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Hopes property prices would rise further this year have been wiped out by higher interest rates and affordability issues that have forced thousands of buyers out of the market.
Victorian property analysts surveyed in March had predicted property prices would rise 5.8 per cent over the next 12 months.
But in the past three months their expectations have slumped to just 0.7 per cent, according to a National Bank survey of 248 industry experts, including estate agents, property developers, fund managers and owners and investors.
The experts believe Victorian property prices will record the smallest price rise of all the states over the next year.
They were most optimistic about rises in Canberra (2.9 per cent), Adelaide (2.2 per cent) and Sydney (2.1 per cent).
The results are a worry for vendors who are expected to flood the market with homes over the spring selling season.
Buyers who do not believe prices are about to rise are less likely to bid strongly at auction.
Six interest rate rises, which have added $317 to the monthly repayments on a $300,000 loan since September last year, have dampened buyers’ enthusiasm.
Auction clearance rates have fallen from 85 per cent before Anzac Day to an average of 67 per cent this month.
The survey’s respondents tipped the strongest price rises to occur at the bottom end of the market – homes worth less than $500,000 in the middle and outer suburbs.
They predicted properties worth more than $2 million would fall in price.
The Real Estate Institute of Victoria says Melbourne has had the fastest price growth ever recorded with a $154,000 rise in the median house price.
Spring will be the next big test for the property market with thousands of vendors hoping increased stock levels and higher interest rates will not lead to lower prices.
Most of those surveyed expected at least one interest rate rise before year’s end.
would add an extra $38 to the repayments on a $300,000 loan.
In Sydney and Melbourne, auctions hit a 52-week low of 49.8 per cent and 55.6 per cent respectively, according to Australian Property Monitors.
On the corresponding weekend last year, Sydney auctions cleared 70.5 per cent of homes and Melbourne’s clearance rate was a healthy 78 per cent, The Australian reported.
Rates were down too from last year’s figures in Brisbane, with just eight homes sold under the hammer, clearing 47.1 per cent of reported auctions, compared with 51.9 per cent last year.
Eight homes were successfully auctioned in Adelaide, which had a clearance rate of 47.6 per cent, down from 57.9 per cent on the same weekend last year.
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National property consultant Damian Kininmonth, from Preston Rowe Paterson, attributed the steady decline in clearance rates across the country’s major markets to buyers being more selective and taking their time to make a purchase.
Winter bargains
JPP Buyer Advocates’ Catherine Cashmore said the tables had turned for some buyers, with stubborn hopefuls willing to brave the chill competing against fewer bidders and paying more realistic prices.
“There’s more stock on the market making up for a shortage earlier in the year, but a natural lull of buyers because people tend to hunker down in the colder weather,” Ms Cashmore told the Herald Sun.
“Concentrated competition is the biggest factor in pushing up prices.
“Now instead of seeing five, six or seven bidders in a crazy auction there are often just two or three.”
Real Estate Institute of Victoria president Enzo Raimondo said buyers were in the best position to negotiate for 18 months because of the amount of homes on the market and low clearance rates. Some vendors needed to adjust their asking price in line with market trends, he said.
“The residential market is much more balanced, with purchasers less likely to be confronted with homes selling for unexpected prices,” Mr Raimondo said.
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Strong results in a number of middle-market suburbs, including Morphettville, Salisbury Heights, Hove and West Beach propelled the median price up 1.23 per cent for the quarter and 13.89 per cent for the year, Valuer-General figures released to The Advertiser show.
The inner metropolitan area posted a modest 1.55 per cent dip in median price for the quarter, but still managed to surge 19.81 per cent for the year to $635,000. The state median increased 15.15 per cent for the year to $380,000.
Real Estate Institute of South Australia president Michael Brock said the figures were a solid result for South Australia. “This steady growth shows what a durable market we have here in Adelaide and the confidence people have in investing in property,” he said.
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“Sale numbers are also above last quarter’s level which means we have compensated for the drop in first homebuyer numbers at the beginning of the year.”
Mr Brock said a pocket of suburbs in the southwest had performed well, as did other middle-ground suburbs in the $500,000 to $650,000 bracket.
Toop & Toop managing director Anthony Toop said second and third time home buyers had boosted the middle market.
He said that suburbs such as Morphettville and Glandore – which posted a 40.5 per cent median house price increase for the year off low sales numbers – were becoming increasingly desirable addresses.
“Morphettville and Glandore are halfway between the city and the beach, have good transport links, are still affordable and they are now going through urban renewal,” he said.
At, the top end of the market , the median house price in the Unley and Holdfast Bay council areas jumped almost 22 per cent for the year.
A need to upsize and Morphettville’s convenient location recently lured Stuart and Natalie Hockley to the suburb.
Mr Hockley, 26, an engineer, said Morphettville was one of the more affordable suburbs in the area.
With daughter Chantelle, 14 months, and another baby due in November, a need for more room was also behind the move.
In Sydney and Melbourne, auctions hit a 52-week low of 49.8 per cent and 55.6 per cent respectively, according to Australian Property Monitors. On the corresponding weekend last year, Sydney auctions cleared 70.5 per cent of homes and Melbourne’s clearance rate was a healthy 78 per cent.
Rates were down too from last year’s figures in Brisbane, with just eight homes sold under the hammer, clearing 47.1 per cent of reported auctions, compared with 51.9 per cent last year.
Eight homes were successfully auctioned in Adelaide, which had a clearance rate of 47.6 per cent, down from 57.9 per cent on the same weekend last year.
National property consultant Damian Kininmonth, from Preston Rowe Paterson, attributed the steady decline in clearance rates across the country’s major markets to buyers being more selective and taking their time to make a purchase.
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“Obviously there were large volumes being transacted earlier in the year and people were really keen to get into the market,” Mr Kininmonth said.
“But with the rising of interest rates, people are becoming more selective with their properties, so we are actually starting to see the gap widen between good properties and what are just also-ran properties.
“The good properties are still doing very well, but the also-rans are not as sought after because people are happy to wait for another property to come along the next week.”
Mr Kininmonth said real estate agents were waiting for the spring months when the market was usually at its best.
Agents were hopeful the federal election would be held before spring as the lead-up to a poll usually flattened housing sales.
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