Annual Price Growth Jumps over 13% In Melbourne and Sydney

Source:REIV

Annual Price Growth Jumps over 13% In Melbourne and Sydney

Generally a pretty mixed bag over the weekend. We spoke to a number of agents who struggled to sell some properties while others had multiple bidders and saw strong competition and results.

The published clearance rate of 76 per cent certainly indicates a good market however that may also mean some vendors are more willing to revise their expectations on price to get a result.

There is no doubt the established apartment market has softened as a result of the oversupply of new apartments, the continual bad publicity, falling rental return and increasing vacancy rates for this market.

The Domain group data confirms this for units showing clearance rates for this sector of the market has been 5-18 per cent lower than for houses in the past 18 months. For those astute, these sort of numbers and supported by what we are seeing is creating real opportunities for first time buyers struggling to get into the market as owner occupiers or first time buyers/investors.

A closer look at the clearance rates across Melbourne show a clear jump in the North and North East suburbs, on strong volumes. This may be due to what is known as the “ripple affect” where prices rise to the outer suburbs as affordability in inner suburbs become prohibitive.

Next week is the Queen’s Birthday long weekend and we will be taking a break from our Street News market wrap.

Source: Shuttesrstock

House Prices Rising on the Labor Affect

Good news last week when GDP figures released for March showed the Australian economy actually grew by 1.1 per cent for the quarter and for the past six months to March economic growth has expanded by a staggering 3.6 per cent.

These latest figures fly in the face of the Reserve Bank’s decision to slash the cash rate further to a historic low of 1.75 per cent, claiming growth in 2016 was “more moderate” that 2015. However it appears they may have got it all wrong, with growth numbers over the last four quarters: 2 per cent to June 2015: 2.6 per cent to December 2015 and 3.1 per cent to March 2016, according to AFR economist Christopher Joye.

To clarify somewhat this economic growth isn’t being seen by all cities and towns across the country, causing a great wealth divide. A surge in mining exports has delivered growth in regional parts of Western Australia and Sydney, growing by 5 per cent or more. While in Queensland and Western Australia the economy is shrinking by as much as 2 per cent per year. Something that should be heeded by would be investors venturing interstate.

In making their decision to cut rates last month the RBA noted that house price pressures appeared to be abating. But the latest RP Data/Core Logic data shows quite the contrary. House prices across Australia have risen by 1.6 per cent for the month of May, or a hefty 5 per cent for the first five months.

This unexpected spike has seen an annual growth rate to 10 per cent across Australia and more than 13 per cent in Sydney (13.1%) and Melbourne (13.9%), according to Core Logic. This has taken the median prices for Melbourne and Sydney to $590,000 and $782,000 respectively.

The question on every property expert’s lips is whether this resurgence in house prices is investor led or due to the latest interest rate cut or both? As a proportion of all new mortgage commitments, loans to investors have been trending upwards.

The other plausible reason for the price hike is that buyers are rushing to purchase an investment property fearing the Labor Party will get into power (now likely) and kill the ability to negatively gear property unless new. What I call as the Labor affect.

Will the RBA cut rates when they meet again this Tuesday? The experts are saying no, instead predicting further rate cuts after the election in August and possibly again in September. If this is the case, then our cash rate is set to fall to an all-time-low of 1.25 per cent and could further fuel the property market. Stay tuned because there are very interesting times ahead and I believe much volatility for the property market.

Street Advocate

Over the weekend we managed to buy and sell two properties on the Saturday which pleased both vendor and buyer.

Our investor buyer Julie had been looking for some-time and had missed out on two other properties to down sizers in the area willing to pay more.

We had sourced an ideal property, 2 bedroom villa unit one of three in immaculate condition and within walking distance to the shops, cafes and train station. The bonus with this property was that it had a double garage which is unusual for a 2 bedroom unit of its type.

We conducted extensive due diligence and found value for the property in the mid $500’s based on other recent comparable sales. We knew the sale was a deceased estate and thought we had every chance to secure it.

In front of over 25 groups we started the bidding at $460,000 and found ourselves holding the bid. It appeared other bidders were waiting for the property to be called on the market. Before we knew it the agent confirmed the vendor’s reserve price and we quickly secured the property for $500,000.

Our buyer was thrilled, seeing we managed to buy a property and save her in excess on $50,000. There is no doubt the buyer bought a property ready to be tenanted which over time will appreciate in value and quite possibly made money at the time of purchase. Congratulations Julie!

What our Clients Are Saying?

We would like to thank you for all your hard work, your advice and your attention helping us to secure an excellent investment property.  Being first time investors, you were happy to spend time with us explaining how it all works and always happy to answer our many questions. You sorted through lots of properties according to our brief to finally secure a fantastic place in a great location and at an excellent price. You made negotiating with the vendor’s agent a breeze and your knowledge of the industry and players was a huge advantage.  All in all, we are so glad we had you as our advocate for this purchase and we hope that we can work with you again in the future. Peter and Jenny.

Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.

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If you are thinking of buying, selling or investing and would like a FREE 5 minute chat with Street News Director Peter Sarmas, please contact him on 0418 740 606 
or via email at [email protected]