Christmas is here!
Now Melbourne is well out of the lockdown, November and December has seen an acceleration of growth and in many respects, it feels as though we are playing catchup with the other states that have experienced strong growth after their 1st wave. Clearance rates are high, the number of bidders on the rise and level of interest rising across the board.
Homes in Metropolitan Melbourne are now purchased within just 25 days on average, much quicker than the 74 days it took to sell in September 2020, and even less than the 34 days it took this time last year according to the REIV.
In summary, according to CoreLogic housing demand is rising due to the broad range of stimulus measures and changes in market sentiment. Record low interest rates are one of the primary factors supporting a lift in buyer numbers. Improving economic conditions and containment of the virus have lifted consumer spirits to higher than pre COVID levels. State government incentives including changes to stamp duty and additional building grants are also supporting demand. As buyer numbers rise, available supply has remained low. This creates some urgency amongst buyers which in turn is adding to the upwards pressure on home values.
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Housing demand is rising due to the broad range of stimulus measures and changes in market sentiment.
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It should be noted that it is not uncommon for housing markets to increase in value during negative economic shocks, or periods of rising unemployment. This is because the monetary response to rising unemployment and falling consumption, is often to lower the price of debt. Those that still have a secure income during these times are in a great position to buy.
The housing risks associated with less fiscal support and the expiry of mortgage repayment deferrals have lessened over recent months. Job numbers continued to improve throughout October, despite the winding back of JobKeeper, and the large majority of mortgage repayment deferrals have already moved back onto a repayment schedule. The recovery trend is being led by owner occupiers while investor participation remains at record lows. With prospects for capital gain becoming firmer, and more rental dwellings showing the potential for positive cash flow, it’s likely investor numbers will become more substantial in 2021.
So most pundits are now predicting the housing market will take off in 2021 after a long year plagued by the pandemic-induced recession that saw Australians squirrel away $110 billion in savings, according to experts. Some of which will end up in the housing market. Finder international insights manager Graham Cooke said the two biggest savings goals Australians were working towards were buying a home and going on holidays.
Confidence in the Australian housing market has boomed since August with the Westpac Melbourne Institute consumer survey recording a strong surge in November, rising 23 per cent to 132 – a seven-year high for the index.
So hold onto your hat, it could be a wild ride in 2021!
After the sombre 2020 a little excitement in the property space would be well and truly welcomed!
Have a happy and safe Festive Season, from all of us at Buyers Advocate!
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State Budget 2020
The recent Victorian State Budget had a very sharp focus on property based incentives to stimulate Victoria’s property sector. They included;
- Reduced stamp duty for purchases up to $1m before 1st July 2021;
- 25% stamp duty waiver on existing properties up to $1m
- 50% stamp duty waiver on new properties up to $1m
- 50% stamp duty waiver on regional commercial and industrial property
- $500m Homebuyer Fund which essentially funds part of the deposit for qualified buyers. 50% reduction in land tax for build to rent developments from 1st Jan 2022.
- The $20,000 first home owner grant will be extended for anyone buying or building a new home to 30th June 2020
- Funding to the planning rules to delivery of government housing initiative. Town planning reforms for targeted planning system changes.
- $5.3b public housing scheme to construct 9,300 new social housing dwellings and 2,900 low-cost homes. Ongoing support where tenants and owners have agreed to a reduced rent plan due to hardship.
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The most obvious impact we are seeing on the ground is the 25% stamp duty saving on established properties up to $1M. This is certainly stimulating the market with some people prepared to pay well over the stamp duty saving to secure a property and stopping at $1M when it reaches this level, even if a property may be worth more.
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Property Management Update
2020 has been a challenging year for many in different ways, shapes and forms however, we have a few things to be happy about. As restrictions ease even more, the team at Buyers Advocate are all extremely happy to be back working together in the office and let’s not forget that the countdown is on until Christmas, a time to gather and celebrate with our loved ones which thankfully we can do.
Whilst the Melbourne rental market has been one of the most impacted through COVID-19, with unit rents down 7% over the year, median unit rents have fallen to $400 per week, down from $430 In November 2019 and a pre-COVID high of $450. We look forward to the rate of decline in unit rents easing as employment conditions gradually improve across accommodation industries. Rental demand will be further boosted across Melbourne (& Sydney) when international travel is once again feasible, (though we are unsure when this will happen) as the decline in Melbourne unit rents was driven by stalled overseas migration and acute job loss across sectors where workers have a higher likelihood of renting, very much like Sydney. In saying this, unlike Sydney, the Melbourne rental demand was compounded by a second wave of restrictions through the September quarter, and an abnormally high next loss of people from Melbourne to other parts of Australia through the June quarter. The monthly decline in Melbourne unit rents has also eased, from -1.3% in August to -1.1% in the month of November.
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We look forward to the rate of decline in unit rents easing as employment conditions gradually improve across accommodation industries.
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Our team would like to take this opportunity to wish you a very Merry Christmas and a Safe and Happy New Year. Although 2020 was not the greatest, we managed to make the most of what we could. We hope for happiness and good health to all for the years ahead.
We pride ourselves on creating an unsurpassed Property Management experience for all clients. If Covid-19 has left you questioning what it is that your Property Manager does, please feel free to contact Lily on 0437 232 529 or Rachel on 0477 663 325 for a confidential chat. We welcome your enquiry.
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WIN a $150 Oasis Voucher!
The festive season is upon us, and that means an abundance of delectable food and drink is soon to be consumed! We’re giving away a $150 voucher to Oasis, ready to be spent on a delicious grazing platter of your choice! Sweet or savory, the choice is yours!
Entry to our competition is easy, but you must do all of the following for your entry to count: Like our Facebook page Buyer’s Advocate, share the competition post, and tag a friend in the comments - someone you’d love to share a platter with!
One entry per person. Entries close on December 17th at midnight, the winner will be drawn randomly on December 18th! We will contact the winner directly via Facebook private message.
Click the photo below to be taken to our Facebook page - good luck!
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Recent Purchases
The market has been extremely strong however, we have still been able to secure a number of great options for our clients. We have listed a couple of examples below.
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Home buyer in Nunawading
After the final client-go-ahead on the previous Thursday we sprang into action to get everything prepared and due-diligence completed for the Saturday Auction. With its single level, 3 bedroom 2 bathroom appeal, Buyers Advocate knew the bases were going to be loaded and competition, fierce. An opening bid of $760k from bidder one commenced proceedings with Buyers Advocate firing back at $800k knowing it wouldn’t buy the property but move the figure closer to reserve for an anticipated outcome. Bidding moved quickly in $10k increments to $830k whilst Buyers Advocate was firing shorter bids in an attempt to break the increments down. At $850k the property was announced on the market/unreserved and we were run up in $1000 rises to $860k. Bid upon bid, we reacted strongly securing the property for $59,000 under our client’s expectations.
Watch the condensed version here: https://www.youtube.com/watch?v=m79sjDl-370
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Home Buyer in Thornbury
After time spent with another advocate, with no luck in securing a home, our client came to us needing direction in what and where to buy in order to meet his objectives. Upon completing the due diligence on the first property he was interested in, we had to let it go, due to building complications, permits and the like. It was a week afterwards we found this little gem in a boutique block with 2 x courtyard gardens and OSP direct from the street. This buying process was by method of “closed tender” and therefore knowing the true value of the home and not relying on the information of the selling agent put us in the box seat. We secured the property for $2500 above the nearest other buyer of a field of 8 other offers. A great result for our client.
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Our Vendor Advocacy Services
Did you know we offer Vendor Advocacy?
A service within our broad range of offerings is Vendor Advocacy. We can assist clients in taking the time, stress and pressure out of selling a home or investment property, delivering focused experience and expertise in all aspects of a property sales transaction.
We are able to provide an independent valuation of your property. Our Advocates are experienced advisers who will guide you objectively through the sales process.
Our role as a Vendor Advocate is to act for the seller, to appoint a suitably qualified real estate agent. This ensures at all times that selling agents do what they say they will do, charge a fair and reasonable fee for their services, act impartially when introducing buyers and market and promote your property professionally and effectively.
Our fee is deducted from the sales commission, so it won’t cost you anymore to engage our service to assist you to sell your property.
Let us help you sell your property. Contact one of our experienced Buyer’s Advocates on (03) 9818 4499, for an obligation free discussion.
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Tip of the month:
How to pick properties to subdivide
We have helped a number of would be property developers buy a good block of land with the potential to subdivide in future. A good article written for Domain some years ago highlighted some good tips which we have repeated below.
There are a number of risks and while the profit can be significant a lot of mistakes can be made if you do not know what to look for. Here are some simple tips when looking at a potential subdivision.
1. Look for properties that have at least 700sqm in land size. Exact minimum plot sizes for subdivision differ from council to council, but most properties sitting on plots larger than 700sqm will be eligible.
2. Check that the property allows ample room for a driveway. Councils generally insist there be enough space between the exterior of the house and the boundary line to build a driveway. Generally, a driveway is anywhere between 2.5m and 3.5m wide.
3. Look for level or gently sloping land. As a rule of thumb, flat land is easier and cheaper to subdivide than a sloping block, because a steep slope is difficult to build on. A sloping block may also require you to build retaining walls, which will increase the costs of construction.
4. Look for corner block properties. Corner blocks are good for subdivision and development as they are easily divided into two lots with street frontage and access.
5. Check out the structure of the property. If you’re planning to subdivide within an existing dwelling, make sure that it’s well-built; working with solid foundations will reduce your construction costs.
6. Understand the zoning rules. Check with the council to ensure the property you’re about to buy complies with the zoning rules.
Subdivision is one of the quickest ways to make a profit in the property industry, but it’s a highly complex and heavily regulated process.
Make sure to carry out appropriate due diligence and gather as much information as possible before buying and subdividing.
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Our Office
We will close on December 18th at 5pm for the festive season, and will reopen on January 11th at 9am.
While our office is closed, we do have people to assist you during this time. If you have a Buyer's Advocate or Property Management enquiry, please call our office on 03 9818 4499 and you will be directed to the correct person for your call.
We wish every one a very merry Christmas, and a happy and safe New Year!
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