Smart Vendors Cash In Before Spring

Melbourne Auction Results 19th June 2016
72% Clearance Rate 879 Reported Auctions	Sold at Auction:	633
	Passed in:	246
	Sold Before:	107
	Sold After:	1

Source:REIV

 

Smart Vendors Cash In Before Spring

No doubt the Australian property market has been good, especially in Sydney and Melbourne. The latter, seeing auction clearance hovering above 70 per cent since the start of the year excluding last week’s Queens Birthday weekend.

It’s all sounding pretty good but let’s not get too comfortable. Our experience is that the Melbourne market appears to be somewhat jittery. Real estate agents are telling me that results are mixed, properties are being passed in then negotiated for a sale and bidders are thinner on the ground. Areas like Glen Waverley and Nth Balwyn have come off the boil as the crackdown on foreign buyers and investors takes hold.

Having said there appears to be more interest from buyers for renovated properties, especially those in good locations or properties with subdivision potential.

A clearance rate of 72% from 972 (Domain) auctions is a strong result on unusually high volume numbers for this time of the year. It appears  some vendors have brought forward their sale in an attempt to maximise their property price and beat the Spring rush.

Perhaps more evidence on the strength of Melbourne’s property market is the recent sale by Marshall White of 4 Robertson St, Toorak which surpassed the record of $24 million set back in the last property boom of 2010.

Source: Shuttesrstock

 

Will Brexit Affect Property Prices 

The other global factor to consider when which could impact our property markets is Brexit, or Britain leaving the European Union. Voters are expected to go to the polls this week on June 23^rd, this event is arguably more significant to our economy than our July 2^nd election.

With punters predicting a 42% chance of an exit, the question needs to be raised how such a move will affect our markets. Economists believe such an exit could see panic and possibly put Britain into a recession causing funds to flee to the safe haven of the US dollar and other minor currencies, this means the Australian dollar may fall as well.

“The heightened volatility sees a risk that Australian banks have to pay more for the capital they borrow overseas (they source around one-third of their funds through these wholesale markets), which they then lend to domestic mortgage-holders. We could face a situation where mortgage interest rates rise independently of the Reserve Bank’s actions. In a worst-case scenario, there is a contagion effect and we get a GFC-type crisis”, according to Richard Wakelin in the AFR June 17^th 2016.

There’s no question that higher interest rates will certainly impact the buying of property through reduced affordability. Those home owners and or investors who are struggling to make their current repayments with limited or no equity will suffer the most, particularly if there is a downturn in the economy and unemployment rates rise.

A recent report released by CoreLogic titled Profile of the Australian Property Investor, highlights the magnitude of the of the property investment market. The paper points to the size of the sector being 2.6 million homes valued at $1.37 trillion, nearly the size of the $1.5 trillion sharemarket.

Mr Lawless emphasised the importance of the Australian housing market to our economy saying, “we are already in a market showing signs of weakening. How much policy changes would affect that is anyone’s guess”.

Commenting on any new political change he said “Any decision needs to be very carefully thought out. “ A policy that involves an erosion of wealth could flow into reduced household consumption at a time when the economy is relying on more consumption for growth.”

 

Street Advocate, 22 Ellesmere Street Northcote

 

 

 

 

 

 

 

Source: REA

Highlighting the current flight to quality by buyers, this single front 2 bedroom home in 22 Ellesmere St Northcote needed more than a bit of love.

Quoted at $650 -$690,000 Nelson Alexander agent John Karr was expecting the property to fetch over $700,000 based on recent sales in the area. Leading up to the auction buyer interest was strong with 10 indicating they would bid on the day.

The end result was multiple bidders pushing the price well above expectations to $875,000. Not surprising when you consider a renovated three bedroom home in the area fetches close to $1.6mil according to Mr. Karr.

The large difference between the buy price and potential sell after renovation means not only are first home buyers interested but downsizers, investors and those considering a “flip”.

 

 

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

For a basic snapshot of your suburb’s performance or a property report customised for your property, request a Free Market Report.

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]