Local Market Update - June 2017
Boom or bust? It’s a rare day that there isn't a headline about the current market.
May figures heralded what some saw as the beginning of the end: the first signs of softening demand. Melbourne house values dropped 1.7% in May and apartments 3.8%.
Is it the beginning of the end?
May can be an odd month in the property market; autumn selling is mostly over and the winter market hasn’t yet begun. It’s unlikely we have entered a major downturn in the property market, but it’s quite possible we may have in the case of apartments, where supply continues to grow. Houses on the other hand are still under-supplied.
Certainly, auction clearance rates have slowly declined over the past few weeks but I would suggest this is a temporary loss of momentum rather than the start of a major correction. Whilst potential growth is likely to be further calmed with a curb on lending to investors, government policy deterring foreign buyers and less lending for interest only loans, we are a long, long way from a bubble burst. For this to happen and by ‘this’ I mean a fall of >20%, we would need much higher interest rates or much higher unemployment, and at this stage, neither of those things are likely.
Rates and jobs seem to be in check for now. In the previous downturns of 2008-09 and 2011-12, the RBA raised interest rates across multiple periods for several years, dragging down Melbourne house prices. However in our current market there is no expectation of an interest rate rise anytime soon, in fact, NAB has forecast no change until mid-2019.
Employment too, is stable in Victoria and roughly on track to record moderate growth.
Another fundamental Melbourne has in its favour is that the population in Greater Melbourne grew at an extraordinary rate of 2.4% last year and is showing no sign of abating.
In a nutshell, Melbourne is likely to experience continued, albeit slower, growth for the remainder of the year however most of the growth is likely to be in the outer and western suburbs where the removal of stamp duty for first-home buyers from July 1 will continue to drive these relatively affordable markets.
For us locally, our market does tend to see a drop-off over winter but well-regarded school zones continue to be major drivers of growth in the inner east and Bayside which augers well for spring!
There were only 15 sales in Beaumaris for June – down slightly from 19 in May. There are 30 properties currently on the market – a slight increase on 26 last month. There were only 12 sales in Black Rock for June only up slightly from 13 over May. There are 12 properties currently on the market way down on the 22 of last month.
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