Melbourne residents, old, new and hopeful are bracing themselves for a possible reprieve from the recent cascade of housing prices in the Victorian capital. For many, the preparation for buying a home came from the buoyancy provided by the Australian government and the RBA’s financial response to COVID-19 nationwide. Slashing interest rates and pumping potential homeowners with more money than they could shake a stick at have meant that many Melbournians bought homes with borrowed money at an interest rate that was unfathomable.
They were then unprepared for the skyrocketing of that interest rate to a whopping 6.1% from the RBA, in response to inflation going nuts around the globe. Those who had pre-paid for homes, couldn’t move in because they weren’t completed, as builders that had promised homes went belly-up when the cost of materials soared as inflation bit, hard.
As much as 2021 was a seller’s market, with housing prices gradually increasing with the weaning of COVID restrictions, would-be sellers in the housing market are now waiting to see what happens with the market before putting up that ‘For Sale’ sign. Whereas buyers can no longer afford to spend, spend, spend as the cost of living has hit near-unprecedented highs.
Melbourne’s active buyer market has depreciated by nearly 15% on the previous year on domain.com.au, as buyers aren’t proving as quick to shortlist a property or make an online enquiry.
However, cautious buyers are still flocking to auctions in Melbourne, as auction clearance rates soared above 55% for the last three weekends since early August. More home-sale auctions are predicted over the next month, with 730 already booked, an increase of 12.5% on last month. Therefore, it’s safe to say that one medium of sale for Australian homes is still providing an avenue of opportunity for those who choose to use it.
As always, with everything, when the cost is higher, more people will baulk at the purchase point. The same is true of the Melbourne housing market, as the increase in the interest rate from the RBA and other lenders who’ve made increases are causing would-be buyers to hold off. This is causing the market to cool and the value of homes to deprecate as they sit un-sold.
Melbourne residents who want to buy a home may soon be in luck. The prediction from Westpac’s senior economist is that we’re heading for a buyer’s market, as housing prices will continue to fall at their current rate, opening the market for all who wish to buy a home. Housing values will continue to fall into spring, according to Matthew Hassan and recent buyers (who paid, let’s say well over asking price during the recent housing boom) will find their homes worth less – as housing prices depreciated by 3.2% in the last three months.
Westpac is predicting that housing prices could tumble by as much as 8% through the remainder of the year and be as low as 10% in 2023. Buyers better get out their cheque books and sellers had better hang onto their hats.
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