Having seen record numbers of auctions this year with strong clearance rates throughout, we are beginning to see a slowdown. Is this the signs of the bubble bursting – OF COURSE NOT, although some professors from out of state may think their 10 year predications are finally about to come to fruition. We saw Channel 9’s THE BLOCK flop, we have seen clearance rates move into the 60’s and we know there are about 4500 gazetted auctions over the next 4 weeks. We are seeing everyone complaining about underquoting but nobody doing anything about it!
Every year in December the clearance rates take a dip. Usually as total numbers of auctions rise. There are only 5 more main weekends and a few stragglers that may try for 20/12/2014. And there are still a lot of auctions to get through. Not to mention the added private sales. In the very short term, the market becomes quite fickle. The best negotiators do very well in the last six weeks of the year. More properties than ever will pass in but still be sold and get updated in the clearance rates.
But for next year we should see a similar year to this one. Population growth for Melbourne is still exceeding Sydney. The price growth in Sydney has spiked much harder than Melbourne and investors are finding it difficult to get any reasonable yields. This means more and more investors head south to Melbourne.
First home buyers are doing it tough, but more and more young professionals will stay at home until they are thirty to save for their first home. No matter what the cost, people will always aspire to own their own home. Interest rates will most likely stay fairly low next year, at least until the economy begins to look better. Many first home buyers are starting their property dreams as investors, buying in high yield and or good growth areas. By renting these out whilst living at home, they have the tenants helping them pay off the mortgage. Some will rent where they wish to live and invest where they can afford to. Whilst interest rates remain low, these first home buyers can get a foothold in the property market much cheaper than they could as an owner occupier. If this could be you, give us a call to us how you can get started in the property market.
We will probably see another 6% – 10% rise across median prices throughout Melbourne. The only exception will be small apartments within 5- 7 km’s of the CBD and the CBD and Docklands. This area will, on paper, increase in value but only the new stock will be selling. I believe we will see a drop in real value of these types of investments until the oversupply levels out. It is extremely difficult to let out properties in areas like Richmond, Docklands and South Yarra at the moment.
If you require any help purchasing a property, whether it be an auction, or private sale negotiation, please give us a call. We would be happy to assist you.
Ian James
Director
JPP Buyer Advocates
