Spring Market

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EXPERT OBSERVATION
The outlook for the property market is expected to be quieter this Spring compared to previous seasons, but buyers are still there, according to home loan lender, ME.
I shared my spring property predictions:
The property market notoriously blooms in spring with a flurry of listings and buyers preparing to pounce.
But this season will be different: the property market will quieter due to the impact of COVID-19, particularly in Melbourne.
Despite some more listings this Spring and record low interest rates, economic concerns will dampen demand.
Plenty of challenges remain including high levels of unemployment, job insecurity and lower immigration, impacting people’s willingness to transact in property.
Many Australians are also on home loan repayment pauses. The gradual end of this type of support will be a critical juncture for the property market going forward.
Demand: first home buyers pounce, dreams of a sea or tree change to become reality
In terms of demand, buyer activity is expected to be overall lower than previous spring buying seasons, but buyers are still there and have a strong appetite for potentially bargain buys.
ME has seen an influx of first home buyers and expects this to continue. Potential for price falls, reduced investor activity together with historically low interest rates and government support are propelling first home buyers into action.
COVID-19 has also led to a re-assessment of life priorities. New remote and flexible working arrangements have made buying in regional areas a more feasible and affordable lifestyle option, and as such we may start seeing more buyers making their move this Spring.
According to ME’s latest Quarterly Property Sentiment Report, 45% of respondents said they were more likely to consider buying in a regional area, to save money and improve their lifestyle − rising to 60% of first home buyers.
Supply: A rush of fresh real estate listings on the horizon
The fallout of the COVID-19 pandemic and lockdowns has caused a short supply of stock. However, this Spring we may see an increase in listings come onto the market. I don’t foresee new stock overwhelming current demand, but certainly anyone listing will be met with a high degree of inquiry.
More competitive home loans
Competition in the home loan market will continue to benefit consumers looking for a good deal. Many lenders including ME have sharpened both <a href="https://www.mebank.com.au/news/perfectly-simple/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">variable</a> and <a href="https://www.mebank.com.au/news/customers-want-low-fixed-rates-for-shorter-periods/" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">fixed home rates</a> to attract and retain customers.
Andrew Bartolo is the ME General Manager of Home Loans
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Spring selling season will be dampened under COVID-19: ME's Andrew Bartolo

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Sticks and Wombat’s Elsternwick renovation from the last season of The Block sold after its weekend auction.
Listed with initial $2.65 millionth $2.75 million price hopes, it fetched $2.83 million <a href="https://www.realestate.com.au/property-house-vic-elsternwick-129120878" target="_blank">through Michael Paproth and Peter Kakos at The Agency</a>.
<div class="page" title="Page 1">There were two bidders and no television cameras when the five-bedroom, four-bathroom home went to its onsite Sunday afternoon auction.</div>
<div class="page" title="Page 1"> </div>
<div class="page" title="Page 1">Passed in at $2.66 million, its sold vert shortly after negotiations to a family from the inner south-eastern suburbs.</div>
The 46B Regent Street last sold for $2.65 million amid the Block's typical frenzy last October.
Larrikins, Mark “Sticks” Croker and Clint “Wombat” Price were fourth place getters on the stressful renovation television series.
Taking home a profit of $130,000, it had been built with an extensive use of reclaimed timber.
The New South Wales representatives had been judged as having the best hallway, front facade and garden.
Canberra was the standout capital city at weekend auctions with the strongest preliminary clearance rate of 68.1 percent, according to CoreLogic.
Prices ranged between $450,500 at Barton and $1.5 million at Braddon.
<a href="https://www.realestateview.com.au/real-estate/31-43-blackall-street-barton-act/property-details-buy-residential-12073654/" target="_blank">The one-bedroom Barton apartment</a> (below) had 69sqm of living space plus a 37 sqm balcony, security car space and storage cage.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/17/bardon1.jpg" alt="">
Set in the 2004-built Landmark, the Blackall Street property had been a $430 a week rental in 2016.
The <a href="https://www.realestate.com.au/sold/property-house-act-braddon-129144866" target="_blank">46B Girrahween Street, Braddon</a> offering was a single level, four bedroom home with private easy care gardens. 
Built in 2003, the property has tenanted at $1,000 per week increasing this month to $1,025 per week until July 2019 
It rates were advised as $1,044 pq and its land tax as $1,760 pq.
Only 45.1 percent of Brisbane homes sold including the nation's cheapest weekend result.
It was a $150,000 home at <a href="https://www.realestate.com.au/property-house-qld-russell+island-128985554" target="_blank">14 Akebia Street, Russell Island</a> (below) which was sold under mortgagee instruction. Russell Island is the biggest of the Southern Moreton Bay Islands, situated between the mainland and North Stradbroke Island.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/17/Bardon.jpg" alt="">
The three bedroom home had been for sale earlier this year at $229,000 with $235 a week tenancy on offer.
The combined capital cities saw an increase in the number of homes taken to auction to 1,985 auctions held, up from 1,916 auctions.
The preliminary auction clearance of 55 percent was lower than the previous week’s 55.3 per cent final clearance rate.
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"This week’s clearance rate is the lowest preliminary result seen so far this year, it will be interesting to see how this revises as final results are collected," CoreLogic auction analyst Kevin Brogan said.
"So far the Spring selling season has seen a lower volume of auctions take place each week relative to the same period last year, demonstrating the reluctance within a softening market," he added.
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There were 991 Melbourne homes taken to auction this week, down on one year ago's much higher 1,265 homes.
Melbourne posted a preliminary clearance rate of 57.2 per cent.
Melbourne cheapest sale was a studio apartment at <a href="https://www.realestateview.com.au/real-estate/302-18-34-station-street-sandringham-vic/property-details-buy-residential-12049262/" target="_blank">302/18-34 Station St, Sandringham</a> (below) which fetched $275,000.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/17/strad1.jpg" alt="">
A kew home was Melbourne's dearest. The renovated 1890s Victorian house at <a href="https://www.realestateview.com.au/real-estate/2-belmont-avenue-kew-vic/property-details-sold-residential-12065448/" target="_blank">2 Belmont Avenue, Kew</a> (below), offering with a price guide of $3.5 million to $3.85 million, sold to a Kew downsizer for $3.83 million.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/17/kew1.jpg" alt="">
In Sydney, 52.6 per cent of properties sold, with 665 homes taken to market.
Last year, there were 916 Sydney homes taken to auction with 64.2 per cent being sold.
Sydney has the nation's top sale which was secured in a pre-auction offer for 15 Kareelah Road, Hunters Hill.
The five bedroom non-riverfront <a href="https://www.realestate.com.au/sold/property-house-nsw-hunters+hill-129088850" target="_blank">1871 sandstone residence Doonbah</a>, set on the peninsula with views over the Parramatta River back to the city, fetched $5.61 million through Tracey Dixon at McGrath.
There had been a $4.85 million price guide.
It was sold by Matt and Jo Sandford, founders of online personal card seller Yellow Postie.
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Sticks and Wombat Elsternwick cottage renovation resold for slightly more

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Are you getting ready to sell your house?
Setting the right asking price is going to be challenging for vendors as spring volumes peak and the summer break looms.
It can be a tricky task, especially when the property market is displaying signs of movement.
Sometimes a home can be listed into a seemingly strong market, which then weakens during the marketing campaign.
Most asking prices tend to a little above what the vendor will actually take, as this allows some negotiating space between the buyer and seller.
Often vendors get a very realistic offer early on from buyers who've been in the market for some time. They might also get a cheeky lowball offer.
It is one of those ponderables as to whether it is best to accept a speedy sale, or wait for that desired higher price.
Higher discounting certainly occur longer into marketing campaigns when the asking price simply doesn't match buyer interest so a vendor eventually accepts a figure well below the initial advertised price.
At the moment Sydney vendors are typically accepting 5.1% discounts on their asking prices to secure their house sales. It was 4.8% at the start of the spring selling season according to CoreLogic.
Canberra is a hot market so its vendors need only to discount by 2.5%, while Darwin is ailing and it requires a 9.9% discount before most sales are done.
The national average sits at just above 5%, with peaks over the past decade seeing 8% required discounting across Australia.
Ofcourse you will have your own idea on the worth of your property, but it is important to canvas and listen to the professions.
Before you signup to one agent, for auction or private treaty, be sure you get two or three other local agents to come through your property.
They will happily provide a report on how they see the local market, its likely direction, and just where your property sits within it.
It is important to get these varied insights for the best way forward.
And don't necessary simply select the agent who promised the highest price outcome.
You have to be comfortable working with your agent all the way through the listing.
Ofcourse the lucky vendors will find a buyer as soon as the for sale sign goes up from someone who's always fancied your home from just along the same street.
The less fortunate will be nervously hoping they finally get that pre-Christmas buyer, forever grateful they had secured extended settlement terms on their next home purchase.
The key is ascertaining where the localised market is placed pricewise, and often that relates to the level of stock.
Overall there's some 25,000 offerings across Sydney - around 20% more stock than the same time last year, which means buyers have more choice. There were 22,000 listings at the start of spring.
Ask your prospective estate agents what, say, four bedroom house stock levels have been in your suburb over recent times, and also find out what sales they have actually secured. 
Asking prices can of course change throughout a campaign but if a vendor’s expectation was unrealistically way too high even this is unlikely to trigger any sale.
This article first appeared in The Daily Telegraph. 
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Setting the right asking price is a fine balance

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With the Springtime property season starting, lenders are going all the way to woo potential borrowers and grow their market share.
The latest to join the trend is HSBC, following moves by major banks such as Westpac and NAB. 
Westpac recently announced it was cutting mortgage interest rates by up to 85 basis points and waiving fees on other products.
Comparison website Mozo too announced its list of the best home loans in the market, with the lowest product being Loans 3.64 percent variable rate.
The Essentials Variable 80 also didn’t have any ongoing fees, though it had an upfront fee.
In second place on Mozo’s list was the Newcastle Permanent Discounted Variable Home Loan product.
It too had a 3.64 percent variable interest rate, no upfront fees and allows a borrower to get a loan with just 5 percent deposit.
Close on its heels was UBank’s UHomeLoan which offered a 3.74 percent variable rate. It also has no ongoing or upfront fees.
Mozo said the product won in categories including best Low Cost, Split Home Loan and both Fixed and Variable Investor Loans. 
Interestingly, the only lender that had two products in the top seven list from Mozo was Loans.
Its second product was the Offset Variable 80 which had a 3.72 percent variable rate. Again, the product has no ongoing fees though there is an upfront fee of $250. 
Below is a table of offers for owner occupiers and investors from Loans.
<a href="https://www.propertyobserver.com.au/images/2017/09/05/LoansOwner.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/05/LoansOwner.png" alt="">
According to Mozo, the product is well suited to borrowers looking for an offset home loan to help pay less interest and repay their loan faster. It's available to owner occupiers borrowing up to 80% of a property's value.
None of the Big Four banks were on the list.
On lower interest rate products, HSBC Australia’s head of mortgages and third party distribution, Alice Del Vecchio, said “lower rates in the market are encouraging customers to refinance their loans, but 25% of mortgage holders don’t know what their home loan rate is, making it harder for them to recognise the financial benefit of switching their loan”.
Del Vecchio added that its 3.65% p.a. rate can “make a huge impact on the savings over the life of the loan, not to mention freeing up money in the short-term with potentially lower repayments”.
A home owner with a $700,000 variable rate loan at 4.00% p.a. will save more than $40,000 over the life of the loan by switching to HSBC’s lower rate.
The bank also ran a survey, along with RFi Group, on 2,000 mortgage holders in Australia to get a feel for home owner attitudes and motivations.
Of those polled, 30% said speaking to a mortgage broker was one of the first steps towards refinancing a mortgage while 25% said they researched loans online.
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Spring Market

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