After a fourth straight month of interest rates being put on hold and the warm sunshine of spring putting everyone in a good mood, Melbourne’s property market is slowly getting back to its usual well-performed self. All signs are pointing to the fact that we are over the worst for the Melbourne property market which has seen better days over the last 18 months.
What does this mean? This means that now might very well be the time to start looking for your dream home, or begin that spring clean so you can get your house on the market before the end of the year.
Are we done with the rates rises for 2023?
October saw the fourth month in a row the RBA decided to keep interest rates on hold, with the current cash rate staying at 4.1%. Whilst some pundits are predicting another rate rise before the year is out, many believe this is the end for the year, and the end for rate rises altogether.
Many other forecasters are predicting a rates cut by August 2024. There are more optimistic analysts such as Michael Blythe from PinPoint Macro Analytics, who believes rates will be cut as early as May of next year. “Many of the factors that pushed inflation rates higher have either reversed or already passed the point of maximum impact such as food prices,” said Michael Blythe to the Australian Financial Review.
MLC Asset Management have predicted a rate cut as early as February 2024. “The RBA has scope to take their foot off the brake by cutting interest rates early next year,” said MLC’s Bob Cunneen to the AFR.
While the predicted rates hold will be good news for many property buyers, the long wait for another 10-12 months (or less if you’re optimistic) for the rates to be on the decline might be a little longer than many anticipated. But there is an end in sight, meaning buyers locking their home loans into a variable rate can have confidence that it will be short term pain for long term benefit.
Banks predicting a house price surge in 2024
Some of the major banks are predicting house prices in Melbourne to soar in 2024, making this the perfect time to buy.
Commonwealth Bank predicts that house prices will rise 3% by the end of 2023, and a further 6% in 2024. NAB has even more of an optimistic view, with a 2% rise predicted for the rest of this year and a mammoth jump of 7.4% next year.
Median property prices have been slowly on the increase over the last few months, with a 0.5% rise in August and 0.4% rise in September (and up 4.3% since bottoming out in January 2023). If the banks are in fact right, and there is a surge in the Melbourne property prices in 2024, there couldn’t be a better time than now to get into the market as a buyer.
Sellers jumping the early spring gun could be a good sign
The number of new property listings in some areas across Greater Melbourne leading up to spring well exceeded expectations considering the state of the market as a whole, showing a level of optimism that has been severely lacking over the last 18 months.
Stonnington-West had 60 new listings in August alone, which was a 140% jump from the previous month. Darebin-South, which includes the suburbs of Northcote and Thornbury, saw 55 new listings which was a massive 150% up from July.
The increase in listings can only mean good news for buyers for the rest of the year, who have a wealth of choice and are a better chance at securing their dream home. While the abundance of new listings has pundits worried about a dip in house pricing across the city (due to too many listings), September saw Melbourne median pricing increase by 0.5%. There is definite optimism that this trend will continue for the rest of 2023.
More new homes on the way
Victoria is set to enjoy more brand new and contemporary residences, with new home approval numbers hitting a yearly high according to the Australian Bureau of Statistics. More than 5000 new homes were approved to be built in the state in the month of August. The number of new home approvals has been steadily rising over the last few months.
This is music to the ears of buyers looking to purchase brand new properties in the coming 1-2 years. The new home market has taken a hit over the last couple of years, from the heightened cost of building materials to a number of construction companies going under including Porter Davis, ABG, Probuild, and A1A Homes. With population numbers soaring in Melbourne (with migration getting back on track post COVID-19), the news of more housing on its way will have many future buyers breathing a big sigh of relief.