The market is as hot as this time last year. There were only 16 less sales this year than the third weekend of February last year. It is only the method that varies. There were 117 more private sales last week than the corresponding week last year, according to REIV figures.
Although everyone is talking about the 77% clearance rate, this was on only 436 Auctions and therefore is not as accurate as a clearance rate on over 1000 like last year. The value of the clearance rate is losing its significance. The value of total sales numbers is much better.
Of the four properties we have purchased over the weekend, only one was purchased at auction. What we couldn’t purchase before auction all went strongly over expectations. These ranged from a $400k+ “renovators delight” to a stylish $1m+ family home in the Eastern suburbs. And whilst I would say the $1.5M and above range is quiet, there are still quite a few quiet sales and good property will always sell well.
Properties below $1m have launched themselves into a sellers market again. Investors looking for revenue neutral property in excellent capital growth suburbs, those who are up-trading from the $500k – $1M range, those who have cash for a deposit and are renting and first home buyers are all pushing the demand for
property well in excess of the supply.
Companies like Mirvac, Stockland, Australand and Lend Lease are inundated with enquiry from first home buyers, so much so they do not have the stock to sell to them. This in turn puts pressure on the established market where there are even less properties. Investors who can now get about 4.5% yield and are only paying just over that for finance are also making the demand increase.
More and more people are finding it difficult to rent. I was passing this property on Saturday. This is not for sale, this is an open for inspection to lease!!!!!!!
Rents are becoming as expensive as repaying a loan at 5% and this is also generating more interest in buying.
Anybody who is currently waiting around until the market falls will be waiting a very long time. Socio – economic influences can only have effect on the two core elements of price differential. These are supply and demand. Even if unemployment gets as high as 10%; people are still going to need somewhere to live. And we have more people coming into the country and into Melbourne than we have dwellings to house them.
Ian James
