for the others, the search continues.
WHAT IS PROPERTY MANAGEMENT?
Property management is the cornerstone of a successful and stress-free property investment journey. It is more than just collecting rent and actioning maintenance. It is about building strong relationships with all clients, be it, rental providers, renters, trades, owners corporation managers just to mention a few.
Whether you’re a rental provider seeking peace of mind or a renter looking for a comfortable place to call home, our dedicated property management team here at Buyers Advocate is here to service your needs. For an insight into our clients feedback, please have a look at our Google reviews.
Our team take pride in ensuring that properties are well-maintained, rent is on time, and renter & rental provider relationships are harmonious.
With a wealth of experience and local knowledge, our mission is to streamline the rental process for both the rental provider and renters alike, offering convenience, transparency, and reliability. From thorough renter screenings to responsive maintenance and compliance with local regulations, our property management services are designed to provide a seamless experience for property owners and tenants alike. Stay connected with us for the latest updates on the Victoria property market, expert tips, and a commitment to making your rental experience a positive one.
TIP FOR RENTAL PROVIDERS
If your property has been open for inspection and applications have been presented to you, it is critical that you respond to your property manager same day with your instructions. Many applicants are viewing several properties and applying for them all because they don’t want to miss out. Waiting even a day to respond to your property manager could see your chosen application accepting another property.
TIP FOR RENTERS
Winter is approaching. If you have a split system in your property, ensure that the filters are cleaned regularly. This is easy to do and will ensure that the unit operates as best as possible.
If you are unhappy with the level of service you are receiving from your current Property Manager, have a chat to Rachel or Liz. It may be time for a change. If you would like a confidential chat, please contact us (03) 9818 4499.
Property Purchases
We have had some great results for our clients over the last month.
Here are a few below:
Home Buyer -St Helena
This was bought as a private sale. There were multiple interested parties so instead of waiting until the “sale by set date” we made our offer early to take charge of the process and to rattle the other potential buyers. We gave only 24 hours for our offer and ensured that we received a response prior to a Saturday open to avoid the agent shopping our offer around. While there was competition the other parties were on the back foot and only had limited time to complete their due diligence. We were able to work well with the agent to secure it for a good price within the 24 hours. A great outcome.
Home Buyer – Malvern East
A home in Malvern East set on close to 600 sqm of land with 2 street frontages, garaging for multiple cars and enormous scope to improve or sub divide! Picked up for clients wanting a live in home with options. Opportunity presented and a strongly negotiated Private Sale with competition for a price below expectation.
Home Buyer – Rosanna
Having bought for this young family in 2019 we were excited to be given the opportunity again to assist them to upsize. This property provided the space they were looking for in an area that they were familiar with. We purchased this within 24 hours of the auction. Rather than take the risk at auction we set our price and although the agent requested more, we were able to secure the property for the price we were happy with. Another successful outcome for this lovely family who had also used us for an investment property some years ago.
Home Buyer – Kew East
We started looking for townhouses for this client, but it became clear that a bigger option was likely to be more suitable. We were able to secure this great home in the leafy and quiet suburb of Kew East. Only a short distance to walking trails, transport and cafes. This property was originally off our radar as we were concerned about the likely price point, however it passed in at auction which allowed us to swoop in and secure it shortly thereafter for a price that was great value in this pocket.
Home Buyer -Mount Waverly
This was a hotly contested auction with multiple interested parties for a new townhouse in the Mount Waverley School Zone. Our initial concern was dealing with a vendor that could have high expectations so rather than bid we held back until the agent declared the property on the market. Once it hit reserve we were able to take control of the bidding to place our buyers in a position of strength to purchase the property. It was clear that other buyers were intimated by our approach which led to a great result for our client.
Vendor Advocacy Service
Did you know we offer a vendor advocacy service to assist clients achieve the best result in selling their home. The service facilitates the sale of your property in conjunction with a sales agency. All fees, sales methods, and campaign are negotiated in consultation with you.
Starting with independent advice on the property value, we will also;
- Help select only the most competent, senior and professional agency team to represent you
- Advise on the different methods of sale and marketing campaign
- Advise on any offers that are received and also attend the auction whilst the selling agent conducts the auction
- At all times provide you with complete independent advice and manage the campaign with the upmost professionalism
Once the campaign is underway Buyers Advocate will assist with the communications with the agent and provide a sounding board for any questions or issues you may have during the campaign.
Tip Of The Month:
Be wary of the price quotes!
Some agents will quote a property low to generate maximum interest necessary to drive a good marketing campaign. This is why it is imperative to do your own research to understand what a property is really worth. To avoid the frustration of missing a property because it sells well above expectations, do your own research or obtain an independent view of the properties worth, this way you can make informed decisions on what properties are likely to be suitable for you.
There are several things you can look at to prepare yourself;
- Review the agents statement of information and carefully assess the comparables in terms of floor plan, condition, location and streetscape
- Review online platforms that can provide recent sales information within your area
- See if there are comparables in the street. Even if they are old you can see what the median price was at the time of sale and use the % increase to determine a likely price in today’s dollars
- Understand the local market trends, including supply and demand dynamics, neighborhood amenities, and development plans.
By combining information from these sources, you can develop a more comprehensive understanding of the property’s value to focus your attention on properties that are likely to be within budget and to be able to negotiate a fair price.
If you are time poor or do not have access to this type of information consult a professional.
