Monthly update - September 2019
By Advantage Property | 16th Sep 19
Melbourne’s property market has changed dramatically since this years May election. Auction clearance rates are now consistently over 75% and it’s a long way above the low 60% clearance rates we were seeing earlier in the year. We are seeing multiple bidding at many well located properties often with 5-6 bidders and reserves are often being smashed by $100,000 -$250,000 or 10-15%. We are seeing some strong run away results throughout Melbourne in different segments of the market.
One of the biggest changes has been the resurgence of investors. They are now back in force and up by 5.3% last month and now at their highest level since September 2016. Investors are like sheep and tend to follow other buyers when the market is strengthening and that is what we are seeing now with investors being the winning bidders or one of the under bidders. They have also been helped by APRA removing the 10% growth cap and also easing the serviceability of lending.
Another big factor is the First Home Buyer portion of the market as they are again dominant. They are at the highest levels in many years, sitting at around 33% of the market or 1/3 of the total market share. They are providing strong competition for properties under $600,000 right through to $750,000 where they receive stamp duty concessions. They are being enticed into the market by the lowest rates in many years as well as improved lending conditions.
The other macro factors that are affecting the market include the lowest interest rates in many years and many experts expecting the rates to fall by a further 50 basis points. The other factors include APRA having removed the high serviceability requirements on the banks and the 10% investor growth caps. We are also seeing the banks now getting more competitive with low rates to entice buyers back into the market including fixed rates for 5 years at below 3% rate which is well below the 7% rates I have tended to pay over the last 25 years on average as a property investor/owner.