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Million Dollar Club – June 2021

July 26, 2021

Million Dollar Club

The Melbourne real estate industry has become a well-oiled machine when it comes to ‘pivoting’ in a bid to cope with the multiple lockdowns imposed over the last 12 months and the latest lockdown 4.0 was no different.
 
Agents throughout Melbourne were quick to make smooth transitions to online auctions and in certain instances, moving the auction dates out a fortnight to cater for vendor and buyer demand. Sale numbers throughout the lockdown did come off, however online auctions which carried on did well.
 
An example of this was 343 Princes Street, Port Melbourne which sold for $1,385,000 off the back of a quoted range of $1,100,000 – $1,200,000. A total of 4 registered bidders participated at the auction.
 
From COVID-induced dips to new record high peaks, the last 12 months have been a tumultuous time for the Australian property market. CoreLogic’s Million Dollar Markets report released today identified 218 markets where either house or unit median values in a suburb reached the million-dollar-mark in May 2021 compared to May 2020.
 
Eliza Owen, CoreLogic’s Head of Research Australia, says “In the last 12 months 218 markets joined the million-dollar club; 198 of which were house markets and 20 unit markets. A quarter of the markets (24.8%) that ticked over the million-dollar-median were in Sydney, with 54 suburbs seeing either house or unit median values in a suburb join the million-dollar club,” says Ms Owen.

Victoria 

  • In Melbourne there are 184 house and 8 unit markets with a current median value of $1m and above; 34.3% more than one year earlier. Regional Victoria now has 11 house markets reaching the million-dollar median value list, compared to only four a year ago.
  • Over the year to March 2021, over 25% of sales across Melbourne were $1m or more. 
  • Brighton is Melbourne’s most expensive house market with a median value of $3,316,986.  
  • Mount Macedon now has a median house value of $1,319,881 (up from $961,495 a year ago).

Data released by the ABS and APRA have provided an updated insight in the housing market lending space. With lending for the purchase of property hitting record highs through April 2021,  the concentration of mortgages regarded as ‘higher risk’ remained around average levels through the start of the year.
 
As new lending continues to rise, ABS housing lending indicators have pointed to a continued shift in the profile of the buyer, with first home buyer (FHB) lending falling for a third straight month against a rise in other types of secured finance. 
 
Over April 2021, approximately $31 billion was lent for the purchase of property in Australia. This is up from $30 billion in the previous month, and marks a record high for the series.

The charts below show the change in the value of lending to different property buyer groups in the three months to April, as well as the share of total finance that each buyer group account for. 

CoreLogic Housing reported that in April, owner-occupier finance commitments for the purchase of property rose 4.3%. This was led by a 7.0% rise in finance to owner-occupier, non-first home buyers. First home buyer finance fell -1.9%, the third consecutive month of decline. Investor lending rose 2.1% in April, which marks the 6th consecutive month of increases across this segment.
 
Whilst local investors have risen, the latest Foreign Investment Review Board annual report shows a surge in foreign buyer activity with the US leading the way.
 
The United States leading with $13 billion worth of investment, trailed by Singapore at $9.5 billion and mainland China in third place at $7.1 billion. However, China’s overall value rose to just shy of Singapore’s when combined with that of Hong Kong.
 
European interest in Australian real estate also rose, with Germany accounting for $3.68 billion in investment and France $2.4 billion. Canada was the fifth most popular source country for investment with $3.3 billion.
 
According to Domain, the $17.1 billion worth of foreign real estate investment is up from $14.8 billion a year earlier with Victoria commanding the majority of foreign investment with 3000 of the 7056 approvals, followed by NSW with 1329 approvals and Queensland with 1311.

End Of Stamp Duty Concessions

Saturday 26th June saw a bumper number of 1267 properties go under the hammer as Melburnians race to secure a home before the end of the stamp duty discounts which end on June 30.
 
The savings included a 25 per cent discount for existing properties priced under $1 million and a 50 per cent discount for new home builds, also under $1 million. However, anyone who signs a contract of sale for an existing home from July 1 will have to pay the full stamp duty costs. The Victorian government will also increase the stamp duty on properties that sell for more than $2 million by 1 percentage point – from 5.5 per cent to 6.5 per cent.
 
The changes to stamp duty could have an effect on pre-approved loans post 1st July for properties below $1 million as there will be a 25% hole in the borrower’s final numbers. We anticipate that some borrowers will either have to borrow extra to cover the additional stamp duty or adjust their budget to take into account the full stamp duty cost however don’t anticipate there to be too much disruption to the market, if anything an adjustment period may be felt for a short time.
 

CoreLogic Insights

CoreLogic data showed a national price increase of 7.0% in the three months leading to May 2021, an increase of 0.2% nationally from last month with Melbourne dwelling values increasing by 5.5% in total in the quarter and 1.8% in May. Melbourne dwelling values are currently at a record high.
Every capital city is recording a rapid rate of appreciation in home values, ranging from a quarterly rise of 9.3% in Sydney to 3.8% in Perth. After easing through April, the 28 day rolling change in the CoreLogic Home Value index once again accelerated through May.
 
 

Auctions

REIV figures saw May 2021 had a reported 5491 auctions with a total of 4498 of these sold representing a clearance rate of 81.9%, which is the highest number of auction sales in a month, breaking the six year record from May 2015. Eleven suburbs across Melbourne saw a recorded 100% clearance rate, led by Fitzroy North, Gladstone Park and Murrumbeena.
At a suburb level, Reservoir again had the most number of reported auctions for the month at 100 followed by Glen Waverley with a reported 78 auctions. Auctions results continue to remain extremely strong despite another round of lockdown with some outstanding results seen throughout Melbourne.
 
 

Property Management Update

What a fantastic month! Although another lockdown bought a new range of challenges to all Melbournians, our rental department snapped into action and thrived. During this period we used a range of procedures that we had created throughout 2020 such as virtual inspections, videos and sending property reports out to potential renters in order to gain applications. This was a massive success for our team as we leased 75% of our available properties during lockdown and in the days following.
 
National rent values have risen 5.6% in the year to May however Melbourne, again remains sitting below the line at -2.4%. It is imperative to our team to beat the odds and get your property assets through this market so we can look to growth strategies when possible.
 
Our Property Management Team prides ourselves on consistently adapting and problem solving so that we may effectively manage your property and bring you the best results. It is as important to us as it is to you that your property succeeds in this rental market. If you or somebody you know has a rental property that has been on the market for some time please feel free to contact our team on 9818 4499 for a confidential chat on how easy it is to move to Buyers Advocate Property Management.
 

Recent Purchases

The challenging market conditions continue just as we continue to deliver great results for our clients. Here are a few below:
 
 
Home purchase – Pakenham
We managed to secure this property in a premium pocket of Pakenham within a week of engagement for a client with some very specific needs and with limited time. With 55 groups of buyers through only one inspection, we won the keys to this home through strong agency relationships, a firm negotiation process and with favourable terms rather than being the party with the highest offer.  
 
 
Investment purchase – Camberwell
An investment purchased during lockdown for our investor clients who were looking for a balance of rental yield and capital growth in a blue chip suburb of Melbourne. We secured this well under budget saving them $50,000 in the process and secured prior to auction.
 
 
Investment purchase – Ringwood East
This villa unit was purchased by private negotiations and secured without competition due to last minute vendor circumstances. Our strong agency relationship and negotiation helped us put our clients in the best possible position to purchase this property at a great price. This is an excellent 3 bedroom unit with multiple living zones and options to add further value.
 

Tip Of The Month: Where do you start?

A lot happens in real estate and can happen very quickly! The current climate has made purchasing a property as hard as ever and the benefits of using a Buyers Advocate have never been so true. With the month on month increases in property prices, buyers flying solo are paying an advocate’s fees plus more each month and doing so without the added benefits that an advocate provides.
 
If you need some assistance with navigating your next property purchase and making sense of all of the real estate talk, make sure you employ a Buyers Advocate.