Melbourne Property News Monthly Wrap – March 2023

Auction numbers and sales ramp up across March

Over March’s four weekends the Real Estate Institute of Victoria (REIV) recorded more than 2,746 auctions. 1,736 properties sold. 1,293 at auction, with 584 passed in. 440 properties were sold before auction & 3 properties were sold after auction. The clearance rate averaged 75%, up on February’s 72.5%.

Moomba weekend excluded, March auction numbers were relatively steady with the weekend of the 18th & 19th holding 907 auctions, accompanied by a reassuring rise in the clearance rate to 78% on the final weekend.

Properties are selling steadily

Whether by auction or off-market, properties are selling well. Agents say although the average number of bidders is down, this is actually encouraging for buyers because there’s less competition.

Interest rates (which went up another 25 basis points to 3.60% on March 7) are still holding sway over the market although most buyers and borrowers are looking ahead and factoring in a rates plateau this year, and a possible easing of rates in 2024.
  
All eyes right now are on the Reserve Bank’s April 4 meeting, to see what progress their rate-rise strategy is making in containing inflation.

Big average profit for home sellers

According to CoreLogic’s just released Pain and Gain Report, 98.3% of Melbourne vendors made a profit from their house sale in the December Quarter 2022, with a national average profit of $350,000. The national median hold period for homes is 9.9 years.

Losses were more common in the unit market, mainly in Melbourne CBD, where investors have been bailing out because of increasing mortgage costs after hikes in the cash rate, and less chance of short term capital gains. 

Will international bank failures impact on our property market? 

Global economics have been rattled in March with the collapse of the American Silicon Valley Bank and the forced rescue of the giant Credit Suisse Bank. Switzerland’s banks have been under pressure for years to clean up their game as a place to hide money or avoid paying tax. Adding to this pressure were some recent management mistakes by the bank. Their shares lost over 75% in the last 12 months, ending up in a final meltdown. 

However local analysts (Australian Financial Review) report Australia should be insulated from fallout to our own banking sector because of lessons we learnt from the 2008 GFC, resulting in tighter bank regulation here and hedging against financial risks.

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