As school holidays draw to a close, the property market is transitioning to business-as-usual mode after a quieter period over Christmas and the New Year.
2019 was a unique year for Melbourne real estate – following low clearance rates and house values falling in the first half of the year, we finished 2019 with values up almost 9% from the market’s low point in May. It was the fastest property market turnaround on record.
CoreLogic reports that Melbourne’s clearance rate in the December quarter was 72.8% – compared with 43.6% for the same period in 2018. Our city maintained a clearance rate above 70% for the last six months of 2019 – despite a significant increase in the number of listings towards the end of the year.
Whether prices will continue their rapid ascent, peak in the first half of the year before slowing or enjoy steady growth throughout 2020 is a hot topic in the real estate community. The consensus is that Melbourne house prices will rise in 2020.
We’ve certainly seen a surge in market confidence across our network. High clearance rates and strong buyer activity means that vendors are feeling more positive about achieving a strong sales result. Likewise, buyers are back in force, responding to record low interest rates, more flexible access to finance and certainty about the future of negative gearing.
Many economists and property experts are warning that housing affordability is likely to become an even more significant issue in 2020, with predictions from CoreLogic that Melbourne house values may rise by up to 14% before year’s end.
The introduction of the First Home Loan Deposit Scheme (FHLDS) on January 1st was intended to support first home buyers to buy a home sooner, however many eligible buyers may find that the goalposts keep moving if median prices continue to rise as predicted. It’s too early to say if the scheme will have a substantial impact on the property market, though we do know that 3,000 potential first home buyers have registered for the grant since the start of this month, leaving only 7,000 additional scheme places for the rest of the financial year. It’s worth noting that the scheme excludes Melbourne properties valued at more than $600,000, so it’s likely to have a larger impact on unit prices closer to the CBD, and both standalone houses and units in Melbourne’s outer ring.
Changes to the Residential Tenancies Act will also impact the Victorian market this year. Across our network, we’re preparing for the introduction of new legislation to ensure our property management team can continue to support our landlords with practical and accurate advice that adds real value. We’re also trialing some exciting technology-led innovations that will provide a more flexible and efficient experience for our property management clients.
From a sales perspective, we’re using a new-to-market tool to allow us to take a more strategic approach to advertising. The system, called Acquire, lets us track sales campaign effectiveness in real-time and make dynamic changes to optimise advertising spend. We’ve seen impressive results so far and are excited to leverage this system to deliver even more value for our vendors.