All aboard for 2019. Where will it take the property market?
On February’s first weekend more than 285 auctions were reported to the Real Estate Institute of Victoria (REIV). Approximately 139 sales were recorded. 99 properties were passed in, 39 of those were on a vendor bid. The clearance rate averaged 65%, way up on December’s 49%.
February 2019 has started with a sharp rise in the clearance rate. But we’ll need the next few weekends results to reveal whether Melbourne’s property market has warmed up this Summer.
We’re in a downturn but the areas hit hardest are selective. Home prices dropped across the inner East and South by about 15% in 2018 according to Domain, but are up 1.8% in Melbourne’s West and Inner West (realestate.com.au).
The experts don’t agree on the details. Property market analysts CoreLogic says Melbourne’s averaged house value has dropped 5.8% since the peak. But Domain claims the drop is 8.4% in the past year alone. However, the REIV has it’s own data and announced some good news in January claiming the Melbourne median house price increased 1.4% in the December Quarter, going from $815,000 up to $826,500!
Looking forward into 2019 other factors will push and pull the market.
All the experts agree Melbourne’s strong employment level has a cushioning effect on house values, by keeping rents high.
Late in 2018 we saw Treasurer Josh Frydenberg urging banks to ease up on their lending clampdown, because the credit crunch was impacting beyond housing and adversely affecting small business operators too. People spend less when house prices fall, because the feel their wealth has declined. The Government did want a clampdown on rampant borrowing, but does not want to trigger a recession.
Any gains the property market makes in 2019 will also be impacted by the coming Federal Election. A Labor win would see curtailing of negative gearing and increased capital gains tax on investment properties. This will drive investors further out of the market and put additional downward pressure on home values.
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