There is little doubt that 2015 has been kind to many Victorian property owners. With consistent growth across most suburbs, particularly the inner-ring areas, we've seen double digit capital growth and some impressive auction results for fortunate vendors who timed their sales well.
The challenges have been plentiful too however. Buyers have had to stretch themselves in many suburbs to compete with other buyers, and competitive bidding between up to ten bidders above reserve at auction has been witnessed. Many buyers have felt disillusioned with the emotional and financial costs incurred over and over again at auction. Moving fast, having agents on-side and being prepared to pay a premium have all been hallmarks of 2015 for many a successful buyer.
Investors felt the pinch earlier in the first half of the year when APRA instigated changes across all of the banks in an effort to curb the high percentages of investment loans being written by the lenders and brokers. Having enjoyed up to 95% lending and being able to leverage hard, investor activity plummeted when Loan to Value Ratios were trimmed back to 80 and 90%. As planned, this did curb the market somewhat but moreso gave way to home buyers (particularly first home buyers) and our market felt the change. The parity between growth rates of apartments vs houses became noticeable; reflected in auction clearance rate differentials, longer days on markets for apartments and bargain buying for some.
Another challenge also in the mix for 2015 has been vacancy rates and more so, limited (if any) rental growth. Our
blog earlier this year shed some light on this common frustrated-investor question.
But all in all, 2015 has earmarked itself as a year of continued and consistent low interest rates. Like never before, our rates have remained at this all time low for a very extended period, offering home owners and investors alike the chance to not only enjoy lower out-of-pocket mortgage expenses, but to also take advantage of some of the incredibly low fixed rate options on offer. For anyone who is concerned about interest rates eventually increasing, now is a great time to chat to a trusted finance advisor about building some added protection around your cash-flows. I certainly have.
This year end, we reflect on the wonderful clients we've had the privilege of working with, the folks we've met in our travels, the agents who have been ever so patient and helpful, and our industry colleagues of whom we couldn't deliver our quality of service without their help, passion and energy.
To celebrate a wonderful 2015, we've covered one of our many favourite success stories... an amazing duo with two young children who threw every bit of energy into a project which made them a 20% equity gain in just weeks. Buying this one-of-four villa unit in Altona for $419,000 seemed an obvious decision back in September. We negotiated access prior so that our clients could coordinate trade quotes and firm up their project time line. A clever $22,000 budget, many long days and late nights later, toddler-taming during fit-out and a fabulous designer eye enabled this incredible duo to revalue the property at an impressive amount. The bank valuation came back at $520,000 just three weeks after settlement and they are now planning their next adventure.
Happy Holidays!...
