The Reserve Bank announcement in early March came as no surprise to commentators with the cash rate remaining on hold at 1.5%. All respondents to the finder.com.au survey prior had expected the rate to stay level, with 68% predicting the next move will be upwards. Interestingly, 90% of panellists expect that loan rates will go up regardless, with lenders apparently set to implement more out-of-cycle increases.
Meanwhile, any threat of higher rates in the future is failing to deter property buyers. While many property experts had been predicting a levelling off of prices in Melbourne this year, the February Home Value Index from CoreLogic showed a surprising surge. Investor demand resulted in a 1.5% growth over the month, with annualised growth at 13.1%. Since 2009, Melbourne prices have now grown by 87%. The result favours what originally appeared to be overly optimistic predictions from Louis Christopher, director of SQM Research, who late last year said Melbourne prices would continue to rise, growing by between 10% and 15% across 2017.
The price growth has occurred in the face of a sharp monthly increase in the number of properties for sale, with SQM reporting listings in Melbourne rose by 16.4% in February. Regardless, the number of properties for sale is still 9% lower than in February last year.
In other important news for the property market, the Victorian Government has announced stamp duty will be abolished for first home buyers on properties under $600,000. From July 2017, discounts will also be available on stamp duty for properties priced between $600,000 and $750,000.
The move is part of a suite of changes aimed at making property more affordable, including a new tax on vacant properties in Melbourne’s inner and middle ring of 1% that’s designed to encourage owners to either rent properties out or sell them. A co-ownership plan will further offer opportunities to people who can afford mortgage repayments but don’t have a deposit, wherein the Government will take up to a 25% share in their properties.
While there’s no telling what’s around the corner, it’s clear that the local market is incredibly buoyant right now with high auction clearance rates and record prices being regularly achieved. For those who’ve been considering a sale, the current conditions could not be more appealing for an imminent move.
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