What an extraordinary 12 month period we have endured. Not just property but politics, policy, and the economy. Commencing with the anticipation of the collapse of the real estate market only to see it peak in March. February witnessed the horrific invasion on Ukraine and later the unexpected partial retreat from the Russians (for the moment). 2024 arrived earlier than predicted, in May 2022, with the first of 8 interest rate hikes. How there hasn’t been a class action against the Reserve Bank is surprising. We have had a change of Federal and State Governments, unemployment has receded to a 50 year low, and inflation is about to reach a high of 8%, up 7.3% for the year.
The cheery news for Christmas is that for the entire year Melbourne’s prices have dropped a mere 7.5% and from all accounts the worst is behind us. My observation still concludes any quality, well located property in the city or in regional areas has sold for market value or above. As I have conveyed in earlier broadcasts, the litmus test will be when the fixed interest loans of 2021 expire, and mortgage holders are catapulted into the deep end of the mortgage pool around the middle of next year. For now, let’s rejoice in the fact interest rate rises are nearing their peak and the property price decline (still above 20% pre covid) has stagnated.
The reduction in supply and increase in demand has stabilised the market. Auction clearance rates are holding at approximately 69% no matter how many auctions are held on any given weekend. Migration will increase to 195,000 nationally per year, and with wages improving I feel we are in for a holiday period where we can chill a little and enjoy time with family and friends, albeit with tighter budgets.
As mentioned, what needs to be addressed is the rental market. Rental prices have increased by almost 10% over the past 12 months with vacancy rates at an historic sub 1%. A balanced outcome is 3% vacancy. These figures will lure investors and consequently lift the market but does little to assist the thousands of people with nowhere to call home.
Michael Ramsay
Principal
The Advocates
P.S. From the team at The Advocates…..
Enjoy the festive season!
Lisa and I would like to take this opportunity to wish you a very happy Christmas and a safe holiday period.