Melbourne buyers continue to feel frustrated at properties selling well above the reserve prices. Homes are selling for more than $100,000.00 above the advertised price range, despite the Federal Court fineing Hocking Stuart Richmond $330,000 recently for underquoting properties between 2014 and 2015.
House prices grew 1.5 per cent in the June quarter with a new record median of $740,995 according to the Domain Group’s House Price Report released in July 2016. The unit median price also grew 3.5 per cent over the June quarter.
Experts believe that interest rate cuts, lack of stock and high demand for properties is driving the market. Official interest rate cuts over the past 12 months are giving young buyers more confidence to bid at auctions.
Harcourts recently sold a home in Lalor for $960,000 - $100,000 more than the reserve. Tony Lombardi from Harcourts said “There is a lack of stock, high demand, and I think people are genuinely believing that this matter is going to keep going for quite some time, so they’re trying to get in [to the market] before it keeps getting higher and higher”. Of course, if you are selling in todays market, this is all good news.
NAB economists forecast house prices to flat line in 2017. Over the last six months, Melbourne prices have increased by an annualised rate of nearly 12 per cent. However, NAB’s chief economist, Alan Oster, stated recently that “there is a significant amount of uncertainty over the outlook for prices, we expect that this renewed momentum in the house market is unlikely to be sustained over the longer term”. NAB is forecasting a much softer residential property market, with 0.5 per cent growth in house prices and nearly 2 per cent decline in unit prices in 2017. Of course, such predictions have been wrong in the past.
Foreign buyer rules tightened
The Victorian stamp duty surcharge for foreign buyers was increased from 1 July 2016 from 3 to 7 per cent resulting in a small reduction from offshore investors. Further, the new Australian Taxation Office legislation relating to withholding of 10% capital gains tax for foreign buyers is believed to be making foreign buyers wary.
Wang Peng of Chinese property group UNME says “…tightening of rules aimed at foreign buyers were being interpreted by Chinese buyers as a potential signal of more to come”. In addition, the crackdown on overseas lending requirements has great potential to impact Chinese buyers.