Market stable in April, but the election could change that.
Over April’s 4 weekends more than 1725 auctions were reported to the Real Estate Institute of Victoria (REIV). There were approximately 827 sales at auction. 730 properties were passed in, 384 on a vendor bid. The clearance rate averaged 56.5%, up on March’s 55%.
Auction numbers were low in April’s second half with vendors avoiding both the Easter and ANZAC Day weekends. Many Real Estate Agents feel at this point Melbourne prices are near their lower limit and are likely to be stable for a while. People have adjusted and will continue buying and selling homes.
But the Federal election looming in mid May could bring big changes.
Firstly some good news is that the newly released Federal Budget has promised $6.2 billion worth of infrastructure commitments for Victoria (mostly road and transport). This will be a boost for the Melbourne economy – and likely to have a positive impact on home values. Both parties are promising big spending in Victoria.
A Labor election win however will bring a drop in home values by scrapping negative gearing and adding a rise in capital gains tax. Labor policy is to remove more investors from the market to make homes more affordable for entry level buyers.
The winners in a Labor win will be people who believe they’ve been priced out and want home values to fall more. There’s some irony of course because as soon as first time buyers enter the market, they hope home values go up!
One side effect is that the changes to negative gearing will reduce investors buying with intention to rent, and fewer rental properties will be available. Remembering at least 90,000 overseas immigrants come to Melbourne each year needing a home.
Housing developers will try to fill the shortfall with more new estates sprawling outwards on Melbourne’s Western and South Eastern fringes.
North East Melbourne property is seeing hot-spot type gains so far in 2019. The median house price in Eltham increased 7.3% to $950,000 in the January-March 2019 quarter according to the REIV. The Greensborough median house price jumped 6% to $808,000. People are going there for the family homes on big leafy blocks, for less than a million.
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