Guest The Pom Queen Posted July 28, 2013 Share Posted July 28, 2013 Melbourne's market is heading back in favour of sellers, according to latest property data. MELBOURNE'S home owners are in for a great Christmas gift, with the property market tipped to be back to peak values by then. A major bank and industry experts, buoyed by the current housing recovery, are even holding strong hopes of a new high in prices in the New Year. Latest property data, including the Commonwealth Bank-RP Data Home Buyers Index, suggests Melbourne's market is heading back in favour of sellers. Real Estate Institute of Victoria spokesman Robert Larocca said: "On the current trajectory, the market has recovered ... we are pretty much there now ... and if we see another quarter like we have just seen, Melbourne will be at a new peak very soon." The current median price of $512,000, for houses and units, needs to rise just 6.6 per cent to $545,800 to complete a full recovery, according to the latest research from RP Data. RP Data director Tim Lawless confirmed: "It's not going to happen in the next couple of months, but by the year's end we should see Melbourne moving through that mark and potentially going through it." Houses will need to gain $38,700 or 6.9 per cent on top of their current $561,000 median to reach a new peak value of $599,700. Units, currently at $446,000, are a more modest $21,854 or 4.9 per cent short of their peak. The Commonwealth Bank-RP Data Home Buyers Index notes a rise in the number of home loan applications compared with properties listed for sale, hinting there is less room for home buyers to negotiate on prices, particularly in outer Melbourne. Fringe suburbs like Epping, Cranbourne and Melton top the list, meaning those looking to buy in the more affordable areas of the market will struggle to succeed with lower offers as the demand rises. The improvement in selling conditions combined with interest rates remaining steady or being cut on August 6, and consumer confidence and the job market remaining reasonably steady, should deliver this extra Christmas present for homeowners. Mr Lawless says despite recent job cuts across Victoria, Melbourne's diverse economy will shelter the market from the workforce losses in manufacturing. "The labour force is going to be softening, but at least Melbourne doesn't have as much exposure to resources like Perth and Darwin," he said. Early signs indicate Melbourne will have had a 2.5 per cent growth in values over the month of July, Mr Lawless said. Monique Wakelin of Wakelin Property Advisory said: "A full market recovery by the end of the year wouldn't surprise me." However, she cautioned Melbourne was not yet in a seller's market. "We're more in a balanced market now," Ms Wakelin said. "In winter there's usually a shortage of supply and it could be construed that the lever is shifting (to sellers)." But Clive van Horen of the Commonwealth Bank said the historically low interest rates and increasingly competitive market would make spring interesting. "My advice for anyone looking to purchase a property over the coming months is to arm yourself with information," he said. "Do your research on prospective properties and trends in your target area." The most recent REIV figures are seasonally adjusted and take in a slightly narrower set of regions than the Commonwealth-RP Data figures. \ The calculated peak figures account for changes in inflation and the value of the dollar. For those looking to buy right now, there will be some 570 auctions this weekend. Read more: http://www.news.com.au/realestate/news/record-house-prices-are-on-the-way-back/story-fndba8uq-1226686589640#ixzz2aIj7MVs5 Link to comment Share on other sites More sharing options...
Lambethlad Posted July 28, 2013 Share Posted July 28, 2013 I hope that's right but who should we believe? Others predict recession and a property value crash. With so many people losing their jobs lately I would have thought there would be a drop in prices due to people having to sell their homes. Link to comment Share on other sites More sharing options...
flag of convenience Posted July 28, 2013 Share Posted July 28, 2013 Totally hope it is wrong as the source is hardly non partial. Immigration levels along with foreign investment will no doubt keep the market chugging along for now. Just how many more Australians are going to be locked into extreme personal debit due to the over valued housing market? At a time of increasing part time and casual employment the longer term prospects along with affordability issues must surely be concerning. Better investment channels than the housing market but a shame for those buying to nest. Link to comment Share on other sites More sharing options...
buzzy--bee Posted July 28, 2013 Share Posted July 28, 2013 Sydney is absolutely booming. Houses are being sold before they are listed. Melbourne is following, its already started. Its the low interest rates as much as anything doing this. BB Link to comment Share on other sites More sharing options...
wolvesaussie Posted July 28, 2013 Share Posted July 28, 2013 This ran on the front page, the headline was something like House Price Joy... how is it Joy when so many (including myself) cant afford to buy a house, over valued and the media seems desperate for some reason to try and get people feeling confident... there is no way im paying 500,000 for a crappy house... There is only one way it can realisticly go, and thats down... they are unaffordable as it is, people just cant afford to borrow more to allow any scope for further rises. My Mum is a home loans officer for a bank, and she says there are much less people taking out loans in the last 12months. Link to comment Share on other sites More sharing options...
AndrewRomford Posted July 28, 2013 Share Posted July 28, 2013 In my area of Melbourne, I am seeing properties not attracting bids at auction, but selling afterwards. To give you an example, a unit is on the market for 500K nearby. The one next to it sold for 350K. The owner of the 500K unit spent about 30K renovating and thinks he should get 120K premium. It is still for sale, and the agents are still trying to greedily get top dollar. The build quality here is shocking, but it is what it is. The real expense is in labour - over priced tradies, not on materials. How many houses built in the UK in the 1930's are still standing proud. Here, you'd be lucky to find something 20 -30 years old that doesn't need the wrecking ball. And I know a few people who have mansions and eye watering mortgages with job insecurity. So I am not convinced about house prices or the sustainability. Australia has one of the highest personal debt ratios in the world and feels like it is entering recession. There are real estate shops everywhere while stores are closing or moving, I'd say things aren't as rosy as the real estate spin doctors would have you believe, they talk it up for short term personal gain. This ran on the front page, the headline was something like House Price Joy... how is it Joy when so many (including myself) cant afford to buy a house, over valued and the media seems desperate for some reason to try and get people feeling confident... there is no way im paying 500,000 for a crappy house... There is only one way it can realisticly go, and thats down... they are unaffordable as it is, people just cant afford to borrow more to allow any scope for further rises. My Mum is a home loans officer for a bank, and she says there are much less people taking out loans in the last 12months. Link to comment Share on other sites More sharing options...
wolvesaussie Posted July 28, 2013 Share Posted July 28, 2013 I noticed the difference in reporting between the UK and Austraila, the UK seems to focus more on the plight of the first time buyer who cant get on the ladder as prices rise. Here in Aus the media celebrates high prices as some kind of miracle. It must be true what you say about housing. After being in the UK for years and coming back to Melbourne. Its amazing how many 1970's houses have been bulldozed and replaced in the last 5 years or so. You dont often get that in the UK with the exception of slum clearance in the really bad areas where people have moved out of an area and no one has wanted to replace them. Link to comment Share on other sites More sharing options...
AJ Posted July 28, 2013 Share Posted July 28, 2013 I noticed the difference in reporting between the UK and Austraila, the UK seems to focus more on the plight of the first time buyer who cant get on the ladder as prices rise. Here in Aus the media celebrates high prices as some kind of miracle. It must be true what you say about housing. After being in the UK for years and coming back to Melbourne. Its amazing how many 1970's houses have been bulldozed and replaced in the last 5 years or so. You dont often get that in the UK with the exception of slum clearance in the really bad areas where people have moved out of an area and no one has wanted to replace them. New houses here are overpriced crap! Maybe look nice but thats all. You should see the standard of finish, the one I am in is just over a year old, every door has cracks going from door to roof, cracks at the windows, coving falling down, the bathrooms smells as it was never sealed properly, you can see in the corners where they have sawn the plasterboard and just shoved the edges together, no insulation, I could go on............ Link to comment Share on other sites More sharing options...
buzzy--bee Posted July 28, 2013 Share Posted July 28, 2013 I don't think any property in any free capitalist market can be described as over-priced or over-valued, all property has an asking price which can be anything, but the sale price is only what someone is prepared to pay, so these prices are set by the buyers, not the sellers. New project homes are indeed not very well built, but they don't cost much either. A project home will cost between $600 - $1000 per square metre. A quality bespoke house will cost $1200 - $1500 + per square metre by a builder, about 20% less if owner built. You get what you pay for. BB Link to comment Share on other sites More sharing options...
AndrewRomford Posted July 29, 2013 Share Posted July 29, 2013 Perhaps in hindsight a lot of property owners will think they paid way too much if the market tanks. So is it fair to say we have 1. People who paid a high very premium who hope prices go up, up, and up so they feel better about how much they paid. 2. People who are unable to afford reasonable housing - being left behind - the people no one cares about because of self interest - as long as their 2 bob job is worth a fortune who cares about the rest... 3. Would be buyers who choose to wait with caution - perhaps for a major correction - return to affordable levels. Why would you pay 550K for a house with no garden, touching the walls of the house next door, with inferior quality and no surrounding infrastructure. We have jobs being lost, the world far from out of the GFC, high costs of living, a state and public sector way out of sync with the current affordability - requiring tax increases or cuts to services. I think when Australia avoided the big GFC, instead of saving and preparing for what is going to come, they all went out and got that new car, bigger house, holidays. Lets see whose got clothes on when the tide goes out... I don't think any property in any free capitalist market can be described as over-priced or over-valued, all property has an asking price which can be anything, but the sale price is only what someone is prepared to pay, so these prices are set by the buyers, not the sellers. New project homes are indeed not very well built, but they don't cost much either. A project home will cost between $600 - $1000 per square metre. A quality bespoke house will cost $1200 - $1500 + per square metre by a builder, about 20% less if owner built. You get what you pay for. BB Link to comment Share on other sites More sharing options...
newjez Posted July 29, 2013 Share Posted July 29, 2013 It is fair to say lower interest rates and higher rents have kick started the market. The only unknown is whether it will continue without further rate cuts. Link to comment Share on other sites More sharing options...
Lambethlad Posted July 29, 2013 Share Posted July 29, 2013 Rising house prices reflect people's growing optimism and confidence which has to be a good thing for Oz. There is plenty of affordable houses for the first home buyers. It's just young people aren't content to start off in a "renovators delight" like their parents did. They go to a display village and sign up for a McMansion and pay it off for the next 30 years. The older, cheaper housing is bought up by investors for the rental market. Link to comment Share on other sites More sharing options...
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