The Melbourne home auction market reported another strong result at the weekend with buyer activity continuing to track at the highest winter levels since 2009.
Melbourne recorded a 79.9 percent clearance rate on Saturday, just above the 79.5 percent recorded the previous weekend and again ahead of the 75.5 percent rate of the same weekend last year. The weekend result was the third consecutive Saturday increase in the clearance rate, with the market reporting remarkably consistent outcomes over the past month.
Unseasonably high auction numbers have provided no barrier to the August revival as confident sellers continue to flood the late winter market. 785 homes were listed for auction in Melbourne at the weekend, which although down on last weekend’s all-time record August offering of 950 auctions was again well ahead of the 625 conducted over the same weekend last year.
Reflecting Melbourne’s consistent overall auction clearance rate over August, suburban regions are now producing more consistent comparative results reflecting an even spread of strong buyer activity through price ranges, buyer types and locations.
Melbourne’s outer east again reported the highest regional clearance rate on Saturday with an 83.1 percent result followed by the west with 82.7 percent, the inner city and the north east each with 81.4 percent, the inner east 80.9 percent, the south east 80.6 percent and the inner south and the north each with 76.4 percent.
The most expensive property reported sold at auction at the weekend was a 4 bedroom home at 95 Rowell Avenue Camberwell sold for $3,200,000 by Noel Jones. The most affordable property reported sold at the weekend was a 1 bedroom unit at 2/8 Walnut Street Carnegie sold for $235,000 by Biggin and Scott.
For a list of weekend auction results in Melbourne click here Melbourne auction results Saturday August 15
Rising auction clearance rates over the past month resulted in rising home auction prices with the median trend auction price increasing from $753,938 last Saturday to $772,375 this Saturday. Although more higher priced properties are entering the market and influencing prices growth, Melbourne’s latest weekend trend auction price remains 11.3 percent higher than the $693,938 recorded over the same Saturday last year.
Increased investor activity is a driver of rising clearance rates in the Melbourne market. Latest ABS data reports that residential investor finance to the value of $3.857bn was approved in Victoria over June. This was just below the all-time monthly record of $3.865bn recorded over the previous month. Investor finance approved in Victorian for housing has increased by 28.3 percent over the first 6 months of this year compared to the same period last year. Investors now account for 51.4 percent of all residential lending in Victoria with activity from this group tracking at record market share levels this year.
An improving local economy has also been a key driver of increased overall housing market activity in Melbourne this year. Latest ABS data however reports that the Melbourne July jobless rate increased sharply from 5.8 percent to 6.5 percent over the month to be just below the 6.6 reported over July last year. Despite the rise in the jobless rate, the number of Melbourne employed has increased by 62,300 over the past year.
Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson
The Sydney home auction market bounced back at the weekend following last weekend’s year-low result.
Sydney reported a clearance rate of 79.7 percent on Saturday – an increase from the 75.4 percent recorded the previous weekend but still below the 82.1 percent recorded over the same weekend last year.
Although Saturdays result was a clear improvement, it was nonetheless the fourth consecutive weekend with clearance rates below 80 percent. Record numbers of auctions over the past month have been a contributor to lower clearance rates with supply catching up with strong underlying demand and offering buyers more choice of properties.
Lower listings this weekend however may have influenced a pick-up in the clearance rate. 724 homes were auctioned on Saturday, well down on the all-time August record of 848 auctions set last weekend. Although auction numbers were down, Saturday was the second highest August auction day on record and significantly above the 433 reported over the same weekend last year.
The Blue Mountains reported the highest regional clearance rate with a 100 percent result - two sales from two listings. Next best was a group of higher-priced regions led by the northern beaches with 91.3 percent, the lower north 89.8 percent, the city and east 88.9 percent and the inner west 86.5 percent. Canterbury Bankstown recorded a clearance rate of 80 percent at the weekend followed by west with 76.9 percent, the south 75 percent, the south west 72.7 percent, the upper north shore quite again with 72.3 percent, the north west 70 percent and the central coast with a clearance rate of 65 percent.
Notable sales reported at the weekend included a 3 bedroom home at 37-39 Crane Road Castle Hill sold by McGrath Castle Hill for $3,700,000, a 6 bedroom home at 139 Wentworth Road Strathfield sold for $3,600,000 by Elders Inner West, a 3 bedroom home at 1/9 George Street Dover Heights sold for $3,210,000 by Phillips Pantzer Donnelley, a 5 bedroom home at 64 Pymble Avenue Pymble sold by McConnell Bourn Pty Ltd for $3,200,000 and another 5 bedroom home at 23-25 Shaw Street Petersham sold by Pilcher Residential for $3,102,000.
The most expensive property reported sold at auction at the weekend was a 5 bedroom home at 25 Turner Avenue Haberfield sold for $4,230,000 by McGrath Inner West. The most affordable property reported sold at the weekend was a 2 bedroom unit at 1/105 Ocean Parade Blue Bay sold for $310,000 by First National The Entrance.
For a list of weekend auction results in Sydney click here Sydney auction results Saturday August 15
A higher clearance rate this weekend in Sydney may also reflect a sense of a fading market from sellers acting to lower price expectations as indicated by moderating recent auction market price growth. The monthly trend median home auction price in Sydney fell marginally from $1,035,000 last weekend to Saturdays $1,030,125 but remains 14.7 percent above the $898,438 recorded over the same weekend last year.
Investor activity has been a key component of Sydney’s recent strong housing market activity. The ABS reports that investor activity continues to rise, with the value of NSW ASB investor finance surging to a new monthly record of $7.1bn over June – $600 million higher than last month’s then record result and an increase of 32 percent over the first half of this year compared to the same period last year. Investors now account for a record 62.4 percent of all residential lending in NSW.
A strong local economy has also been a key driver of increased overall housing market activity in Sydney this year. Latest ABS data however reports that the Sydney July jobless rate increased sharply from 4.7 percent to 5.5 percent over the month and is now higher than the 5.1 reported over July last year. Despite the rise in the jobless rate, the number of Sydney employed has increased by 57,700 over the past year.
Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson The Property Show expert 2UE Saturdays 12.30-1pm
Latest ABS home loan data for June has revealed another sharp increase in finance approved for residential investment in Australia. The value of investment loans soared to $15.3bn over the month which was another monthly record following the previous high watermark set in May 2015.
The stunning June result was 5.0 percent higher than May with investor finance increasing by 24.8 percent over the 2014-15 financial year compared to 2013-14. The value of loans approved to investors over the first 6 months of this year is now 27 percent higher than the amount approved over the first 6 months of last year.
The loan market share for investors now stands at 54.1 percent over June, just below the all-time record of 54.2 percent set in May.
Banks have moved recently to increase lending rates to investors, for both existing and new loans, at the direction of the regulatory body, APRA. Increased mortgage rates for investor loans are designed to quell demand in this strong market sector. Although it is early days in this policy shift, there is no sign of any easing in the runaway train that is Australia’s residential investment market.
It remains unlikely given relatively high yields, the prospects of continued capital growth and the taxation advantages and investment benefits that residential investors enjoy, that the recent increase in rates will cause a significant decline in activity particularly in the still strong Sydney and Melbourne housing markets. Moreover, a fall in residential investment would certainly not be welcomed by the majority of capital city markets that continue to report modest housing market activity and associated economic benefits.
Dr Andrew Wilson is senior economist for the Domain Group
It may be called The Great Australian Dream, however if you are renting now and perhaps saving for a home deposit, you might be thinking that home ownership really is nothing more than a dream. At the end of the day, a house is designed to provide basic shelter, so why do I think the security of home ownership is so important?
Home ownership is perceived as prestigious but it also provides you with a sense of security. When renting a property, you can be at the mercy of the landlord and could face eviction without a great deal of notice. This means that you can never be certain where you will be living beyond the immediate short term.
Home ownership will underpin your financial future
There can be tax benefits for home owners as there is no capital gains tax payable on your primary residence. In simple terms, this means home owners are free to improve their home through renovations or alterations to enhance the value of their property. Many people don’t understand the real value of this benefit.
So, what are the most commonly asked questions when making the move from renting to owning?
When should I start thinking about buying?
The answer is probably ‘now’ depending on your financial and employment circumstances, of course.
What if I can’t afford where I want to live?
Generally, higher levels of locational benefits and amenities will be reflected through higher property prices, however first home buyers should look to enter the market as soon as they can. This may mean downgrading location and amenity preferences.
Once in the property market, first home buyers can look to upgrade to areas with perceived better location and amenities down the track.
I can’t afford a mortgage…
If you are currently renting and think you cannot afford a mortgage, think again. You are probably paying off or contributing to a mortgage – it is just someone else’s! Consider how you can get that deposit together.
Recent changes to first home buyer grants in most States or Territories now only allow a grant for new property purchases such as the typical new build house and land packages. These packages do offer fantastic value for money and provide an easier transition to get off the rental treadmill. Check out some larger, reputable builders in your area and how they structure the initial deposits, to allow you to continue your current rent payments as your new home gets built.
What type of property should I be looking for?
This depends on individual preferences but there is an increasing demand from first home buyers for apartment living, which is closer to the city centre. The longer term value growth is not proven with this type of property, particularly because there are newer apartment properties being developed all the time. A case of supply exceeding demand can limit the growth here, but there are many important qualitative aspects that apartments and inner city locations also provide.
Ideally, strong demand remains for typical medium fringe suburb housing where you have the ability to improve the value yourself. Even in its simplest form, a garden makeover or coat of paint is going to improve the value of a home.
Catch more of my video’s in the latest Online Property Series for Homebuyers and Investors with some of the guys from The Block and kick-start your own Great Australian Dream.
Remember 1968?....The Beatles hit Number 1 in Australia with Hey Jude, a brand new Holden Kingswood cost $2780 and Rain Lover won the Melbourne Cup! …And can you imagine buying a home in Sydney for under $20,000?
Well housing interest rates are now officially at their lowest since 1968 and whilst this is good news for Australian home buyers, it is worth understanding why this is the case.
At present, we are experiencing low wage growth, employment growth and reducing general investment. As such, the Reserve Bank of Australia has adjusted down the base mortgage rate, which is intended to free up discretionary income, increase repayment capacity or borrowing ability and stimulate general economic consumption.
This is good news for home buyers on a few levels. We can expect a less volatile housing cycle generally over the next short and medium term as any increase in the borrowing rate will most likely be modest and only likely to follow broader economic growth such as employment and wage growth.
So it could be a great time to lock in a low interest rate in the knowledge that the cost of borrowing could be as low as it is ever going to get.
Remember that the housing market activity is more reflective of the local supply and demand drivers that exist in each area, rather than simply the blanket interest rates alone.
So what are some of the real estate trends we can expect to see over the next 12 months?
For example, whilst there will be more apartment living as lifestyle choice, most CBD areas continue to provide a supply level that is ahead of demand and likely to be unchanged for the shorter term. Therefore, just because the cost of home borrowing has become lower, this will not translate to a growth in property values, despite the increased numbers of new people moving into these areas, until property supply aligns with demand.
I think we will see continued rapid gentrification of inner suburban areas as owners seek to renovate and add value to existing properties, especially as the borrowing cost of doing so is reduced, but also as way of reducing commuter time, as roads and transport systems generally play catch up.
Increased buyer affordability is likely to push the mortgage belt further to the fringes of capital cities as first and second time buyers capitalise on the interest rate relief.
This will bring increased numbers to these segments of the home buyer market and competition ultimately will start to drive up property values in areas that have seen modest growth over recent years.
Increasingly, employers are adopting more flexible working hours and this gives rise to the green-changers or sea-changers as a combination of tele-commuting, decentralised corporate hubs and flexitime policies that provide greater opportunity for work/life balance.
Australians continue to look to regional areas with fast rail commutes of under 90 minutes and take advantage of their buying power compared to metropolitan areas.
Separate to the shifting employment and work dynamic, the increased planning and development limitations within our urban areas, also continue to limit affordability within our existing capital cities.
For example, whilst Sydney has decentralised high rise housing locations in the past, community opposition continues to slow multi-density and high-rise housing amenity. In the other capital cities, high-rise living continues to be contained to the CBD where supply typically exceeds demands. It seems that we have adopted a ‘yes-but not in my backyard’ approach to high rise and multi density living, which pushes the urban sprawl.
Areas like the Sunshine Coast and Gold Coast in Queensland, Wollongong and Gosford in New South Wales, plus Geelong and Bendigo in Victoria are areas where workers have shifted from capital cities, yet can commute with arterial or public transport infrastructure available if needed, which underpins property values and growth in these areas.
Catch more of my video’s in the latest Online Property Series for Homebuyers and Investors with the guys from The Block and kick-start your own Great Australian Dream.
A suburb simply doesn’t become ‘popular.’ There are triggers which determine why a suburb starts to become known as a hot-spot. Some of these can be price related where a suburb clearly becomes attractive as adjoining suburbs continue to rise in market value, or where new road developments now provide easier access.
Firstly, when considering an emerging suburb, identify areas where the gentrification is alive and well. These are areas that are commanding premium prices, which now have restricted affordability. Then start valuating neighbouring or bordering suburbs, and the potential lifestyle and appeal of these areas too.
Many of the neighbouring areas may be divided by a major arterial road, train line or waterway, and subsequently they may not have enjoyed the same regard or appeal as their more popular neighbouring suburb. I call these suburbs the ‘bridesmaids’. They are often overlooked for the ‘prettier’ more desirable postcodes but can often offer real value in comparison to the more popular areas.
Perhaps local industry and manufacturing dominated the area which prevented quality housing or where smaller block sizes were initially released, modest housing styles emerged and have since characterised the area and have held values back until now.
An example is Camberwell in Melbourne where good education, parks, shopping and well serviced transportation under-pins strong property values.
However, just five kilometres down the road from the Camberwell Town Hall is Ashburton, with its mix of modest period timber bungalow homes and 1940’s government housing.
Buyers who are unable to afford high priced Camberwell or Malvern, have started to realise the appeal and far more affordable option in Ashburton, with most of the local amenities still within easy reach.
Cultural or ethnic groups can re-define an emerging suburb. Professional workers have driven medium density living and the re-development of our inner urban industrial enclaves, seeking lower home maintenance and a focus on lifestyle. As new populations and investment spill into these new areas, quality housing redevelopment takes over and the general appeal and local amenity continues to increase.
Before we know, the secret is out. We have a hot-spot!
Some examples of up and coming suburbs include:
Catch more of my video’s in the latest Online Property Series for Homebuyers and Investors with the guys from The Block and kick-start your own Great Australian Dream.