For the seventh straight week, with the exception of the Labour Day week, we have seen more than 1000 sales reported to the REIV. The market is not only heating up in the $300k -$500k segment, but all the way up and beyond $1M mark. Trends do not, however, begin with one sale. There were several properties over the weekend that achieved results reminiscent of 2007 but on the whole the market seems quite stable with most properties achieving quite realistic results.
Finally even the REIV have begun to realise that the “Clearance rate” is not going to have the significance it had in 2006 and 2007. There has been an increase of 26% in reported private sales this year and a drop of 56% on the number of auctions according to the REIV. The REIV would report on most auctions but to think that anything over about 60% of private sales would be reported to the REIV would probably be wishful. From the anecdotal assumption that the split between Private Sales to Auctions in Melbourne was about 70:30%, I would suggest we are now looking at 80:20 and if we take into account sales before auction, pass in and Sold after, as well as properties that are passed in, then immediately sold and reported as sold at auction, we are most likely looking at the “clearance rate” representing less than 10% of the market sales.
RP Data have released figures showing a 1.9% increase in the median price of property across Melbourne. With the exception of Darwin, whose market is relatively small and by extension quite volatile, Melbourne had the highest capital growth of any capital city. Is it any wonder why? We still have the fastest growing population of any capital city. Our economy is in much better shape than our neighbouring states, and our infrastructure whilst not perfect is in pretty good shape.
We need more housing built. A finance company was quoted through the week as saying we have an oversupply of housing and that population growth would only require the building of 12000 dwellings nationwide next year. This would equate to an increased population of only 28,800 people. It’s great to see the Australian Bureau of Statistics isn’t needed anymore. The planning level for the 2008–09 Migration Program is set at 190 300 places. This does not include our natural population growth either.
First home buyers, investors who want to avoid the volatility of the share market and increase the certainty of capital growth, people who are selling their $400k properties and changing up to $1m+, even the top end of town is slowly starting to awaken. There are more people wanting to buy property than there are properties to buy.
THIS IS THE REASON PROPERTY PRICES WILL CONTINUE TO RISE.
Selling Agents only have a limited supply of stock and this allows them to spend more time on each of their properties. If you are in the market to purchase you had better have a good negotiator on your side. I had a woman call me on Thursday. She had purchased a property subject to a building inspection and the building inspection was particularly poor. She asked some advice as to whether she should proceed or not. One five minute phone call saved her over $5000. Another client asked me a question about a property negotiation he was involved in. One five minute conversation, what seemed like a huge and difficult problem – solved!
You are going to be making the largest financial decision of your life when buying a new property. GET SOME ADVICE!!
Call us now for a no obligation meeting to see how we can help you
Ian James
