In November, Melbourne’s property market demonstrated a state of equilibrium, showing results that were reasonably consistent when compared to the outcomes observed in October.
The number of properties brought to market in November declined slightly; however, after listing numbers reached an 18-month high in October, buyers have not been left with a shortage to choose from as we head out of spring and into summer.
Again, unit clearance rates outperformed those of houses, a trend seen for 5 of the past 6 months. With borrowing capacity reduced and buyers wary of over-extending themselves in case of further interest rate rises, this is not surprising.
Melbourne’s rental vacancy rate eased slightly in November, returning to 1.0. Any relief on prospective tenants is expected to be short-lived, though, with the rental changeover period – the time when the bulk of leases expire – just around the corner. This has potential to place further pressure on the rental sector if vacated properties are not re-offered for lease.
After a widely anticipated rise in November, interest rates were held steady in the lead-up to Christmas and the holiday season; a welcome relief for homeowners, with the RBA not scheduled to meet again until February. It’s also worth noting that 2024 the RBA will move to a new schedule, seeing them meet 8 times a year rather than 11, with the first month of each new quarter being meeting-free.
Buyers and sellers are now looking ahead to 2024, wondering what might be in store. Nicola Powell, the Domain Chief of Research and Economics believes interest rates will remain high into the second half of the year. She suggests a cut would likely spur housing activity, creating another price upswing.
What does this mean if you’re wanting to purchase a home in the next 12-months? While a lower interest rate always looks appealing, this will likely drive competition for properties, in turn pushing up prices. You’ll then need to take out a larger mortgage, meaning higher repayments, negating savings from a lower interest rate.