How much will the cold months cool the property market?

As Victoria shivers through the first month of winter, the residential property market is following suit. The latest report from May shows Australian homes fell in value for the first time in 20 months - albeit by 0.1%. This was propelled by Sydney (1% fall) and Melbourne (0.7% fall).

More interestingly if we look at the annual change in value, the Melbourne property market saw a 5.8% growth which was only in front of Perth at 5.6%. Historically the Melbourne market has consistently ranked as the 2nd most expensive to Sydney. However Brisbane is quickly catching up with the median house price now at $779.895, compared to Melbourne at $806,196 (closer than I thought).

Interest Rates

With interest rates on the rise and housing affordability not getting better, it would seem that we are going to be in the current downward trend for the near future. Clearance rates are hovering around 60% suggesting that vendors are pricing their properties too high and/or that purchasers are not in a desperate rush to buy with the fear of increasing prices in the near future. Saying that, I believe the right time to buy and sell your property is when YOU'RE ready, not when the market is.

Over the past couple of weeks after talking to a number of legal practitioners, a similar theme of conversation came up - what are the drivers in the value of houses.. I thought I would share a few of my thoughts:

• Location, location, location as the old saying goes
• Proximity to the local shop and amenities, as you want to be close but not too close
• Size and shape of the land (always nice to be a house on top of a hill)
• Size and condition of the house

To sum up, as we rug up in front of a fireplace with a glass of red wine, with limited properties on the market in the coming months there may be a lot of media articles about the doom and gloom of the property market in Victoria. But only when there is enough evidence and sales will it become evident how far the market has fallen. In spring we will be able to get a good gauge on the market.

Mark Pastor | Associate Director Melbourne | Acumentis