Demand peaks in June, despite interest hike
Over June’s first two weekends the Real Estate Industry of Victoria (REIV) recorded more than 910 auctions. 632 properties sold, 481 at auction, with 156 passed in. 150 properties were sold before auction with 1 property selling after auction. The clearance rate averaged 81% sharply up on May’s 78.5%.
Properties are in such short supply that clearance rates ran above 80% on winter’s first two weekends. Sellers’ expectations are creeping up too, following some signs of home value recovery, which have been showing up in the first half of 2023.
Cash rate goes up to 4.1%
This rising market will be dampened though given the Reserve Bank put the cash rate up on June 7 by 25 points, to 4.1%, the latest of 12 rate hikes since April 2022.
The real cost of Covid to homeowners
According to property analysts CoreLogic, after the rises and dips of the last three years Melbourne house values are now virtually back to where they were in 2020 at the start of Covid. In the meantime all other State capitals have enjoyed double digit value rises – for example Sydney up by 16.5% and Adelaide up by 42.5% over this same period.
Melbourne’s wooden-spoon performance is attributable to the roll-on effect of unnecessarily long and extreme lockdowns. The deep and ongoing damage has cost Melbourne homeowners a small fortune.
CorLogic does note an upside – Melbourne presents good value now if you are an outsider buying in!
Unit values going up
Unit values are recovering, as rents keep rising. Across Australia’s capital cities the median unit rent is now only $39 cheaper than the median house rent. A year ago unit rents were $64 a week cheaper than house rents.
As inflation keeps biting and interest rates rise, the better affordability of units is attracting attention from all corners – units make more sense than houses for entry-level home buyers and investors are attracted by improved returns.
The new State tax on investment properties will produce more rent rises for both house and units as landlords and investors factor in the extra cost and share it with tenants.
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