Tied election results! Tied AFL Grand Finals! What’s next? Balanced property markets? What will happen to the Melbourne auction scene next weekend? We know there are several of the larger franchises meeting this morning to consider their options. Do we postpone? Do we go ahead anyway? It will be very interesting.
In the Melbourne property market, there were still healthy numbers of private sales last week, however only a handful of auctions, almost all of which sold. The open for inspections on Saturday morning were absolutely packed with queues forming outside some stand out new property listings.
For those of you left bereft of emotional control by Saturday evening, get ready for one of the most balanced markets seen in Melbourne. Interest rates are almost sure to go up on Tuesday, just how far will be the question. Even if the Reserve Bank lifts only 25 basis points, there is reasonable market expectation that the banks may grab another 10 or 15 basis points as well.
The US economic commentators are now saying there will not be a double dip recession. China is looking to ramp up production meaning commodities will continue to rise. Australian cashed up companies are looking to expand overseas as the US Dollar remains so low and the Aussie Dollar so high.
If we look at all these factors then our economy is going to boom. Normally in a boom economy property prices rise strongly with rising stock markets. However, money is not as cheap as it was to borrow twelve months ago, stock levels are anecdotally lower than normal for this time of year, and the investors making plenty of money from the Aussie commodity boom will want to buy property.
What we are about to see is fewer properties on the market, but with fewer people trying to buy them. Those with property already who are able to leverage that into the purchase of new properties are going to be the real winners. I believe we are going to see the start of the two tier property market.
The properties that are in well located zones, with good infrastructure and are popular with owner occupiers will become stellar investments. Those that are in the new estates will remain somewhat affordable and stagnant (property price growth), because of a lack of new first home buyers being able to borrow money.
All in all it will be very interesting times in the property market over the next 6 – 12 months. There will be plenty of capital growth in some areas and very little in others.
If you are considering a property purchase, please feel free to call and have a chat.
Ian James
