April Market Update
The first month of Q2 has started off strongly, with no new records set, but performances that have continued to be solid.
Houses are selling well at auction, and although Melbourne’s clearance rate for April of 69.9% is 4.4% lower than the result for March, it does reflect a level of consistency. The result is also the strongest April clearance rate since 2017.
Reflecting well on the corridor that many of the Noel Jones offices operate in, was a clearance rate of 78.8% for the month. This result, which was recorded for the Outer East, was only surpassed by the Mornington Peninsula who recorded a result of 82.5%. The next highest result was 71.7%, achieved in Melbourne’s North East region. And once again, for the fifth month straight, Noel Jones offices are able to boast a 100% clearance rate at their auctions.
There was a decline in the volume of houses that went to auction across Melbourne for the month, however, this is expected in the period that Easter falls, and was also potentially impacted by the inclusion of Anzac Day which also fell across a weekend. In saying that, it was still the largest volume of April auctions scheduled since 2018.
High end properties recorded larger declines during earlier downturns, however, they are now leading the gains that are being seen, with the most expensive quarter of homes in the country at the forefront of the growth phase, jumping 8.8% in value across the past few months. This is over double the rise for the bottom quarter which was recorded as 4.1%. The lean towards high end properties is also supported by data published by REA recently. Over the past year, property searches that have used a price filter have shown a noteworthy shift towards higher priced properties. In February 2020, 36.8% of searches had the top end of their price bracket above $1 million, comparative to February 2021 data which showed a rise to 40.8%. Record low interest rates, and the sentiment that these will not go up for some time – many economists tipping it will be 2025 before we see this – is allowing borrowers and investors the confidence to borrow more. This, along with low stock levels, is one of the factors driving the results that we are seeing, many of which are far above expected sales prices.
Michael Hill from Noel Jones Wantirna uses 18 Marie Street, Boronia, which was sold in mid-April, as an example of this. He says ‘The buyer of this property came through our first Saturday open and then re-inspected on the Thursday. He offered an unconditional sale, $100,000 above the price we had quoted, with a settlement of the seller’s choice. We knew the property we were selling was premium in the area, but the result, which was a record for the “Bowling Green Estate”, surprised even us. Needless to say, the buyer was thrilled with the result!’
Melbourne has also seen the difference between house and unit clearance rates increase further. It’s the ninth month in a row that house clearance rates have outperformed units, which is unsurprising based on people looking for lower density options, as well as more space and greater lifestyle options since COVID-19 hit our shores.
CoreLogic stated in their Hedonic Home Value Index for May that they are expecting housing values to continue to rise throughout 2021 and into 2022, albeit at a gradually slower pace. This was what we saw in April, but will this be true of the upcoming winter market? For further information contact your local Noel Jones expert today.