There has been a feeling of doom and gloom when it comes to Victoria’s property market in recent times, and the market as a whole across Australia. Well, it’s more than just a feeling. Property prices have been down, auction clearance rates have been in the doldrums, and there has been a general malaise in buyers and sellers in the market. And who could blame them when you look at clearance rate and sales numbers?
But there has been an undoubted shift in the Victorian property market over the last few months, with an outlook that is much brighter and more optimistic. House prices are back on the rise and auction clearance rates have improved dramatically. Here are some reasons why.
An unlikely election result
The re-election of Scott Morrison and the Liberal government in May was an unlikely election result but a welcome one for the property market. The Labor government had some serious election proposals in the works surrounding negative gearing and capital gains tax changes, which had many property owners hiding for cover. The fact that these changes did not go ahead with a Labor victory was a big sigh of relief for many.
Also, for the first time in many years, there is a sense of stability at the federal government level. Couple that with a steady economic outlook on a state level, and Scott Morrison’s growing relationship with Victorian Premier Daniel Andrews and their promise to collaborate on significant infrastructure projects, it all adds up to a property market that is very bullish heading into spring 2019 and beyond.
Stability on a state level
State treasurer Tim Pallas has delivered a robust Victorian economy that is the best in the country for 2019. Victoria claimed top billing on four of eight key indicators, including jobs, economic growth, retail trade, and construction work. Construction work for instance is 30.1% higher than the decade-average output. A strong and efficient economy, along with the continued development of infrastructure projects including the Metro Tunnel, removal of level crossings, and North East Link, has only strengthened the property market and its outlook moving forward.
Low interest rates helping the market
The Reserve Bank’s back-to-back interest rate cuts have given the property market a much needed boost. Corelogic data indicates that house values in Melbourne increased by 1.3% in August alone, with a rise of 1.6% in the last 3 months. Auction clearance rates are also much more promising, with the rate at 77% the week ending September 1 in Victoria. This time last year the clearance rate was at 59%.
A safe haven in a volatile global market
The world is in a bit of a mess right now, from US-China trade wars to instability in Hong Kong, just to name a couple of key issues. The global financial market is in a bit of a spiral, but as always, Australia is seen as a safe haven on a political and economic front. And within the safety of our economic landscape, the real estate market has always been a secure and almost failsafe investment option which has historically gained value over the medium and long term. This is another factor as to why the market is looking more positive, with many buyers seeing Australian property as a safe investment given the current worldwide economic climate.
Spring is upon us
Spring has always been the silly season when it comes to selling and buying properties in Australia. The weather has turned, the sun is out, the flowers are blooming, and people are out at open for inspections with the hopes of snaring their dream home. With the upturn in the market over the last few months, the timing of spring this year is perfect to carry momentum and propel the property market back to its glory days. The sentiment right now is that this spring is the perfect time to buy a home, with prices still a bit down from the last couple of years. In theory, this should give the market an even bigger boost. I guess we’ll see over the next few months.