Australian Housing Prices Rise Fastest Since 1988, Housing Vacancies Break 10-Year Record
Huge volumes of inner-city rental vacancies in Melbourne have been the result of the COVID-19 pandemic. Over the past year, investment in inner-city CBD areas has ground to a halt, but more recently, investors are cautiously stepping back into the major city market. Australian housing prices are on the rise too. Inner-city availability historically has fallen in February as students commence their studies for the year, but due to international border closures, the seasonal increase in rental demand has not occurred this year.
Outside of the Melbourne capital, vacancies are working very much in the favour of landlords. SQM Research has predicted that this year will favour tenants in the inner city as the property market recovers from the pandemic, but will remain a landlord’s market in regional areas. Larger properties in outer suburban locations have enjoyed a strong year of rental returns. The Melbourne rental market as a whole has been described as ‘relatively resilient’.
Current rental market conditions have benefitted outer suburban and regional investors drastically, which signals that it’s a good time for other investors to enter the market immediately.
This is substantiated by CoreLogic data which shows that the monthly home value index rose 2.8 per cent in March. This was the largest increase in Australian housing prices since October 1988. Home values in Melbourne are at record highs and housing values in regional areas have risen 11.4% higher over the past year.
Listing numbers remain low, yet buyer demand has been increasing due to record low interest rates set by the Reserve Bank. Advertised housing stock is 25% less than the five-year average and for every new listing, 1.1 homes are being sold. Listing levels in regional areas are particularly low, with people moving away from the capitals due to COVID. Low interest rates have allowed for greater borrowing and encouraged first home buyers to enter the residential housing market.
The good news for home owners is that the Reserve Bank has said they won’t raise rates to explicitly target lower house prices. This means that it’s still a good time for first home buyers and investors to enter the market, despite low housing availability. Regulatory intervention to address over-borrowing is also unlikely to be introduced unless lending conditions deteriorate.
If you are looking to enter the Melbourne inner-city or outer-suburban property market as a first home buyer or investor, contact Pillar Financial to discuss your options. We can help you to work out how to purchase your dream home. The market is still in a great state to be buying, so don’t wait, call us today.
Pillar Financial is open to take your call Monday to Friday, 9:00am to 5:00pm. Call our friendly team on 1300 730 309 to ask what we can do for you as you begin or continue your property investment journey.