The latest data released by the REIV for the March 2020 Quarter, reveals the strong performance of the Victorian property market in the lead up to the coronavirus pandemic. Like most of the economy, the real estate sector saw a significant change in conditions from the middle of March, following the Government’s announcement of a series of restrictions on social gatherings.

The Metropolitan Melbourne region saw median house prices reach a record high of $893,000, up 3.7% since December 2019 and up 2.3% since March 2019. Unit and apartment prices recorded a median price of $641,000, up 0.6% since December 2019 and up 4.6% since March 2019.

Regional Victoria saw median house prices reach $419,000, down -0.5% since December 2019 and up 2.5% since March 2019. Unit and apartment prices recorded a median price of $297,500, down -3.3% since December 2019 and no change at 0% since March 2019.

The Inner Melbourne region saw median house prices reach $1,485,000, down -1.9% since December 2019 and down -1% since March 2019. Unit and apartment prices recorded a median price of $635,500, up 0.3% since December 2019 and up 4.2% since March 2019.

The Middle Melbourne region saw median house prices reach $1,024,500, down -0.8% since December 2019 and up 3.1% since March 2019. Unit and apartment prices recorded a median price of $724,500, up 1.9% since December 2019 and up 6.6% since March 2019.

The Outer Melbourne region saw median house prices reach $695,500, up 2.7% since December 2019 and up 0.3% since March 2019. Unit and apartment prices recorded a median price of $550,000, up 1.3% since December 2019 and up 2.1% since March 2019.

Auctions saw median house prices reach $1,012,500 which has no change at 0% since December 2019 and up 4.3% since March 2019. Unit and apartment prices recorded a median price of $713,500, up 0.2% since December 2019 and up 6.1% since March 2019.

Private Sales saw median house prices reach $753,000 which was up 2.1% since December 2019 and down -1.5% since March 2019. Unit and apartment prices recorded a median price of $573,000, down -0.5% since December 2019 and up 3.7% since March 2019.

Is now a good time to buy a property?

With the flattening of our COVID-19 infection curve, there is the possibility that we might see an early exit from containment after a one-to-two-month lockdown. This coincided with the JobKeeper incentive and other business stimulus packages in an assertive effort from our Government to get workers back into their jobs and help minimise the number of mortgage arrears and losses.

As soon as we see improving economic conditions, we believe there will be a rise in sentiment and “pent-up demand” from buyers and sellers who had put their property goals on hold during the pandemic. This will provide a stimulus to the housing sector which could result in a strong recovery in the later part of the year, making now an opportune time to buy a property.

The team at Beckett are continuously monitoring the latest developments so that we are best informed to help our clients make the best decisions to ensure both personal and financial health. We are still trading and assisting our clients under the Government’s new health guidelines and we welcome any future enquiries.

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Over the past month, both State and Federal Governments have introduced new measures to address the ongoing threat posed by the Coronavirus (COVID-19) outbreak.
In an effort to curb the spread of the virus, social distancing measures have significantly altered business practices across all sectors of the economy. Among the Government led directives, are bans on open real estate auctions and open home inspections. These have now been replaced by online auctions and private property inspections.

Social distancing will also likely delay property transactions as policies may intensify. It is hard to forecast the exact impact this is going to have, but it will certainly adjust how the real estate industry operates. Although it is difficult to be definitive in these rapidly changing conditions, we currently foresee a downturn in the property sector to be relatively short lived.

For the second time in March 2020, the Reserve bank of Australia cut the official cash rate to a new record low of 0.25 per cent in an emergency move to support the economy facing challenges due to the Coronavirus. Government and RBA measures to help struggling businesses and households through the Coronavirus shutdown should help in preventing a really big rise in unemployment. Some economists have stipulated that if there was a rise in unemployment to around 7.5%, it would likely drive a 5% dip in property prices. However, once COVID-19 is under control, a market recovery is anticipated as the Australian economy bounces back and consumer confidence rises.

What do I need to know if I’m looking to buy a home?
For those that have the capacity to buy in the current market, money is cheap and there could be some great opportunities over the next few months. In this environment, buyers who have very secure jobs are actually in an improved position because the overall market is weaker. There will be buyers who are simply unable to buy now due to reduced incomes and job uncertainty. Then there are others who are adopting the wait-and-see approach.

What do I need to know if I’m a property investor?
Property is deemed a safer investment option compared with the share market and those who take a long-term perspective will always outsmart short term reactive thinkers. It has never been cheaper for investors to obtain finance and if prices come down, rental yields will increase, and investors will be in a far greater position to capitalise. A major point to factor is that it could take longer to find a tenant, or a rent reduction may be required during these unprecedented times.

What is ahead
Unfortunately, no one has the crystal ball to accurately predict the future. We can’t be sure how the Coronavirus health crisis will pan out globally. We also can’t be exactly sure how it will affect the Australian economy or our property market until we see an end to this crisis. There will be some business casualties along the way, but eventually, things will improve and we will get through this.

Once COVID-19 is under control, the housing market is likely to bounce back with a combination of record-low mortgage rates and the likelihood that they will remain at these levels for quite some time. In addition to this, a slowdown in property transactions in the coming months combined with continuing population growth will likely create pent-up demand for housing. This pressure on supply and demand will once again drive high property prices.

The team at Beckett are continuously monitoring the latest developments so that we are best informed to help our clients make the best decisions to ensure both personal and financial health. We are still trading and assisting our clients under the Government’s new health guidelines and we welcome any future enquiries.

The post Coronavirus: What to expect from the property market amid COVID-19 appeared first on Beckett Property.

Melbourne’s property market is currently experiencing the quickest price recovery on record, which is disheartening for many buyers who hoped that prices would stay level after the recent correction in 2018 and the first half of 2019.

This week, the REIV released data for the September Quarter stating that Melbourne’s median house price jumped 4.5% in just three months to $830,000. The property shortage is really starting to push prices up and forced the largest growth in Melbourne home values in two years.

There has also been a strong resilience across the metropolitan units and apartments sector with prices increasing by 3.9%, despite higher supply levels. This most likely comes down to affordability constraints in the market as well as more first home buyers supporting demand, thanks to first home owners stamp duty incentives.

The top end homes of Melbourne previously recorded the largest decline over the past twelve months, but now these suburbs are leading the charge for the most rapid recovery.

What’s driving the house price increase?

The strong rebound is attributed to a variety of factors including:

• The Liberal party winning the Federal Election.
• Three interest rate cuts and record low mortgage rates.
• APRA loosening credit rules.
• Higher levels of investor participation.
• Strong population growth.
• Weak Australian Dollar which is incentivising foreign buyers again.

Another major driver of this sudden price surge is the shortage of real estate stock which is approximately 40% lower than this time last year. Home buyers have suddenly changed their strategy when either up-sizing or down-sizing their homes.

The switch from a “Seller-Buyer” market

During 2018 and the first half of 2019, people were not confident they would achieve their desired price when selling their home and they felt more comfortable selling first as they wold know exactly what they had in the bank before they bought again. This forced the market to experience many ‘seller-buyers’ and contributed to very healthy stock levels. It made sense to people – in a declining market, sell at today’s price and buy at tomorrow’s price.

The switch to a “Buyer-Seller” market

Now that the market has turned and confidence is sky high again, people are very confident they will achieve their desired sale price for their home. However, they are now concerned they won’t be able to secure their new home or get priced out of the market. This has led to the ‘buyer-seller’ strategy which is putting more pressure on property stock levels. People aren’t listing their homes for sale until they buy first, which again makes sense in a rising market – buy at today’s price, sell at tomorrow’s price.

With positive media, easier lending circumstances, high auction clearance rates, price growth and restored buyer confidence, some property commentators are forecasting double digit capital growth for the year ahead.

The fear of missing out and then paying more is now the current theme in the marketplace. This sentiment was also experienced during the property boom from 2013 to 2017 when prices were soaring.

Speak to the experts in Property

If you are a first home buyer, upsizing your property or downsizing for lifestyle, a property investor or developer, the correct property selection is now more important now than ever.

Beckett Property are fully licensed Buyer Advocates and highly acclaimed Property Advisors who specialise in property acquisition services for home buyers, investors and developers across Melbourne. We help our clients grow, protect and pass on their wealth through a wide range of services.

If you are looking for assistance to source and acquire your next home or investment property in this market, please contact one of our experts today.

The post Melbourne house price rises appeared first on Beckett Property.

This guide provides first home buyers with a strategy on how to buy a house in Melbourne. This includes answering important questions such as:

• What is my budget? How much can I borrow?
• What kind of loan should is best for my situation?
• How should I structure it so that my property is protected?
• Do I get any concessions for buying a property?
• What are the key factors I need to consider before starting my search?
• How do I conduct my search and research?
• What questions should I ask a real estate agent when buying a property?
• How should I need to prepare before going to auction?

Budget and Borrowing Money

Setting a budget and knowing how much you can borrow is the first critical step in the process for first home buyers. Once you know this, you can then understand what areas you can look in that will fit your budget.

Usually you want to buy a property with no more than 80% LVR (Loan to Value Ratio), which means that you only want to borrow a maximum of 80% of the value of the property. Hence the first question is how much deposit do you have. If you have a $125,000 deposit, then this is 20% of $625,000 so that is the budget that you want to set on a property. Similarly is your deposit is $150,000 then your budget could stretch to $750,000. Given this, you must make a decision as to whether you have enough budget to buy in the area you want now. If you don’t it may be worth saving to have enough deposit to get the budget you need to buy a house in the area that you want.

If you have enough deposit to secure the budget you need on an 80% or less LVR, then next question is do you have enough income to prove that you can comfortably service the loan. This question is best answered by a mortgage broker. We usually a mortgage broker more than a bank as they have access to a number of different outlets and can provide the best loan option for your situation.

If you can have enough deposit and income to service the loan and you are serious about buying, the next step is to secure a pre-approval which is when you receive a conditional approval on your loan. The last thing you want is to find the house which you think is within your budget, but get declined for a home loan right before the property goes to auction.

Home Loan Selection

There are a number of types of loans that first home buyers can get for your property which includes interest only, principal plus interest, then these is floating or fixed interest rates. There have been some recent changes made which make it more attractive for first home buyers to go for a principal plus interest loan. Also considering a fixed loan for a period of time helps to ensure that you know what the interest rates will be next month.

As you set up a mortgage you also want to consider setting up an offset account to minimize the interest paid.

Asset Protection

May people investing in property should consider asset protection as you never know what will happen in life. In saying that, for first home buyers, your principal place of residence should be in your own name to avoid capital gains when you sell (assuming that you will be living in it for a year or more). If you are buying with a partner, you should consider establishing a joint venture which is a formal agreement which confirms what percentage of the property each of you earns and what your respective financial commitments are to paying off the property. As much as you expect it all to go smoothly, each party wants to protect themselves and ensure that they have thought through the specifics of how this will work.

Concessions or First Home Buyers

As a first home buyer, depending on what your budget is you can get concessions on stamp duty and of course you are not exposed to capital gains if you decide to sell your first home as long as you live in it for a year a more. There are additional first home owners grant which you can apply for if you buy or build a new home. However this does not usually apply to the majority of our clients.

Stamp duty concessions for First Home Buyers

Stamp Duty can be as high as 6% which is a significant amount of the property value. Recent laws introduced has meant that first home buyers can receive concessions on stamp duty depending on what they buy their property for. These concessions exist for properties purchased for a value of up to $750,000. You can see examples of these concessions at different levels of investment below:

Property Search

We wrote another article on how to buy a property in a hot market. In this article, we outline the key aspects of a scope which includes elements of the property, position and price. Once you have defined this and your budget, you can then begin the search. Realestate.com.au is the best resource in the market although we also use Domain.com.au. We have paid subscriptions to platforms which provide the most up to date sales and as a member of the REIV we also get access to up to date market data on number of key market indicators such as clearance rates and median house prices by suburb.

When you have narrowed down the target areas you want to search in, you can call the Real Estate Agents that are representing the vendor.

• Why is the vendor selling
• How long has it been on the market
• Would the sellers consider an offer pre auction
• What is included in the sale in addition to the property?
• How many other people have expressed interest in the property?

First home buyers are in a better position to negotiate if it is a distressed sale or if there is less competition. Make sure you develop a relationship with the agent to get them on side. Sometimes this can make all the difference.

Property Auction

• Pre-approved Loan: As mentioned earlier, you want to make sure that you have this in place before going to auction.
• Choose the right time to bid – If you have a good budget for the property, wait until others have bid to see what it starts to peter out at before coming in with a confident bid. If you don’t have a significant budget, you might consider setting the pace with a confident bid to start with.
• Control the pace of the bidding with confident bids– If the bidding is in $5k increments, slow it down, it it’s in $500 increments and you have budget, change it up. Always keep the other parties guessing and try to avoid revealing your hand.
• Do your research to determine what you value the property at: Look at comparable sales and what similar houses have sold for to get a realistic view on the value of the property (this is where a Buyers Advocate in Melbourne can really help). Knowing what the property is worth ensures that you don’t get caught up in a bidding war if other people are overvaluing the property.

Final Words

Before purchasing any house, we recommened first home buyers invest in a pest and building inspection to ensure the house is structurally sound. Also make sure that you have read through the sale of contract before making any bids. Take into account any additional costs associated with purchasing or moving into the property. Remember that a Buyer’s Advocate is also an investment and will help you make a confident decision on the property and ensures you are making the right decisions and employing the right strategies for searching, bidding and acquiring properties.

If you are interested in a free consultation, please call +61-3-9531-1670 to speak to one of our expert agents.

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