Market Wrap – Surge in First Home Buyer Activity

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Victoria is seeing a surge in first home buyer activity, with the latest ABS figures showing the state is leading the charge when it comes to lending approvals.

The number of loans granted to Victorian first-timers was up 5.7 percent in the first nine months of 2015 compared to the same period last year – substantially greater than Queensland which only grew two percent, and the other states where loans dropped.

This increase is largely due to the availability of affordable land in the city’s fringe areas where there is now improved infrastructure and public transport. For instance, house and land packages in estates in the outer rings have gone gangbusters. Our Melton and Caroline Springs offices have seen a substantial increase in young buyers seeking land this year too.

Low interest rates and the directives from APRA have also played a hand. With investor lending tightening and less competition for apartments and family homes, first home buyers now have a foothold in both the inner city and outer suburban markets. Lower interest rates for owner-occupiers also means it’s more affordable for youngsters to buy rather than to rent.

Looking into 2016, with interest rates remaining low and the market moderating, the signs are positive for those wishing to purchase their first home.

Market Wrap – Family Homes

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A new report from the Australian Population Institute suggests that the supply of family homes in middle Melbourne is dwindling, as a result of the baby boomer generation choosing to stay in their homes instead of downsizing. The data found that almost 60 percent of freestanding houses in Melbourne’s middle suburbs are occupied by Australians over the age of 50 who are unlikely to move until they are 75 or older.

The report also stated that this meant there is currently inadequate housing for young families after large homes in the middle ring areas. However, hockingstuart’s own data shows a somewhat different trend – this weekend, almost 50 percent of our homes going under the hammer are in the middle circle and have at least two bedrooms.

There’s also plenty of housing options for families just outside the middle suburbs. For instance, our Melton and Ringwood offices are booming, simply because the quality of infrastructure, transport and schooling have improved in these areas, and there’s plenty of large houses with yards available. On the flip side, some families are also embracing apartment living and are forgoing the backyard for an inner-city lifestyle, where parks and facilities are within walking distance.

Remember, there is not a ‘one size fits all’ approach to housing families. Each Australian household is unique and is drawn to the living options that best meet their needs.

Market Wrap – Grand Final Weekend

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Grand Final weekend is traditionally a time when the Melbourne Auction market takes a short pause amidst the hectic spring selling season, and this year was no exception.

But the long weekend wasn’t a break for all. With the warmer weather upon us, the holiday rental market comes alive, especially in popular getaway locations like Torquay, Rye and Daylesford.

In fact, our Daylesford office geared up for an exciting Rugby Sevens completion, Seven’s in The Springs, took place over the long weekend. With gay inclusive teams from all over the globe participating, plus a series of special events organised in the spa town, the region will have been bustling with spectators, teams and holidaymakers.

The thrilling part about visiting Daylesford (apart from the spas, foodie hot spots and views of the Great Dividing Range) is the exquisite Victorian-style cottages that are abundant in the old gold-mining town. One of the oldest regions in Victoria, we highly recommend renting out one of these cottages from the 1800s era – it makes the whole experience far more authentic.

Market Wrap – Melbourne’s Street Paved with Gold

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Melbourne’s streets seem to be paved with gold, with almost half a billion dollars of luxury real estate sold in the past financial year.

Our Network witnessed an increase in the number of prestige homes hitting the market this September, with over 80 $1 million plus properties listed – a 10% increase on the same time last year.

The rise can be attributed to vendors taking advantage of the booming market by cashing in on their trophy homes.

But prestige abodes aren’t just snapped up for their luxury architecture or features – the suburb, street and even cachet of the vendor’s name comes into play too.

For instance, Kooyong Road and St Georges Road in Toorak are considered amongst the finest real estate locations in Melbourne as is the Esplanade in Brighton and Monomeath Ave in Canterbury. These streets are also all home to some of Melbourne’s most elite.

If you are looking for a trophy home, there is a good range of stock to choose from. For prestige home owners, if you are considering downsizing, now could be the time to make your move.

Market Wrap – Melbourne Named The Most Liveable City For The Fifth Year Running

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Melbourne has been named the ‘Most Liveable City’ for the fifth year in a row by The Economist – and it’s not hard to see why. Thanks to the city’s interconnected public transport system, beautiful parklands, abundance of cafes, restaurants, music and sporting events, plus the array of top notch education facilities, Melbournians aren’t left wanting.

These factors are also drivers behind our property market’s exceptional performance in recent times. With clearance rates averaging 80 percent and annual growth above ten percent, it’s evident that many would like to make Melbourne home.

Recent Domain data also revealed the most sought after suburbs in Melbourne – unsurprisingly, Melbourne’s CBD topped the list followed by South Yarra, Richmond, St Kilda, Brunswick and Hawthorn. These inner city hot spots also boast some of our city’s most loved cafes, restaurants and shopping strips.

It’s clear that Melbourne is onto a winning formula of education, employment, transport and leisure activities. And this means demand for property in our city is unlikely to wane in the future. If you’re waiting for the market to fall before purchasing your dream home, you might be waiting a long time. Remember that market conditions are friendly for buyers, with interest rates low and banks favouring owner-occupiers over investors. If you’re ready to buy, why wait?

Market Wrap – First Home Buyers

First home buyers are entering the market with a vengeance, with ABS data revealing the number of first home buyer loans has increased by 13 percent over the 14-15 financial year, despite house prices rising.

Young buyers in Victoria are borrowing on average $338,300 – almost a record – off the back of the slate of interest rate cuts earlier this year. These property first timers are adopting a range of strategies to break into the market. Some are living with parents to save for a deposit, or even asking mum and dad to help with financing their loan.

Then there’s the trend of ‘renvestors’ – youngsters purchasing investment properties in more affordable suburbs but renting in the inner-city close to lifestyle amenities and work. The goal here is to use the appreciation from the investment property as equity when purchasing their ideal home down the track. This strategy isn’t without its pitfalls though.

Young investors aren’t eligible for the first home buyer’s grant or the related stamp duty concessions. Recent APRA changes to investor loans could also mean mortgage approvals for younger buyers will become tougher as those with larger borrowing requirements are often the first to be screened out.

Remember, everyone has their own strategy to get into the property market. But always consider the advantages and risks of the course you take, and how they affect your financial and personal needs before making the jump.

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Market Wrap – Prestige Real Estate

Australia’s multi-million dollar properties are thriving, according to a recent prestige real estate sales index. The index, which tracks the luxury property market’s price movements in 35 cities worldwide, ranked Sydney and Melbourne as third and seventh respectively when it comes to the price growth of the cities’ crème de la crème of real estate.

While Vancouver and Miami toped the ranking, the Asia Pacific market has surged tremendously. Cities in this region now make up seven of the top ten places – Australia scoring the highest annual increase in luxury property values. According to the index researchers, demand is coming from expats looking to return home and overseas investors capitalising on the low Australian dollar to purchase an Aussie trophy home.

Australia’s position highlights how our nation’s prestige market is primed for the world’s wealthiest. In Sydney, it’s the harbour views, beaches and cosmopolitan lifestyle which draws buyers. Whilst in Melbourne, it’s the best education and universities as well as the high calibre of global sports attractions.

While the higher echelons of Melbourne real estate is not within everyone’s reach, this demand reminds us that our country certainly has a lot to offer when it comes to the good life.

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Market Wrap – Stamp Duty

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One of the country’s leading think tanks, the Grattan Institute, has proposed the introduction of an annual property tax to replace current Stamp Duty levies on home-buyers. According to the institute, the proposed tax would help raise $7 billion a year for state governments to support the health and education sectors – plus boost the economy by $9 billion in GDP.

Under these recommendations, home owners would be charged $1 to $2 for every $1,000 of their land value, which equates to $560 a year for a median-priced house in Melbourne. These annual charges would mean lump sum stamp duty payments home-buyers have to fork out at settlement would be abolished. In Victoria, the average Stamp Duty is approximately $21,000, which can be an extra hurdle for buyers – often restricting their purchasing potential or discouraging them from moving house.

However, some commentators have pointed out that the proposed tax would have to be set higher than the current suggested rate to raise enough money to replace lost Stamp Duty revenues, with existing revenues currently contributing about $16 billion a year to state coffers. Whilst the proposal has stirred debate across the board, it’s still early days. If you’re looking to buy, don’t let this affect your current buying decisions as the government is yet to comment on its viability – and a change this big, should it occur, will take time to come into effect.

Market Wrap – Property Pundits Deliberate

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For the majority of 2015, property pundits have deliberated on significant house price growth across Australia, even throwing around speculations of a ‘property bubble’. And yet, new data confirms that owning a home now is still more attractive than renting. In fact, house prices are 30 percent undervalued.

The research conducted by a Reserve Bank senior research manager concluded that owning a house right now costs 30 percent less than renting, the widest gap in 30 years. Only a year ago, when real estate values were somewhat less, the same research indicated the cost of buying was about the same as the cost of renting.

What’s changed since then and now is partly the result of record interest rate cuts which have seen mortgage rates hover at around 4.6 percent and a change in bond yields, which should see the cash rate remain low for another decade.

However, while most Australians aspire to own a home, not everyone is in a position to buy – especially amongst the current economic climate. Renting is also a good option for those who are house sharing or in transit and planning their next move. Regardless, it cannot be disputed that owning a property provides better value long term – not just in terms of weekly payments but also because home-ownership can lead to gains via capital growth.

Market Wrap – Vintage Year for Victorian Real Estate

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The financial year has come to an end, and it’s been a vintage year for the Victorian real estate market. CoreLogic RP Data revealed that over the 2014-2015 financial year, home values in Australia’s capital cities rose by 9.8 percent. In June alone, Melbourne was the strongest performer, with values rising by 2.9 percent.

Additionally, the Valuer-General’s annual report on Victorian house prices highlighted that property sales jumped by 12 percent in 2014. Low interest rates and high stock numbers no doubt played a hand.

The question remains, how will these factors influence our property market over the next twelve months? Economists suggest that while house prices will continue to rise, growth will be moderate – with punters predicting Melbourne prices to increase five per cent over the next financial year. Those looking to sell will need to act quick to ride the wave of the property boom, especially in the lead up to Spring, traditionally the real estate market’s hottest selling season.

For home-hunters, there’s light at the end of the tunnel. As property prices steady over the next 12 months, capitalise on record low interest rates and keep your dream home in sight. The bets are also on for how much longer we’ll be enjoying the luxuries of a low interest rate environment.