Is Australian Housing Heading for a Hard Landing or a Financial Cliff?

By Peter Sarmas on 16 Oct 2017
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Melbourne Auction Results 16th of October2017

75%
Clearance
Rate

877
Reported
Auctions

Sold at Auction: 567    
Passed in: 215  

 

Sold Before: 95    
Sold After: 0    
Postponed 13  

 

 

Source:REIV

 

Melbourne Market Wrap March 16th October, 2017

The REIV reported 877 properties auctioned this weekend versus 962 last week and 1058 for the same time last year. The clearance rate was 75% which is in-line with last week’s result of 74% and slightly less than the 77% recorded last year for the same time.

Melbourne’s auction clearance rates have been steady in the past month and showing no signs of this market strength slowing down, however the number of bidders at some properties is thinning and more properties are being sold prior to auction or negotiated after the auction. We are still seeing “run away” auctions.

In our advocacy work last week we managed to secure the sale of a property in Wattle Glen for our client Liz.

Under competition we achieved an excellent result for our client with a long settlement so she can move to the next phase and build her dream home.

Many thanks to Liz and her sister Kathy for the referal!

 

Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606

 

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Source: PIXABAY

Is Australian Housing Heading for a Hard Landing or a Financial Cliff?

So far the Melbourne property market has managed to survive another week of speculative news with clearance rates hovering in the seventy percentile. Depending on whose figures you believe – the REIV at 75% from 877 auctions or Domain Fairfax at 72%.

These numbers really highlight the strength and even more, the stability of Melbourne’s property market, this on the back of significant increases in stock levels over the past month.

From my experience and talking with real estate agents the Melbourne market has softened no doubt, but as I have said previously there have also been a number of runaway auctions/results.

Unfortunately the same cannot be said for the Sydney property market which seen clearance rates dramatically fall from 80 plus percent to now being in the 60’s.

What I am not hearing from property commentators though is the high proportion of investor buyers (approx. 50 per cent) in Sydney prior to the new lending regulations. This explains why there has been such an impact on this market.

To remove any further risk to our economy the government through the Australian Prudential Regulatory Authority has placed enormous pressure on indebted investors using interest only loans, this could bring some 1.9 investment properties under selling pressure according to Citi.

However data also shows that property investors with multiple properties have a lower Loan to Value Ratio’s and have portfolio’s focussed on strong cash flows.

As a result of limiting the number of interest only loans, the Melbourne, Sydney and Brisbane property markets have no doubt cooled, but there is no need for alarm just yet.

The Reserve Bank has also outlined concerns at the significant rise of investors aged over 60 as well as evidence showing investors who already owned multiple investment properties outpacing investment in a single property.

In its forecasts the NAB has revised down house price growth across the country from 4.3 per cent to 3.4 per cent. Sydney is expected to slow to 5.1 per cent this year and 3.7 per cent in 2018, while Melbourne could see an 8.6 per cent rise this year and 5.5 per cent rise in 2019. These figures they are not exactly catastrophic.

In my view, what is worrying is the ballooning size of deposit needed for First Home Buyers to enter the market which for Melbourne stands at a median house price of $822,000 (2017 June Qtr). This means not much change from $164,000 for a 20 per cent deposit plus stamp duty, WOW!

With rental vacancy rates in Melbourne already at low levels and investment stock become limited due to APRA’s crackdown we are close to seeing this segment of the market completely locked out, perhaps for good! The only saving grace here is that some FHB will get a helping hand from their “equity rich” parents but not everyone will be so lucky!

 

Thinking of buying or selling a home?

Visit our Street Advocate website or send an enquiry below or just call

Peter Sarmas on 0418 740 606.

 

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About the Author

Peter Sarmas is a Certified Property Investment Advisor (PIAA) and Vendor/Buyer Advocate. Before becoming the founder of Street News, Peter completed a Degree in Applied Science (Chemistry) and a Graduate Diploma in Property Valuations (Hons). Peter believes property investing is a major and potentially risky undertaking. In his view, everyone should have an independent person acting on their behalf when seeking property investment advice.

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