Market Update August 2023

The final month of winter offered few surprises across Melbourne’s real estate market, with results against key performance indicators remaining stable when compared to those achieved in July.  

The consistency of the market appears to have enticed a number of sellers to move forward with their plans after initially holding back and watching how the market progressed. This has led to unseasonably high listings building slowly across the winter months and peaking in August. 

This has helped to boost supply, and it is expected that this trend will now continue across the Spring selling season and the warmer months ahead. However, it will be interesting to observe how the market responds to this change in volumes.  

The increase in choice and reduced urgency can be an advantage for buyers; however, it has the potential to lead to a decrease in auction clearance rates and longer selling times for vendors. This scenario could be mitigated if we simultaneously witness a corresponding increase in buyer demand to match the higher advertised supply levels; a distinct possibility now that interest rates have remained unchanged for a third consecutive month.  

Of the four major banks, three are projecting that the current rate marks the highest point, while only NAB anticipates the possibility of one more rate increase before the conclusion of 2023. (https://www.ratecity.com.au/home-loans/mortgage-news/when-will-interest-rates-fall-again) 

Melbourne’s rental market reflects the same level of consistency seen in the sales space, with the vacancy rate remaining steady at 1.0% for the third consecutive month. This suggests that conditions are stabilising for tenants. 

Recent CoreLogic data indicates an increase in properties listed for sale by investors, particularly in Melbourne and Sydney, despite above-average rental growth and consistently low rental vacancy rates. This can be attributed to factors including increased mortgage repayments, tighter regulations, and a new land tax by the Victorian state government.  

Tim Lawless, CoreLogic’s research director points out that in these regions, the increase in mortgage repayments has often been more than double the rise in rental income. The combination of factors has led many mum and dad investors and retirees to the conclusion that ‘owning an investment property is no longer worth the expense and hassle’. On a positive note, the onsell of these properties does provide excellent opportunities for potential investors, first-home buyers and downsizers who have been struggling to find new properties. 

If you’re considering buying or selling, there’s no time like the present. Call your local Noel Jones office or contact us via noeljones.com.au.

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