The Reserve Bank cut the cash rate to a new record low of 0.75% at its most recent meeting. It was the third time they’ve dropped it since June, and many are tipping more rate cuts to come, possibly even by the end of this year. With the RBA board projecting that inflation will stay around 2% for another two years, economists are predicting that there may not be a rate rise until late 2021 at the earliest.
CoreLogic also recently released their national home value index, which showed that the Australian housing market continues to recover – dwelling values nationally have grown for three consecutive months through to 30 September, up 1.7% for the quarter. The picture is even more positive in the Melbourne property market – our average dwelling value was up 3.5%, with a local market increase of 1.7% in September alone. This growth means that our housing values are now only 7.9% below the market peak in late 2017.
The REIV also released some interesting data, showing that Melbourne properties are currently spending fewer days on the market before they’re sold. August figures show that metro Melbourne vendors had their properties on the market for a median of 34 days before a sale – the lowest ‘days on market’ figure in more than a year, and significantly down on February 2019’s high of 50 days. REIV’s CEO, Gil King, suggests that these findings demonstrate that demand for Melbourne property is outstripping supply.
Clearance rates are also strong – we’ve had 12 consecutive weeks above 70% – so where are all the vendors?
We’re now well into the spring sales period – with the weather finally coming to town – however, volumes are still low compared with recent years. There really is a fantastic opportunity for vendors to take advantage of low interest rates, easier access to credit and strong buyer sentiment – but, across our network and the broader Melbourne market, we’re seeing some reluctance to list.
While the market is down from its peak, CoreLogic reports that 92% of Melbourne properties sold in the June quarter achieved a better result than their purchase price. This means that only a very small percentage of vendors are selling at a loss, with the vast majority making a profit. From my perspective, there’s a lot to be gained – and not much to lose – by listing now and taking advantage of the healthy buyer competition being driven by favourable lending conditions and low stock levels.
Get in touch with your local Greg Hocking office to chat about what’s happening in your area. Whether your target market is owners or investors, both groups are certainly back in the market and motivated to buy.