Surging buyers shrug off share market drop.
During February more than 3,518 auctions were reported to the Real Estate Institute of Victoria (REIV). There were 1,990 sales at auction, with 668 properties passed in. 300 of those on a vendor bid. The clearance rate averaged 76.5%.
February was a powerhouse month for Melbourne property, driven by confident vendors and competitive buyers. There were two Super Saturdays with clearance rates percentages in the high 70’s.
Not surprisingly, with such a healthy market, capital gains grew through February. The cycle from downturn towards recovery is now complete with values reaching where they were at the last peak in September 2017. Values rose 1.2% over the month. Which makes it +3.9% for the last quarter, and +10.7% for the last twelve months (CoreLogic).
How will Coronavirus effect the market?
The Coronavirus driven stock market collapse and its roll out effects will impact on top end property sales first, as share values are hammered and personal wealth and buying power is reduced. Agents report no effects on middle and lower range properties though, which are benefitting from the pent-up demand.
The absence, or withdrawal of Chinese buyers will have a dampening effect on some blue chip suburbs that rely on their presence to bolster values. Real estate commentators have also flagged some short-term pain for apartment developments with exposure to offshore investors.
The financial crisis should settle down when the virus starts to recede. Looking at the record, the SARS pandemic became visible in March 2003, rapidly climbed to a peak in the following April and May, and then receded in June. A four month time line.
Good news is figures just released from the Australian Bureau of Statistics shows there’s a surge in new home loan approvals. First home buyers and investors are jumping into the market while they can before rising values make it too difficult. Competition at auction is heating up for apartments with aspiring first home buyers seeming to have grasped that this type of property is the ideal and practical entry level home.
There are reports of many sales before auction, particularly with in-demand family homes, as buyers with a fear of missing out take decisive action to secure a purchase. It takes a substantial offer to entice a vendor to sell before the auction.
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