The month of May saw us witness a slight adjustment in property prices after a significant and prolonged period of growth, the third-fastest in Australia’s history.
Whilst those currently transacting in the market are seen to be operating with a little more caution, there are still a large number of buyers looking to purchase both homes to live in, and investments to help bolster the flourishing rental market. This will see prices hold strong in the future, with current housing values 9.8% higher when compared with pre-COVID levels.
Pleasingly, the inner and outer East both outperformed the average auction clearance rate for May, with the best results of any of Melbourne’s regions; this continues to reflect buyer faith in Noel Jones’ core suburbs and surrounds. The number of auctions this month was 22.5% above those seen in May across the past five years; however, the number of homes coming onto the market is starting to slowly reduce.
Noel Jones Director explains that, “Quality family homes are still in high demand, and these are outselling other property types. The shortage of these properties sees them continue to sell quickly, with shorter days on market and minimal discounting. This is allowing us to deliver fantastic results for these vendors”.
By comparison, the overall days on market figure has increased slightly across Melbourne, providing buyers more time to consider their purchases. This is in contrast to the state of the market we witnessed in the depths of COVID, where buyers were making quicker decisions due to lower stock levels.
Properties requiring significant renovation or those with development potential have eased slightly due to reported shortages of some building materials and, subsequently, increased costs. This is good news for buyers that have an interest in these properties, as it may present an opportunity to negotiate a good deal whilst having a wider number of properties to choose from.
Melbourne’s rental market saw another improvement across May, now reflecting a 2% improvement year on year. The continued resurgence of Melbourne’s rental market is excellent news for anyone who is considering the purchase of an investment property in the coming months.
The continuation of international students and migrants arriving back in Melbourne should see the demand for rentals increase even further, which is excellent news for current and future landlords.
With a vacancy rate of just 1.6% and stock levels currently sitting at a lower level than March 2020, the availability of additional properties will be welcomed by those seeking rental accommodation.
Interest rates continue to be monitored by Melbourne homeowners and those looking to enter the property market. On 7th June, the Reserve Bank increased rates for the second consecutive month, lifting them by 0.5%; this is the biggest increase since the year 2000. As we are coming off an all-time low base, the most recent rate rise should contribute to further market stabilisation rather than a downturn in prices.
If you have questions regarding current market conditions or would like to discuss the next steps of your property journey, we would love to be of assistance. Call your local Noel Jones office and see how we can help.