The Housing Market Shows Signs of Stabilising!
We hope you had a happy and safe Christmas and New Years!
Welcome to 2023, lets make this year a great one!
Here is a market update for our local area:
After a prolonged period of decline, the Mornington Peninsula and wider Melbourne housing market is showing signs of stabilising, providing a glimmer of hope for homeowners and investors alike. Despite the challenges faced in recent years, there are several reasons to be optimistic about the future of the housing market.
Firstly, the decline in housing prices in the Mornington Peninsula has started to slow down, with some markets even showing signs of growth. This stabilisation trend is expected to continue in the coming months, as more buyers and investors enter the market and demand for housing increases.
Overall, Melbourne house prices nudged marginally higher over the December quarter. Despite this improvement, houses prices experienced the steepest annual decline in nearly 4 years. House prices are now 5.6 per cent lower compared to the December 2021 peak. However, they are a substantial 17.2 per cent higher than before the pandemic property boom.
Another factor contributing to the positive outlook of the Mornington Peninsula housing market is the rumours of interest rates also stabilising. The Reserve Bank of Australia has been keeping interest rates relatively low in order to not shock the economy. With an expected rate rise coming in February when the RBA meets, there are many economists and property experts stating this may be one of the last rises we see this year, they are even saying that we might see a decrease in interest rates later in the year. This trend is expected to continue in the future, further fueling demand for housing and contributing to the overall growth of the sector. However, this comes with a caveat.
The caveat is the big elephant in the room, inflation. The December quarter figures came in higher than expected at 7.8 per cent, increasing by 1.9 per cent in the three months to December. Indications are showing that we have passed peak inflation and the hope is it starts to decline and the RBA back off on rate rises.
In addition, the Mornington Peninsula has always been a popular destination for those seeking a coastal escape, and this is unlikely to change in the near future. They don't make land anymore!
Another factor contributing to the positive outlook of the housing market is the strong economic conditions in the area. The region has a low unemployment rate, a stable economy, and a strong business community, which has helped to create a healthy environment for the housing market to thrive.
In conclusion, the Mornington Peninsula housing market slowdown appears to be losing momentum, with several positive indicators pointing to a stabilisation. With a positive economic outlook, a desirable coastal lifestyle, and a strong economy, the future is looking bright for the Mornington Peninsula, providing a ray of hope for homeowners and investors alike.
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The property market is in a very interesting place at the moment. We have prices increasing while interest rates are also on the rise. This means that affordability is worsening for buyers, yet sales volumes have also significantly increased. When people search for property, the total number of properties available is important. Buyers look at all the properties that are listed, and if they don't find suitable options or if the prices are too high, they ignore them. After that initial search, potential buyers wait for new properties to become available. Currently, there are very few properties on the market for buyers to choose from. Ideal selling conditions occur when prices are rising, demand is strong, and there is little competition. That's the market we are currently experiencing. At the beginning of 2023, it was predicted that national property prices would decrease by 7% to 10%, and many others made similar forecasts. However, these price falls haven't occurred due to the increase in sales during the first five months of this year and the very low number of properties available for sale. If there were a significant increase in the number of properties listed for sale, buyers would have more options and could negotiate bigger price discounts. This could lead to prices starting to decline again. During the winter season, which is the current time of year, many sellers choose not to list their properties for sale and wait until the spring season. If sellers wait until spring, there is a possibility that there will be a lot more properties available. Historically, the number of new listings tends to increase during that period. Over the past decade until 2022, there were on average 19.7% more new listings in spring compared to winter. Last year was the only exception, and if we look at the decade until 2021, the average increase was 21.4%. More properties for sale in spring give buyers more bargaining power and could slow down the recent increase in prices. In fact, auction clearance rates usually decrease during spring as the number of auctions goes up. What we know for certain is that property prices are currently rising, sales have significantly increased compared to late 2022, and there are very few properties available for purchase. Some sellers may recognize these conditions and decide to sell earlier. Waiting may result in increased competition and the uncertainties that come with selling in spring. Here are some statistics and figures if you want to delve deeper: (Source: REA PropTrack - Cameron Kusher, Director of Economic Research) Preliminary sales, which are the number of sales advised by agents, were lower in the second half of last year compared to 2020 and 2021. By the end of 2022, they were even lower than the sales recorded in 2020 and 2021, and similar to the levels in 2019. However, this year we have seen a significant improvement in preliminary sales. In May 2023, sales were only 0.6% lower than last year and higher than both 2019 and 2020. But they are still lower than the sales in 2021. Although prices and sales are rising, there hasn't been an increase in the number of properties available for sale. The amount of new properties being listed this year is much lower than last year. In May 2023, the number of new properties listed for sale was 16.8% lower than the same month last year. However, the total number of properties listed for sale was 3.3% higher compared to a year ago. Despite the increase over the year, the total listings were still very low, about 30.5% lower than the average of the past ten years.