analytics

NOVEMBER 2022 

Market Defies Media

 

 

Our world has shifted in more ways than one this year. Global inflation, continuation of the Covid-19 crisis overseas, war in the Ukraine, elections, cash rate rises, and more. Since the beginning of the year our community has been faced with challenge after challenge and the wild predictions being thrown around in the media certainly doesn’t ease our concerns. 

 

The now-familiar tale of falling property prices continues, however, it seems the fall is a little less vicious than initially anticipated. We have experienced a very strong start to the Spring period recording our company’s highest number of monthly sales in September for the year so far. By communicating and educating our Vendors on realistic and competitive price points for their homes and vacant blocks of land, we have been able to achieve what some experts say wouldn’t be possible. Home buyers are taking the interest rate rises in their stride as the shock of the initial first hike back in May has now settled. More Purchasers now are seeking the advice of their brokers as to whether their serviceability has changed.

 

Whilst the media can’t tell you what to think, despite every effort to convince you otherwise, it can certainly tell you what to think about. Take this year’s interest rate rises for example. The media has instilled fear and doubt in our minds about the future of our individual financial situations. The possibility of a downturn in the market has been injected into our thoughts. However, I am happy to say that regional Victoria has defied this unnecessary media presence reporting a strong start to the Spring period. In a general sense the market has eased, but there is still momentum, let’s look at the figures to back this up. As per Property Data, Kinglake has reported a median house price for Quarter 2 2022 of $955k. At that exact time last year, the figure was sitting at $680k. That’s a whopping 40% increase in the median house price from June 2021 to June 2022. Whittlesea also experienced a median house price increase of 18% in the 12-month period along with Yarra Glen reporting a strong 20% rise. All three suburbs experienced 100% clearance rate for Q2 and a healthy number of days on market. If this isn’t defying the media reporting, then I don’t know what is. The next set of data modelling to keep an eye on will be the Q3 results which will give us an indication of the post winter market.

 

Though sales results are positive, unfortunately this isn’t to say the same for the rental market, with some explaining the situation as a ‘once in a generation crisis’. 31% of Aussie households are leased, meaning more than a quarter of the population are affected by the current rental market. A healthy market balance between tenants and owners is reflected by a vacancy rate of 3%, Melbourne is currently at a record low of 1.3%. Brisbane and Perth are even more detrimental falling under 0.6% vacancy rate meaning we are well and truly in a landlord’s market, despite rising mortgage costs for negatively geared properties. The number of applications per rental property listed on Realestate.com.au has risen by 28% year on year making competition fierce. In addition to competition, the pandemic pushed prices sky-high with regional lifestyle areas experiencing the steepest increase in rent. Recent data from Domain states the average regional rental house price is $420 per week as of August 2022. But it’s not just the prices that are becoming more expensive, it’s that people won’t be able to find somewhere else to live within their budget. We hope to see the state government and industry bodies step up and fill this gap sooner rather then later.

 

As always, there is a lot taking place in the property market at the moment. The rental market is tight whilst sales are looking fairly positive for Spring with volume of listings increased, but don’t be fooled by the media that’s floating around. I encourage you all to contact me any time for an insightful discussion of your local market right now. Enjoy the rest of Spring!

 

Regards,

William Verhagen – Integrity Real Estate