Households under Mortgage Stress Could Surpass 800,000

Source:REIV

Melbourne Market Wrap March 19th June, 2017

A clearance rate of 75 per cent was recorded this week compared to 75 per cent last week and 71 per cent this week last year. There were 866 auctions reported to the REIV, with 647 selling and 219 being passed in, 91 of those on a vendor bid. Auctions continue to gain popularity in the outer suburbs with the City of Melton recording 209 sales this year, a 100 per cent increase on the same period last year. (REIV)

The apartment market is really struggling in the current market. So much so that it appears to be having an impact on established units in 60’s/70’s blocks which traditionally have been resilient.

Blue chip areas like Glen Iris had a higher than normal number of properties pass in over the weekend, this is very unusual but could be reflecting the reduced interest and compettion from Chines buyers.

On a very different note, areas like Hoppers Crossing appear to be booming. Affordability is a big factor with median house prices in the area for the March Qtr at $480,000 (REIV).

We were fortunate to be appointed in the sale of 3 Renalagh Crt Gen Iris and over the weekend achieved $1,372,000 for the two bedroom semi detached. An excellent result which surpassed the vendor’s reserve price.

For more information about selling your home

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

Peter Sarmas on 0418 740 606.

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Recent Auction at 3 Ranelagh Crt, Glen Iris

Households under Mortgage Stress Could Surpass 800,000

Some interesting figures out last week highlighted where the Australian economy is at the moment and more to the point how this will affect the property market.

The latest unemployment figures showed a dramatic growth in May to 2 per cent from 1.7 per cent in April with overall jobs rising 42,000 four time the expected amount. This takes the total employment growth since February to 141,000, the biggest three-month gain since late 2004.

Companies appear to be investing again and with the Australian economy almost at capacity. Economists like Paul Bloxham from HSBC believe wages could see some upward pressure over the coming quarters.

This is welcome news, as statistics from Digital Finance show the number of households in mortgage stress are expected to pass 800,000 soon. The reason is three major factors

1. The continual rise in power bills and cost of living

2. Underemployment which is at its worst level since reporting began 1970

3. Interest rates are set to rise

In the US the Federal Reserve increased rates by 0.25% last week. Economists expect further rises, up to 3.5% per cent by 2020 pushing US bond yields above 4% and in turn forcing rates higher as Australian Banks are reliant on international funding.

This would certainly make it that much harder for our youth to be able to afford rental accommodation or eventually be able to buy property.

According to an article in Business Insider the ABS also released damming data highlighting the seriousness of unemployment for this  group. 12.7% of Australians aged 15 to 24 were unemployed in May, more than double the national average of 5.5%.

Both unemployment and underemployment have risen for this age group, the latter from just above 10% before GFC to more than 18% now.

NAB’s latest Consumer Anxiety Report found more than 50% of younger Australian’s aged between 19-29 had difficulty buying food or paying bills in the past three months.

Median rental data released by the REIV from May 2016 – May 2017 show median rents have grown for both houses and units for property located in Melbourne’s inner city to the outer suburbs. Such growth will continue to put pressure on young people wanting to live closer to Melbourne’s CBD and could potentially create ghettos in outer suburbs with poor infrastructure.

Housing affordability, particularly for our younger population is more than just stamp duty concessions or spending less on smashed avo. Accessibility to major work place centres must become a priority. The need for a bigger and more efficient public transport and fully interconnected freeway system is now of paramount importance.

What Our Clients Are Saying

Hi Peter,

Just would like to express my sincere gratitude towards your service again.

I have sold two properties both through the help of Peter. He has been very professional and a wonderful person to work with, and he would provide me with recommendations and improvement tips to maximise my sales return throughout the campaigns. Every property sale has its own difficulties, and on both occasions of my property sales, we had to overcome their unique obstacles, but Peter was superb at managing difficult situations and would come out winning  for his client. In all honesty, there might be a difference of opinion at times, but Peter is always willing to work hard and stick it out for his client to achieve the best possible result. I wouldn’t hesitate to recommend Peter to other vendors!

Thank you again!

Derek

8 Birchgrove Cres, Templestowe

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.