Market Update May 2023

The property market sustained its growth momentum in May, as a significant number of prospective buyers actively pursued new homes, resulting in a positive surge in property acquisitions.

Despite limited listings, the demand for properties continues to thrive. The scarcity of available homes on the market is leading to price escalation, presenting a favourable opportunity for sellers during the winter season. With a persistently tight market, numerous buyers are exhibiting confidence by securing properties before auctions; they are also displaying robust bidding when homes do go under the hammer. This has led to improved prices at Melbourne auctions for both houses and units, with the difference in clearance rates between the two negligible. Furthermore, there is a notable decrease in vendors withdrawing their properties from sale, indicating a commitment to capitalise on the current low stock levels and sell their homes once listed.

Although in May, the national vacancy rate increased for the first time since December 2022, Melbourne’s rental market remained stable at 0.9%.  Whilst conditions do not appear to be worsening for prospective renters, there continues to be an imbalance between availability and consumer demand. Melbourne witnessed the greatest annual fall in rental listings of the capitals, down 46.7% annually and at an all-time low for May. Competition for rental properties in the outer Eastern suburbs remains strong, with three municipalities (Knox, Maroondah and the Yarra Ranges) featuring amongst the top five city areas with the lowest vacancy rates.

The popularity of this region is further supported by the auction clearance rate of 77.3% recorded in May, only being surpassed by the Inner East who cleared 79.9% of their properties. These both exceeded Melbourne’s result of 70.2%, supporting both continued buyer confidence and the liveability of the suburbs that Noel Jones predominantly operate in.

In May, both the Federal and State governments recognised the urgent and critical nature of the housing supply and affordability crisis. The federal budget projected that approximately 1.5 million individuals would migrate to Australia over the next five years, further exacerbating the situation. In response to these challenges, the Victorian State budget has proposed changes to the land tax system starting in January 2024, aiming to generate an additional $1.15 billion from property owners with multiple properties while exempting family homes.

As investors adapt to this new landscape, there is growing anticipation surrounding the outcome of the Victorian parliamentary inquiry into stamp duty. Taking cues from a similar review conducted in NSW, certain homebuyers were granted the option to pay an annual land tax instead of the traditional upfront stamp duty. This alternative approach may help alleviate some concerns among investors in Victoria regarding the recent adjustments to the land tax system.

Contact your local Noel Jones office or connect with us via noeljones.com.au if you’d like to discuss any aspect of your buying, selling or renting; we’ll be more than happy to help.

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