December Property Report

Even though house prices in Victoria have fallen (slightly) for the third consecutive month, potential first home buyers are still holding back on entering the market. Being a first home buyer is daunting at the best of times but with so much uncertainty in the market this experience is made even more difficult to navigate.

The turbulent market has resulted in Victorian first home buyers reaching a record three-year low. Some are waiting for the market to drop even further, others simply cannot afford higher mortgage repayments due to the rising interest rates. It is important to note that it is highly unlikely we would experience a huge crash so there is no point waiting for this doubtful prediction to never come.

According to PropTrack data, days on market has risen and sales levels have fallen suggesting buyer demand has moderated. This is good news for first home buyers as there is reduced competition and greater choice. The ‘fear of missing out’ driven property market surge experienced last year is behind us leaving more time for these young inexperienced buyers to conduct their due diligence before making any big decisions. Over the last few months, we have seen mainstream buyers retreat to wait to see what happens, presenting opportunities for experienced buyers who are cashed up, educated, and prepared. It is understandable for our young Aussie home buyers to wait until rates normalise and house prices steady as buying a home is no easy decision.

Previous downturns in the market have often seen governments introducing incentives to help first home buyers get into the market and raise demand. If the economy continues to slow next year, we are hoping to see a similar reaction from the government with new incentives introduced, especially if they raise the first home buyer stamp duty exemption threshold.

This is our first spring in 3 years without Covid concerns, yet the combined pressures of interest rates and inclement weather has seen the strong selling season well below normal levels. The unseasonably slower period for new listings and enquiry rate is proof that the pandemic price lift is over, and the actions of the reserve bank are affecting owners and buyers’ confidence in the property market. New listing volume is down 9.2% year-on-year nationally. Yet the new listings coming onto the market are not being matched with strong buyer interest which is expected to accelerate further price declines and slow sales volume. So far though we haven’t seen any evidence of forced or panicked sales which is humbling to hear that our community remains resilient.

Although market conditions are challenging for sellers, the homes that meet buyer’s fussy expectations are still achieving quick sales. This is putting more emphasis on presentation and downward pressure on Vendors to present their homes with even more precision and attention to detail. Experts warn that there will be a slow recovery due to the added burden of high mortgaged homes, especially those that were exposed to competitive markets through Covid.

Looking ahead, we have many motivated Vendors looking to sell in the near future. Unemployment rates are predicted to remain very low, wages growth is expected to rise along with international migration recovering post pandemic. With Christmas only a few weeks away we are starting to discuss with our clients their options to go to market in the new year, and we look forward to a well-deserved break. Thank you to all our clients that have supported us through this year. Stay safe over the holiday season and we wish you and your family all the best for Christmas.

Regards,

William Verhagen – Integrity Real Estate

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