At the start of 2019, the property market appeared fairly bleak. The Royal Commission’s findings in the banking sector were handed down, instantly creating further ‘doom and gloom’. A tightening of bank lending followed which impacted the broader business and property markets.

We found that any plans relating to property were placed on hold, with confidence plunging even further with continual updates from the media. There were considerably fewer homes offered for sale, approximately 50% from the previous twelve months.

The news today could have been considerably more pessimistic had the Coalition Government not been returned to power at the end of May. However, with the win and the continuation of negative gearing, we have noticed a return to confidence in the property market. Tax cuts made by the present government have also boosted consumer confidence. The clearance rates for June and July hovered around 70% and reached 73% in August, figures compatible with a healthy market. A strong economy with increased employment means more disposable income and greater confidence.

 The move by the Australian Prudential Regulation Authority (APRA) to encourage banks to make lending easier for buyers also elevated the property market a few notches, albeit with a lower volume. The volume of property coming onto the market is till low compared to the same time last year; however, we’re finding numbers of vendors and buyers creeping up with renewed confidence.

We are discovering that properties valued below $3 million are selling well, induced by a combination of factors, including falling interest rates and tax cuts and a slightly more relaxed lending policy form banks and other financial institutions. Prices have tended to lift initially from the low end of the market, filtering through over twelve months to more premium properties.

As prices for well positioned and high-calibre properties will continue to grow, so will Melbourne’s acceptance for top-quality and well located apartments. While this trend of scaling down from the large family home that requires considerable upkeep was a trickle in the early-to-mid-90’s, it’s now a way of life many empty nesters are choosing. Our clients might have multiple housing; a city base for part of the working week, a lifestyle house at Flinders or Portsea or some may even maintain an apartment in either New York or London.

Over the last six months, we have also noticed a return of expats to Melbourne, looking for well located homes near leading schools. The drop in the Australian dollar in the last couple of months has made it eve more attractive for the international market to focus on Melbourne. The beauty of living in Melbourne is you can easily head to the Mornington Peninsular to enjoy the weekends.

With my 34 years in the real estate business, you need to put things in perspective. I see a slow but steady upswing in the property market, quickening as confidence in the overall economy strengthens. We are seeing a greater development in the international market looking at Melbourne, which I feel is one of the most sophisticated cities in the world. Unlike many other destinations, where overcrowding is affecting the amenities and facilities, Melbourne and its environs have room to ‘breathe’ an enjoy.

Enquiries for homes here are now coming from many expats currently based in London, Singapore, New York and Hong Kong. The Asian market continues to be a force, along with locals who understand that purchasing property is for the long term rather than the quick gain. Going forward for the next six months, it’s ‘steady as she goes’, with the momentum building in the property market with the return of confidence.

Text by Ross Savas, Managing Director, Kay & Burton

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