Is Australia Becoming a Nation of Landlords and Tenants?

A clearance rate of 75 per cent was recorded this weekend compared to 69 per cent last weekend and 76 per cent this weekend last year. There were 1476 auctions reported to the REIV, with 1113 selling and 363 being passed in, 157 of those on a vendor bid. Melbourne’s south-eastern suburbs are dominating the auction market this weekend with more than 400 auctions scheduled.

Traffic and Melbourne Congestion

Photo Source: Shuttesrtock

 

Is Australia Becoming a Nation of Landlords and Tenants?

Last week saw a raft of some very important economic news and over the weekend the property market was put to the test when over 1700 properties were expected to go under the hammer on Saturday. What happened? Well we’ll get to that further down but firstly let’s chat economics first.

The Economy, What’s Happening?

Key numbers released last week showed more encouraging signs for the economy and probably explains the resilience of our current property market. Unemployment levels were steady at 5.8% while the latest ANZ/Roy Morgan consumer confidence figures were up by 1.6 points (1.4%) to 116.4 in the week to March 13 – the highest reading since November 2015. Confidence is up 5.1% over the year and is above the average of 111.4 since 2014.

Retail spending is up, consumers are optimistic with the estimate of family finances over the next 12 months lifting to the highest level since January 2010, the height of the commodity boom.

An improvement in the Australian GDP numbers and better than expected unemployment data has meant the cash rate has remained steady. Concerns weighing on the RBA at the moment are the rising Australian dollar, deteriorating of the Chinese economy and low inflation, all manageable with an interest rate cut if required.

It appears the RBA are in the enviable position of having a strong stable economy and recently annointed AAA economy and plenty of ammunition in the way of rate cuts should further stimulus be required.

Population puts Pressure on Our Roads

Since 2000 Melbourne has been experiencing a population boom. On average about 70,000 people are moving to Melbourne each year. This coupled with our lack of investment in infrastructure, new roads and public transport is causing enormous stress on our roads, public transport and even footpaths.

Melbourne is set to overtake Sydney as the most populated city in Australia and the immediate problem I see is that we are not keeping up with our neighbouring states who have been busy building their infrastructure projects in Queensland and NSW. Melbourne faces becoming an unliveable city if something isn’t done soon!

But savvy Melbournites alike are making significant shifts in the way they buy and rent property. Property prices are beginning to reflect their location in terms of liveability, infrastructure, including transport and proximity to employment.

Walking to a nearby train station or tram and leaving the car at home or opting not to live without a car and be close to a share car or bike track is becoming increasingly important in property decisions. Location priority is coming at the expense of a typical home on a quarter acre block and prices appear to be reflecting this change.

Property Market Put to The Test

In what was one of the biggest Saturday’s for property auctions this year, 1700 homes were set to go under the hammer in what’s been a ‘compressed’ month of March. Thankfully the weather has cooled down, first signs we have hit autumn but interest from buyers is still strong barring a few suburbs, Balwyn, Balwyn North, Mount Waverly, Ascot Vale, which showed unsually higher passed in rates compared to the rest of Melbourne.

Real estate agents in general are still complaining about stock levels and over the weekend pointed to some big results achieved, it seems the shortage is affecting prices. Talking to other agents, there seems to be more stock coming onto the market once Easter and school holidays are over and done with.

Early signs are the market is going along steadily hovering around the 70% clearance rate, not a bad result considering the jump in volume over the weekend.

Despite APRA affecting lending conditions there are still people around willing to get into the market. The question is how many of these buyers are bringing their buying plans forward in fear of further lending conditions and further price rises.

Even established one and two bedroom flats are back in fashion now seen as an entry point to inner city property ownership. Big call I know but when a first time buyers needs to find $75,000 plus LMI for a 90% lend on a $500,000 purchase you begin to wonder where its all going to end, one bedroom apartments in inner Sydney are fetching $600,000 plus. At this rate Australia is beginning to look like a nation of landlords with growing equity and tenants who will never be able to get into the market, unfortunately.

Street Advocate

Over the weekend we attended three auctions in Rosanna, Ivanhoe and Eltham. Two of the properties in Rosanna and Eltham were dual occupancies while the third in Ivanhoe was a villa unit.  All these properties were close to a train station, shops and good infrastructure. Each of the auctions had strong demand and a number of bidders and all past their reserve price comfortably.

Although the Rosanna property was located on a through road in Station street it was also close to Rosanna Station and the popular Miss Marie’s Cafe. Three first home buyers fought hard to secure the keys of the property but all was in vain with the final bid going to a downsizer at 702,000 for the two bedroom dual occupancy home.

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 
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