Melbourne Property News Monthly Wrap – April 2021

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April market peaks, but might settle

In April the Real Estate Institute of Victoria (REIV) recorded more than 2,941 auctions. 2,140 properties sold, 1,669 at auction, with 439 passed in. 467 properties were sold before auction & 4 properties were sold after auction. The clearance rate averaged 83.75% slightly up on March’s 83%.

Despite recording one of the largest ever first quarterly value increases, some analysts are suggesting Melbourne’s red hot market will cool a bit. Melbourne metropolitan house values rose an outstanding 8.8% over 2021’s first quarter reaching a record median of $1,004,500 (REIV).

Auction clearance rates are running very high and it’s a very good time to sell a skillfully presented and marketed home. Reserves for some top properties are still being smashed. Any slowdown at this point may apply more to the rate of value growth.

Will the market settle now?

REIV President Leah Calnan is expecting the market to settle, with the approach of winter and an increasing atmosphere of normality. More sellers are coming onto the market now, easing the log jam of frustrated buyers that backed up across 2020. Investors are cashing in too, adding stock to the listings.

Possible causes for an easing market

According to CoreLogic there are several signs of a cooling market ahead:

  • More stock is coming onto the market.
  • Negative population growth (100,000 fewer home-buying immigrants to Melbourne per year, mostly from the subcontinent and China).
  • There’s a lift in housing supply underway including 43,032 units under construction in Victoria in 2020’s last Quarter.
  • Higher barriers to entry for first home buyers are emerging because of the current value surge. Instead of the typical household taking about 8 years to save their 20% deposit, it will take more like 10 years.
  • Some expiring Government stimulus measures will reduce buyer activity.

Market peaks always find a ceiling – marked by sellers over-expectations and by borrowers’ caution.

Craig Knudsen
Principal Advisor
Vendor Marketing

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