Price growth impacting Melbourne property trends.

This year - Auctions: 1068 / Clearance rate: 81%
Last year - 
Auctions: 1671 / Clearance rate: 74%
Source: REIV

Melbourne gave host to is third consecutive super Saturday at the weekend, notwithstanding the Labour Day hiatus, boasting an overall clearance rate of 81%.

The strong performance of late has many asking, “can Melbourne sustain such high clearance rates?” For the moment, the simple answer is yes. While auction numbers appear high, they represent a drop in volume of 25% to 35% when compared with this same time last year, which will further test the relationship between supply and demand in coming weeks, particularly when it comes to houses.

With strong population growth projected to continue for Melbourne in 2017 and beyond, demand pressures will increase – with houses, townhouses and larger established apartments in Melbourne’s inner and middle ring suburbs the primary beneficiaries.

This growth will drive further changes in buyer activity, such as already growing interest in the city’s west due to more affordable prices coupled with proximity to Melbourne’s CBD – with suburbs such as Altona representing one of just a few suburbs in which to buy a home under $800,000, in such close proximity to the CBD and the bay.

Yet, despite heightened demand and affordability constraints, subpar properties still suffer reduced interest among buyers, irrespective of the location. Reinforcing the importance of selection when buying for investment purposes.

Interestingly, mounting anxiety among would-be buyers is also leading to an increase in prior offers, according to agents. In an effort to stymie this growing trend many agents are delaying availability of contracts and the Section 32, in favour of auction sales.

Boardroom auctions are also becoming increasingly frequent, despite it being the less favourable method for many buyers. Boardroom auctions can be daunting for inexperienced buyers, so ensure you’re adequately prepared and armed with a game plan.

While markets are performing strongly, the impact of recent rate rises by NAB and Westpac remains to be seen. Continued rate rises have the potential to affect confidence levels, with implications for current demand.

But, for now, the outlook is positive. History shows clearance rates at or above 65% result in moderate growth in the market. Current clearance rates are early evidence of strong growth on the horizon for certain property types in 2017.

Meanwhile, recent announcement of changes to first-home owner incentives, while well-intentioned, are expected to add fuel to the already hot Melbourne property market. This has many savvy first-time buyers moving quickly to take advantage of reduced competition in sub the $600,000 price range before the changes come into fruition mid-year.

Speak with a WBP Property Adviser about how we save you time and improve your chances of buying a property with the right fundamentals for growth. To find out more click here or contact us on 1300 302 581.

Disclaimer: © 2017 WBP Property Group (WBP). The WBP Market Wrap has been produced as a general guide and does not constitute advice. While it was produced in good faith and with due care, no representation is made for the accuracy of the whole or part of the document. WBP accepts no liability for damages suffered by any party resulting from their use of information in this presentation.

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