What’s Driving the Property Market?

By Peter Sarmas on 28 Aug 2016
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Melbourne Auction Results 28th of August 2016



Sold at Auction: 665    
Passed in: 175  


Sold Before: 104    
Sold After: 0    





Market Wrap August 28th, 2016

The number of auctions held over this weekend was substantially up on the previous week at 840, however this figure was down for the same time last year (1065) but comparable to last year’s clearance rate.

A clearance rate of 79 per cent was recorded this weekend compared to 74 per cent last weekend and 77 per cent this weekend last year. There were 840 auctions reported to the REIV, with 665 selling and 175 being passed in, 85 of those on a vendor bid. Brighton and Malvern East are performing strongly at present – both suburbs have a 91 per cent clearance rate from 19 sales in August.



Source: Shuttesrtock

What’s Driving the Property Market?

There’s no end in sight to the current strength of the property market in particular in Sydney and Melbourne.

Auction clearance rates over the weekend proved again to be strong, Sydney at a an 12 month high of 81% clearance rate and Melbourne 79% both on significantly higher volumes. 

Savvy investors with word of an imminent gloval market collapse have sold their family home and are sitting on the sidelines cashed up and in the hope of a once in a lifetime wealth creation. So far this collapse has not eventuated, so if there is a lesson in all this its never to speculate with property especially the family home in the hope of beating the market. 

So what’s causing this continued growth in house prices and how strong is the property market in Melbourne and Sydney? The Reserve Bank has reduced the cash rate by 0.5% this year in an attempt to lower the Australian dollar and spur on the economy after the mining boom. The end result however has been further growth in house prices in the two major cities.

Historically lower interest rates have fueled property prices. With interest rates falling at historically low levels more disposable cash is now made available to mortgage holders who may choose to upgrade their home or buy an investment property.

But it isn’t just interest rates driving prices at the moment. Recent data released shows the economic strength in the two major cities. For every 3 jobs created in Australia the past year, 2 have been in the cities of Melbourne and Sydney.

This should reinforce the importance of economic strength at a macro and micro level, in other words at a state and suburb level. It really highlights the importance between employment and the ability to service a loan and should be a careful consideration when buying your next investment property.

The third factor which has positively impacted property prices is lower stock levels. Cameron Kusher from Core Logic explains below the shortage dilemma.

“In Sydney, over the past four weeks there were 6,299 newly advertised and 18,951 total properties advertised for sale.  Year-on-year, new listings have now been lower than they were the previous year fairly consistently since last November and are currently -20.6% lower than they were a year ago.  Over the past four weeks there were 17,949 total listings in Sydney which was 0.8% higher than a year ago.  While total listings are slightly higher than a year ago, there is very little new stock being listed for sale.”

“It is a similar story in Melbourne where there were 7,177 new and 25,846 total residential properties listed for sale over the four weeks to 21 August 2016.  The number of new listings was -9.4% lower year-on-year and total listings were -0.8% lower. “

Looking forward, the strength of the property prices will very much be determined by stock levels in the short term. At the moment the Melbourne property market is being described as patchy. Quality listings are fairing well while the rest are struggling, often being passed in and subsequently negotiated or placed for private sale.

The strength of each market is very much stock level dependent and varies from one suburb to the next. Knowing the market and being able to have an insight into the supply levels gives us an idea as to what to expect over the next three months.

Street Advocate – 6 Highett Rd, Hampton

This weekend we were engaged to sell a property for our client Arnold who was the executor for his aunt’s estate. This process in itself brought with it a number of complexities and challenges, transparency was importnant in such a transaction.

After our initial meet and greet we proposed the best way to prepare the property for sale. Although much of the value lay in the size of land and location of the property being in Hampton and 910 sqm, it was important we presented the home in an attractive and safe way for buyer inspections. 


Sc:Buxton Sandringham

We chose three active agents in the area and over a period of a few hours interviewed them extensively, finally chosing the agent who was most experinced in property development. 

The main challenge for this property was to ensure we maximised the sale price for the beneficiaries without compromising the sale. Although the land was big in size and on a corner, the value of the property was very much dependent on whether two or three units could be built. As part of our due diligence process, I made a call to Bayside Council who confirmed a maximum of two units could be built on the site.

With this at hand we marketed the property but knew developers would be price conscious. We were hoping to find an emotional buyer who would purchase the site to live in one of the units, this would be our best buyer.

The vendor had set the reserve and waited for proceedings to begin. The auction began slowly with many savvy developers hoping for a bargain. A lady buyer showed her hand early and two developers bid up the property to $1.710 million. At this point  the property passed in and we went inside to start the negotiation.

One of underbidders was still outside hoping to be a part of the negotiation, so we used this to our advantage with the current bidder. After some toing and frowing we managed to push the buyer up. Our vendor and beneficiaries were happy with the result, the property selling for $1.80 million.


What our Clients Are Saying?

We found Peter Sarmas from Street Advocate took the hassle out of finding the right agent to sell our property and ensured a maximum result. By using Peter and his company we avoided the need to come up to speed on the most effective way to sell our property, as Peter has many years of experience to leverage on.

Not only did Peter find the best agent and negotiate a great commission rate for us, his fee was included in this negotiated fee! He kept up to date weekly with all the details, allowing us to focus on other things. We got a fantastic outcome, $130k above the reserve price. For us using Peter again would be a no-brainer.

Karl and Henty Punt, 118 Bridge St, Eltham

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.






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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