Melbourne Market Performs Fuelled By Increased Buyer Demand
Fuelled by increased buyer interest and improved borrowing conditions, the Melbourne market showed signs of improvement over the past month.
September delivered another good result for the Victorian capital with values up 1.7% for the month and 3.4% for the quarter, making it the second strongest capital city property market over the period behind Sydney.
According to REBAA President, Cate Bakos, ""September saw some heady prices at auction in Melbourne's inner and middle ring and this price growth is largely attributed to the combination of stock shortage, increased borrowing capacity for eligible buyers, and a positive sentiment change.""
Aussieproperty.com.au director Steve Janes observed, ""a broad shortage of stock intensifying throughout September, resulting in greater sale prices amongst the inner suburbs, compared to earlier in the year.""
Lastest days on market data from the Real Estate Institute of Victoria provides further support that demand is outstripping supply with REIV CEO Gil King claiming that, ""Melbourne's housing buyers are crying out for more vendors to enter the market.
""We know from our members that buyers are keen to get into the market following the price correction we saw earlier this year, and we have now had 12 consecutive weeks of auction clearance rates of more than 70 per cent, with the past five weeks above 75 per cent.""
Ripehouse Advisory CEO, Jacob Field said that while demand for good quality stock is outstripping supply on a city-wide level, ""there isn't much quality stock available, but rather an oversupply of bad development stock.""
""Because we are operating in a low listing environment, investors need to be cautious when interpreting the numbers.
""There are always exceptions to the rule. We have just identified a cluster in Melbourne that is exhibiting higher volumes with limited new supply and importantly a limited potential for more stock to be bought onto the market. This LGA is showing very strong growth signals on a national level,"" said the CEO.
As the spring selling season progresses, it is hoped that more stock will enter the market.
""A greater volume of new listings are expected in the spring, however, this has not yet come into effect, especially in the sought after pockets close to the city.
""In fact, quite the opposite, those few new listings entering the market are being quickly absorbed, thus the market is noticeably a great time for those active vendors,"" said Mr. Janes.
According to Ms. Bakos, ""Those who are familiar with seasonal cycles in our local markets will know that the number of listings will steadily increase between now and Christmas, and buyers can anticipate a busy auction weekend either side of the Melbourne Cup weekend.""
For homeowners and investors thinking about selling their property, fresh buyer demand makes now a good time to list, said the REIV CEO.
Despite recent concerns about the overall health of the Australian economy, buyer sentiment remains positive, but only time will tell.
""The market is either in a state of strong growth or possibly an interesting turn of events fuelled by the force between supply and demand.
""Q1 2020 is looking to be a true test for market strength, and it will be interesting to see if the market absorbs the likely increase of new listings entering the market aiming to benefit from a quick uplift in capital value,"" said Mr. Janes.
Ms. Bakos suggests that ""despite talk of economic woes and global news feed items raising concerns for some, our local property markets are not reflecting buyer caution at all.""
September 2018 sales prices vs. September 2019
In the table below, Ripehouse Advisory Analysist, Will Farrell shows the shift in capital city market values, comparing the First, Median and Third Quartile sales prices for September 2018 with September 2019.
The graph below shows the retraction of the Sydney, Melbourne and Brisbane markets, while Hobart and Adelaide have made solid gains across the First Quartile, Median and Third Quartile when comparing September 2019, with the previous September.