Despite all the negative news in the press, there are many reasons not to worry about the future of the Melbourne real estate market.
Today I’d like to share 5 things that you really should know about Melbourne property.
Recently Dr. Andrew Wilson, Australia’s leading independent property economist, took the time to speak to many of our clients at our Melbourne Seminar.
His theme was: Everyone is coming to Melbourne, but where are they going to live?
In case you missed it, here are some of the key points Dr Wilson made:
- There is rising chance of an interest rate cut(s) in 2019
- The strong local Victorian economy is supported by continued solid migration – but challenges remain
- Housing demand is also supported by still solid first home buyer activity
- Housing supply will remain behind demand over longer-term
- More migrants, dwindling first home buyers and fewer new apartments will tighten the Melbourne rental market
- The election budget will stimulate economy – tax cuts and handouts
- Unit living is becoming more popular – affordability, lifestyle, convenience, value, security
- there is a need for larger apartments from families, downsizers and empty-nesters
- The current market weakness driven by negative sentiment – the fundamentals clearly remain strong
- Home prices will continue to rise in the future, although growth rates more subdued than recent results
- Flatter price cycle in prospect a positive for certainty and predictability – welcome to new economic reality
- Melbourne house and unit prices will stabilise through 2019
Here are some more details:
1. The fundamentals are strong
The Melbourne property market is slowly regaining its confidence and the underlying fundamental growth drivers remain strong.
The current market slowdown is being driven by negative sentiment thanks to the media, rather than by poor fundamentals.
Initially buyers went on strike, now sellers are not putting their properties on the market unless they really need to, but confidence seems to be returning.
For example auction clearance rates are rising, albeit on much smaller volumes.
Dr. Wilson felt that price growth falls will moderate and the Melbourne market will stabilise later this year.
2. Melbourne’s population growth is very strong
Despite the recent suggestions that we should lower immigration, the latest budget confirms that strong population growth is here to stay.
And Melbourne’s population growth (2.4%) is the highest in Australia, with many of Melbourne’s new immigrants are at household formation age.
Apart from strong natural population growth, Victoria leads the pack for migration.
3. Migration and population growth is fuelling Melbourne’s economy
4. Melbourne is a powerhouse of jobs creation
Over 111,400 jobs were created in Victoria last year.
This is in part being fuelled by Melbourne’s strong population growth.
5. Interest rates are set to fall and soon
Of course the RBA has also recently changed it bias from predicting the next rate movement will be up
- Australian economic growth is now fading – with a weaker outlook for our GDP
- International economic growth is easing – US GDP trend is now falling, and China’s growth is down from its highs
- International interest rates now have a downward bias
- Australia’s low inflation has failed to meet the RBA’s inflation target for the last 3 Years
- Wage growth is still low and weak despite our strong labour market and all the jobs being created
- The Australian Dollar is still too high and our our sharemarket is still too low
- Domestic consumption is low and stagnant, with retail sales underwhelming
- We currently have near record low savings ratio – Consumers are spending their savings just to survive
- Lower migration will negatively impact our economic growth
- The recent collapse in new home building is also a significant drag on economic growth
- The sharp declines in Melbourne and Sydney house prices will negatively impact our economy
- Recent Sharp Turnaround in RBA Rate Predictions From UP to DON’T KNOW BUT MAYBE DOWN
- Predictions in Recent Years of Rate Rises Clearly Nonsense – “Market” Now Signalling Cut
The Bottom Line:
There was so much valuable information on the day that it would be difficult to sum up in one blog, but if you would like the opportunity to understand what is really happening in Melbourne and how there may be an opportunity for you to take advantage in the short term, just click here now and organise a time to meet me personally and to talk in some more detail.
Our Metropole Melbourne team has noticed a significant increase in local consumer confidence with many more homebuyers and investors showing interest in property.
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