We are already approaching the end of the first quarter of the year and with it comes some interesting and positive market developments.
House Sales Numbers & House Prices
Residential price growth is predicted to jump as high as 8% in Melbourne after record low interest rates, as reported by Domain. This is 10% above the recent peak reached in December 2017 and more than double the growth rate predicted in June last year. Domain economist, Mr Trent Wiltshire, said rate cuts and expectations of prolonged low interest rate environment have triggered the sharp rebound across most capitals. "I think it has really sunk in for borrowers that low rates are here to stay and this has given them confidence to borrow again" he said. .
“I think it has really sunk in for borrowers that low rates are here to stay and this has given them confidence to borrow again”
Trent Wiltshire, Domain Economist
Melbourne’s auction clearance rate jumped to 78% in the last week of February which is a significant increase to the 57% at the same time last year, which evidences the strengthening housing market.
Property Investment - a Positive Step Forward
The overall housing market continues improve, with data showing that investors are also making a comeback within the market. The market has reacted positively since the last May federal election results, with investors pleased that tax benefits for investment properties remained unchanged. According to the ABS, Victorian investors borrowed $1.67 billion from the banks in December 2019, almost $300.7 million more than in May 2019. In addition to the above, record low interest rates and changes to lending rules from the banks have also helped Melbourne’s property market values continue to grow. The median house price in Melbourne has soared to $901,951 in the December 2019 quarter.
Monetary Policy Decision
The RBA Board decided to lower the cash rate by 25 basis points to 0.50%. There are further signs of a pick-up in housing market, with prices rising in most markets, in some cases quite strongly. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.
Hermitage Homes won HIA’s 2019 Most Professional Builder award in our category, which is a great testament to all our staff’s hard work and their commitment to great customer service and quality. I would like to thank every staff member at Hermitage Homes for this massive achievement.
The HIA (Housing Industry Association) awards are one of the most prestigious awards within the business. The award program provides home builders the opportunity to be recognised and showcase their work to the broader industry. We, at Hermitage Homes, are very proud of receiving the award.
- AUSTRALIAN FIANCIAL REVIEW – “Sydney house prices to surge by 10pc” [online] – Nila Sweeney 12/02/20 - https://www.afr.com/property/residential/sydney-house-prices-to-surge-by-10pc-20200211-p53zo7
- REIV – Website[online] – Viewed 02/03/20 - https://reiv.com.au/market-insights
- DOMAIN – “Property investors return to Melbourne market – but they’re discerning” [online] – Melissa Heagney 22/02/2020 - https://www.domain.com.au/news/property-investors-return-to-melbourne-market-but-theyre-discerning-932169/
- RESERVE BANK OF AUSTRALIA – “Statement by Philip Lowe, Governor: Monetary Policy Decision” [online]- Media Release 03/02/20 - https://www.rba.gov.au/media-releases/2020/mr-20-06.html