Across the September quarter, the real estate market delivered results that aligned with recent predictions made by a number of property sector experts.
Buyer confidence was bolstered by a consistent run of strong sales results, prompting sellers to re-enter the market throughout the September quarter. This saw an unseasonably high number of listings emerge, building slowly across the winter months and peaking in September, where the number of properties being put forward for auction increased by more than 15% month on month.
The uncharacteristic surge has steadily begun to offer potential buyers a greater selection, something that had not been witnessed recently, with much of 2023 characterised by heightened buyer interest and limited listing numbers. As anticipated, the wider range of options, and as such, decreased urgency, have led to a decline in auction clearance rates, which weakened marginally across each of the months in the September quarter.
For the second quarter in a row, the change to unit median prices outperformed those of houses, though this time, the change in results was more modest. Units saw a 1% increase in their median price, while houses experienced a slight 0.2% decline. For two of the three months, Melbourne’s unit clearance rates also outperformed those of houses. These results may well reflect factors such as affordability and borrowing capacity, but they could also suggest a level of caution, with buyers not wanting to over-extend.
With the last increase to the official cash rate made back in June, and NAB being the only one of the major banks still anticipating the possibility of a rate increase before the conclusion of 2023, this could serve as a motivating factor for potential buyers to consider borrowing larger amounts. Consequently, this shift in borrowing dynamics might result in houses outpacing units in performance in the upcoming months.
The cities of Knox, Maroondah and Whitehorse all showed consistent performance across the board this quarter, enjoying growth in both the median price of houses and units. Mitcham led the charge in Whitehorse with an increase of 5.5% to the median price of houses, whilst Blackburn recorded a staggering increase of 18.9% when looking at unit medians in the suburb.
PropTrack senior economist, Eleanor Creagh reported that in the past year, property values have risen about 4% in the inner East and 3% in the outer East, both areas with a high Noel Jones presence. These are strong results when compared to Melbourne’s overall growth of 0.07%. An article published in the Herald Sun by Emily Holgate supports this data, with suburbs including Forest Hill, Vermont South, Burwood East, and Box Hill South called out for the uptick in their median prices. Antony Bucello of National Property Buyers Victoria said he was unsurprised by these results. He believes that the love affair with the eastern suburbs will continue, with demand and price growth likely to extend to areas such as Ringwood, Ringwood East, and Heathmont.
The first two months of the quarter saw Melbourne’s rental vacancy rates remain steady. However, in September, they dropped to 0.9% overall. For the eighth consecutive quarter, rents have risen, marking the longest stretch of increases the city has ever seen. Rents for both houses and units are at a record high, resulting in Melbourne losing its status as the most affordable city in which to rent a property.
Counteracting this, however, is the news published by the REA, that by the end of 2025, Melbourne is set to get hundreds of renter-only houses, bolstering its standing as the nation’s build-to-rent capital. Resimax, a well-known developer, has assigned 500 new properties to be built across three of the company’s estates. This is in addition to the 200 homes they have already made available in a successful trial across the past 18 months. They will retain the titles to the homes, and offer them exclusively to renters, at a price below the current rental median. This is being touted as a national first. The strategy replaces traditional mum-and-dad investors, who have historically been the primary providers of rental properties in Victoria, with corporate or developer residential rental providers..