Property Report - March 2019
BUSINESS BACK TO NORMAL
It is a relief that the market has returned to normal. Campaign lengths have settled to 45-90 days, with some properties still selling in less time.
The best way to gain perspective on a new and somewhat uncertain year is to look back and compare to previous years. Currently we have more buyers and more stock than this time last year. January has seen 3 times more properties sold than January of last year.
Currently the median sale price is $559,000 in Kinglake and $663,000 in Kinglake West. These are above the Regional Victoria median of $411,000 and not far off the Metropolitan Melbourne median of $826,000. Kinglake West, for example, has seen an annual price growth of 14.2%. This trounces Melbourne’s growth rate of a mere 1.4%. All of this data has been gathered from the Real Estate Institute of Victoria’s market insights.
The REIV also acknowledged that while the December quarter “saw a drop in Metropolitan Melbourne’s median house price of 3.7 per cent to $796,500… Regional Victoria’s went up by 2.5 per cent”.
“Regional Victoria’s property market was the star performer in the 2018 calendar year, with a 5.5% annual increase in the median house price… and annual increases of more than 20 per cent in the top five towns.” (December Quarter 2018 Report).
The trends for 2018 saw a slow climb to steady growth between the months of February – June. July and August were busy months, despite the weather, and it was only in September and October that our local regional market experienced a slump. This was 12 months after sources agree the market experienced broad deflation in October 2017. This slump of 2018 did not last into November, with the second last month of the year recording the highest sales results in 11 years.
It is difficult to predict what trends lay ahead as we enter into March and property transactions get into full swing. One thing is for sure, now that the results of the Royal Commission have been released, and buyers have become more comfortable with the increased diligence of lending institutions, buyer confidence is set to increase.
This may be surprising to some readers. In a recent interview with ABC, AMP Capital’s chief economist Shane Oliver attributed 2018’s price correction to the following reasons: tighter lending conditions, low affordability, over supply, reduced foreign demand, limited interest-only loans, fear of changes to negative gearing, and the transition of a fear of missing out among investors to a fear of not getting out.
A couple of these issues, such as the fears surrounding changes to negative gearing, will be clarified at the federal election and can only be speculated until after May. With respect to misgivings surrounding the Royal Commission, it is evident that treasurer Josh Frydenburg is intent on restoring a free flow of credit in the Australian economy. This is very important. Whether Frydenburg will be successful, or be around to accomplish this is another matter, but the fact is that credit is key.
Other reasons for the “price correction” don’t apply. For example, reduced foreign demand is not really a concern for a region such as ours, where the market has never been propped up by a section of foreign investment. If we evaluate some of statistics, we see that discussions about over supply in the marketplace have been blown out of proportion. For example, the ABC recently referenced a CoreLogic report that sale times for houses had increased from 37 to 44 days. This is so minuscule its laughable.
When you look closer, you see how important it is to evaluate local causes and effects, rather than apply broad and often irrelevant factors. Furthermore, be wary of uninformed media reporting. A verified source, such as the REIV, will give more accurate readings of market movement than second hand reports by the ABC.
Being on the ground gives us the benefit of seeing exactly how many properties are selling and in what timeframes, and this information allows us to make an acute assessment of current conditions. In the Kinglake Ranges, properties have now become stratified, which means that each section of the market is performing differently to one another. To determine which campaign will suit your property the best, wherever it sits in the marketplace, contact the agent with their finger on the pulse, at 5786 2033.