Is there a recovery under the Christmas tree?
On December’s first 3 weekends more than 2,996 auctions were reported to the Real Estate Institute of Victoria (REIV). Approximately 1,018 sales were recorded. 1,291 properties were passed in, 600 of those were on a vendor bid. The clearance rate averaged 49%, the same as November.
What a year it was! It feels a bit like stepping off a ride at Luna Park. The property market always delivers drama and this year we had plenty. In 2017 the booming Melbourne market appeared to be heading up to an affordability ceiling, but we never reached it. Instead, we’re having the ‘correction we had to have’ – created by Australia’s financial regulators, with tighter lending and investment conditions putting a choke on the boom.
Since the height of the 2017 peak Melbourne’s median house price has fallen from around $880,000 down to $800,000. Despite that apparent 10% dip, values are actually down about 4.9% from their peak (CoreLogic). But there are sub-markets in Melbourne where values have held, or even grown. And there’s still plenty of reasons for Christmas cheer in Melbourne. A robust economy still underpins the market. Property prices are up 41.5% over the last 5 years and 77.3% over the decade.
Melbourne is one of the 10 fastest growing cities in the developed world. And the population will grow a massive 10% more in the next 4 years. The jury is still out about high immigration and the impact on sustainability, but population growth certainly aids propertyvalue, by sustaining demand.
What are the trends at the end of 2018? It’s taking longer to sell, i.e. approx. 39 days compared to 31 days this time last year. Vendors are discounting asking prices more than 12 months ago, coming down an averaged 6.1% compared to 4.6% a year ago (CoreLogic).
Will 2019 shake off the downward pressure? Or will the savings clock take more time to rewind the market? New Year 2019 should bring some clearing of the built up stock levels in January. Hopefully we see some fresh energy injected into the market in February and therefore a bump in activity as people include property moves as part of their New Year resolutions.
For Christmas, we wish all our clients and our readers, and our Real Estate compatriots a joyous and bountiful Christmas and holiday season. We’ll be seeing you again in 2019!
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