February brings good news for sellers, with rate cuts getting closer
As February starts the latest data shows inflation is trending down, from 5.1% in the September Quarter to 4.1% in the December Quarter. This is good news for property sellers, because interest rates should stay on hold at the Reserve Bank review next week, and more importantly, will most likely be lowered later this year. This adds hugely to buyer confidence. It’s expected that rates will drop by at least half a percentage point by next Christmas, delivering a saving of $201 a month on a $600,000 mortgage.
Outer suburbs drive Melbourne median house value higher
According to Domain’s latest House Price Report, Melbourne’s median house price has risen again, in the December Quarter, by 0.9% to $1,047,273. But this is a bit deceptive, being driven mostly by rising values in the more affordable Outer East, South East and Western suburbs.
Borrowers are coping with higher interest rates
According to market analysts PropTrack, research suggests a third of mortgage holders (about 1 million Australians) felt stress about paying their home loan in January. But they are still able to meet the payments. Less than 1% have fallen behind. The ‘non-performing loan’ figure is only 0.78%. Which is actually historically low. It’s significantly better than halfway through 2020, when the figure did edge over 1%. This was during the dark days when the worst of the capital city Covid lockdowns were taking place.
High employment is keeping economies afloat
High Australian employment is the safety net that’s keeping households mortgage payments on track. Living costs are shooting up but people are adjusting by reducing spending elsewhere, increasing the hours they work, or drawing on existing savings if they have to.
The outlook for 2024
Melbourne’s house price recovery has been among the slowest of the capital cities, but some analysts believe big rises are on the horizon in the coming cycle. No one has a crystal ball, but a report from economic forecaster Oxford Economics Australia (OEA), forecasts Melbourne’s median house price will surge more than $110,000 to an almost $1.16m record high over the next 18 months. That’s a rise of $1400 a week. OEA predict a jump from Melbourne’s current $1,047,300 median house value will rise to $1,157,700 by June 2026.
The Bank of Queensland is also bullish on Melbourne. BOQ chief economist Peter Munckton is forecasting Melbourne’s $916,000 typical house (value according to BOQ) could gain as much as $64,120 (7 per cent) in 2024.
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