Autumn ends with strongest buying in 5 years.
There were in excess of 4644 auctions reported to the Real Estate Institute of Victoria (REIV) in the 5 weekends of May with more than 3736 sales recorded. Approximately 908 properties were passed in, 425 of those on a vendor bid. The clearance rate for May was 79%, with 3 weekends at 80% or higher.
The strong buying reflects the opportunity presented by low interest rates and shows no signs of abating. Activity includes people who are downsizing, or buying a second property. Many are also taking the plunge on upgrading to the best property they can possibly afford, buoyed by the all-time low interest rates, expecting such properties will cost more in a few months time. The keen activity has created a shortage which keeps driving prices up.
Consequently, commentators with longer memories are warning this could become a bubble scenario. After pressure from regulators wanting to take some heat out of the market, some big banks have just started to tighten their lending criteria. ANZ Bank is reducing availability of discounted interest rates. NAB and Commonwealth Bank have also reduced some discounts they had offered to new investor borrowers. This is expected to slow some growth.
Looking ahead, auction numbers will be lower, with the Queen’s Birthday (June 8) holiday weekend and the onset of wintry conditions in June.
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