The property market continues to bubble along with supply continuing to be the biggest obstacle facing would be buyers. This will pick up in the next couple of months as we head into Spring, however the imbalance with demand could not be more obvious, particularly for good quality property. At auction 4-6 bidders is starting to become the norm. This is resulting in some pretty strong results and should be a reminder to people not to take too much notice of market commentary.
Put simply if supply remains low and demand increases, particularly with the increase in migration there is not enough property on the market to satisfy buyers.
Like any property cycle however, not all areas and properties are performing the same. There is still an aversion to buying properties that require renovation. This relates to the negativity surrounding the construction industry and costs, although the latter is starting to stabilise.
We are also starting to see supply increase in some of the outer areas of Melbourne outside the 20 km radius of the CBD. This will put pressure on prices in these areas over the coming months.
Inner Melbourne however is lacking any real impetus as people are hanging on and preferring not to participate in the market at this time. Also those that are looking to buy are doing so before they sell in many instances, further exacerbating the problem.
So we are looking toward Spring to see what this brings both in supply and demand. This will point to the short term direction in the market.
In this months newsletter we provide our normal insights, property management update, a couple of purchase examples and our tip of the month on the value of buying in a good school zone.
Insights
Source: Corelogic July 2023
A lack of available supply continues to be the main factor keeping upwards pressure on housing values, Mr Lawless said. “Through June, the flow of new capital city listings was nearly -10% below the previous five-year average and total inventory levels are more than a quarter below average. Simultaneously, our June quarter estimate of capital city sales has increased to be 2.1% above the previous five-year average.”
Each month the CoreLogic Research team puts together a Housing Chart Pack, with all the latest stats, facts and figures on the residential property market, such as the combined value of residential real estate, sales volumes, and the trend in new listings.
Here are this month’s highlights*:
- National home values rose 2.8% in the June quarter, which is the highest quarterly movement since January 2022. On a monthly basis, the pace of growth eased from 1.2% in May to 1.1% in June.
- The combined capital cities dwelling market value rose 1.2% in June, easing from a 1.4% lift in May. Values across the combined capitals are rising at more than twice the pace of the combined regional market, which saw values increase 0.5% in June.
- The high end of the Sydney housing market continues to lead capital growth, up 5.7% for the three months to June.
- Over the past financial year, Australian home values declined -5.3%. The highest growth result was a 8.7% gain across the regional SA dwelling market, while the lowest annual capital growth was a -12.7% decline across Hobart.
- CoreLogic estimates there were 35,523 sales in June nationally, compared to a previous five-year average of 39,180 for June. The six-month moving trend suggests sales volumes are stabilizing, despite being down from recent highs in 2021.
- The amount of time it takes to sell property trended slightly higher through the June quarter nationally, with the median days on market sitting at 34 days, up from a recent low of 30 days in the three months to April. However, vendor discounting suggests selling conditions continued to improve. Across the combined capitals, the median vendor discounting rate is at its lowest since the three month to May 2022.
- In the four weeks to 2 July 2023, new listings totalled 32,568 nationally. New listings saw a slight uptick in recent weeks, which is unusual for this time of year. However, listings volumes remain -7.9% lower than the historic five-year average.
- There were 130,950 listings observed over the four weeks to 2 July, 2023. Total listings are trending lower than the previous five-year average due to the relatively low volume of new listings, against a normalising in sales volumes.
- The combined capital cities clearance eased slightly through the month, averaging 67.7% in the four weeks ending 2 July 2023. This is down from an average final clearance rate of 71.3% in the four weeks prior, but remains elevated on the equivalent period of 2022, when the clearance rate averaged 55.0%.
- Australian rent values increased a further 0.7% in June, taking the national annual increase to 9.7%. Annual growth in rent values remains elevated on the decade average (which was 3.0% per year), but has shown signs of easing after peaking at 10.2% over the 2022 calendar year.
- Gross rent yields moved lower through the month of June nationally, as capital growth in home values (1.1%) outpaced the estimated growth in rent values (0.7%). National gross rent yields were 3.8% over June, down from 3.9% in the previous month, but higher than 3.3% a year ago.
- The combined value of secured housing finance increased 4.8% in May to almost $25 billion. Both owner occupiers and investors are seeing an uplift in borrowing from a recent low in February, which coincides with the trough in national home values.
- CoreLogic estimates that around a third of new listings added to the market through June were investment properties.
Property Management Update
Australian rent values increased a further 0.7% in June, taking the national annual increase to 9.7%. Annual growth in rent values remains elevated on the decade average (which was 3.0% per year), but has shown signs of easing after peaking at 10.2% over the 2022 calendar year.
Gross rent yields moved lower through the month of June nationally, as capital growth in home values (1.1%) outpaced the estimated growth in rent values (0.7%). National gross rent yields were 3.8% over June, down from 3.9% in the previous month, but higher than 3.3% a year ago.
What a turbulent market we are seeing now. With multiple people attending open homes we are seeing so many of these who have been served a notice to vacate as the rental provider is selling. With properties being sold, it just adds to the rental crisis so many are feeling.
As reported by Corelogic, there is a massive shortfall in rental listings with stats that will help us understand just how challenging it is for those looking to put a roof over their heads.
Rental listings remain well below the previous five-year average, with a national shortfall of approximately -32.4% (or 47,500) rental listings recorded over the four weeks to June 3rd.
Despite the continued shortage in listings, national vacancy rates eased slightly over the quarter, from 1.1% in March, to 1.2% in June, but remain well below the pre-COVID decade average (3.3%).
Buyers Advocate Property Management tip for Residential Rental Providers.
If you do not have insurance (that being both building & landlord), we urge you to please engage a provider and obtain a suitable policy. We can assist you with some recommended providers, should you want details, please contact us as we are more than happy to share these with you.
With individual dwellings, it is advised to have gutters on your property cleaned at least once per year.
Buyers Advocate Property Management tip for Renters
We keep hearing that people are missing out on properties because of the rental crisis. Whilst this may well be a factor, there are other things that need to be taken into consideration here. Things such as, have you completed your application? If there is more than one person applying for the property, have all parties completed the application and attached all points of ID. If you view a property and want to apply, submit your application straight after viewing the property. Another very important thing to note is where possible, advise your employment and rental references that you are applying for a property. So often application processing is held up due to lack of response from your current property manager and or your employer. We hope these tips help with the rental application process.
We pride ourselves on our honest open communication and the strong relationships we build with our rental providers and renters alike.
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
Although supply has been very low, we have continued to deliver great results for our clients. Here are a couple below:
1st Home Buyer- Carnegie
This was a situation that seems to be arising a little lately, but a first for Buyers Advocate, whilst involved in an Auction. It was a cool Sunday morning at the Auction of this property with 4 other interested parties known, making the bases loaded. Buyers Advocate opened the bidding at $1m with two other parties competing up until the $1.2m mark. From here another 2 parties entered the fore. Buyers Advocate stopped bidding at $1,286,500 with a three further bids, coming in from others, with the winning bidder having the property knocked down to them at $1,290,000. This was a touch above our clients maximum. Sometimes it pays to “hang around”, after an auction! It became apparent, that the winning bidder was not in a position to buy the property and reneged. This opened an opportunity for Buyers Advocate to swoop! With our client nearby, we invited them back to the property to sign the Contract of Sale and make the property theirs.
1st Home Buyer- Doveton
This client brief on this one, was a first. This was going to be all about finding the right home, with enough space for our clients 32 bookshelves, on a limited budget.
After sorting out the clients priorities of house over unit, garaging versus carport etc we were in a position to strike when this property came up. On a great sized portion of land, this property was going to Auction in 3 weeks. After expressing interest in the home with the selling agent, he advised, that we may be able to secure the home prior to Auction, at a great price. Given the limiting constraints of the client’s brief, their budget and the current market value of the home, we jumped at making an offer prior to Auction some $70,000 below where we saw its value sit. A great result for the client in a market with short-supply.
Tip Of The Month:
The value of buying in a good school zone
Buying a property in a good school zone can offer several benefits:
1. Enhanced Property Value: Homes in high-performing school zones tend to experience higher appreciation over time. Demand for such properties is primarily driven by families with school-age children.
2. Better Resale Potential: When you decide to sell the property, being in a desirable school zone can attract a larger pool of potential buyers, increasing your chances of a quicker sale at a higher price.
3. Quality Education: If you have or plan to have children, living in a good school zone can provide access to quality education, which may have a positive impact on their academic performance and future opportunities.
4. Community Amenities: Good school districts often come with well-maintained facilities, excellent extracurricular programs, and a supportive community, which can enhance your overall living experience.
However, it’s important to note that buying in a good school zone might come with a higher upfront cost. Additionally, it’s essential to consider your long-term plans and whether the benefits of living in such an area align with your lifestyle and priorities.
