Influencing factors may still stall Melbourne's steady new homes growth, according to Terry Portelli, Managing Director of leading residential sales and marketing agency Red23
Terry Portelli, Managing Director of residential sales and marketing agency Red23, is expecting a steady recovery for Melbourne’s new homes market during 2020, but is wary of influencing factors yet to play out.
"The market recovery is in its infancy but we have seen the established market turn, making gains with price escalation and clearance rates similar to early 2018." said Mr Portelli.
"We know this is partly due to demand exceeding supply.
"This correction will flow through to the new homes market.
The RBA has reduced the cash rate to 0.50 per cent due to the impending impact on the economy from the coronavirus.
"We believe there is a strong chance of another rate cut by mid-year," said Mr Portelli.
"In terms of affordability for buyers, we will be keeping an eye on how wage growth will compare to price escalation throughout this year.
"The war on lending will continue after the four major banks passed on between 0.13 per cent and 0.15 per cent across their portfolios since October’s rate cut.
"Borrowing will remain competitive with traditional bank lenders competing with non-bank lenders."
For comparisons on mortgage rates visit Joust here.
Nationally, owner occupier home loans increased from 19,840 in October to 19,866 in November 2019.
First home buyer loan commitments accounted for 29.7 per cent of owner occupier commitments (excluding refinancing). Investor loan commitments remain lower than owner occupiers.
Everything you need to know about the First Home Loan Deposit Scheme
New construction home loans fell 8.4 per cent to 3,028 from 3,305 in October 2019.
According to the HIA, ‘structural changes in the banking sector are still discouraging banks from lending to those borrowing a high Loan to Value Ratio, which includes most first home buyers.’
Contributed: Red23
REIV states Q4 2019 marks the first time that metropolitan house values have surpassed $850,000.
This result comes on the back of two consecutive quarters with growth of more than 3 per cent, the last time this occurred was June 2017.
There is speculation that median prices will be $1 million come 2021.
The REIV 2019 Q4 data indicates Melbourne house prices are up 3.7 per cent while units have increased 3.8 per cent.
For the first time Melbourne unit values surpassed $630,000, while new benchmarks were set across inner, middle, and outer rings.
"We understand first homebuyers will continue to find it difficult to enter the market within inner Melbourne suburbs," said Mr Portelli.
"But since May’s election, we are starting to see positive signs in greenfield regions across Melbourne and Greater Geelong.
"The ‘First Home Loan Deposit Scheme’ has proven successful.
"First home buyers will continue to take advantage of the FHLDS, the State Government’s Stamp Duty Scheme and the First Home Buyer $10,000 scheme to enter the property market."
Greater Melbourne’s median lot price was down -0.2 per cent month on month to $324,000 or -7.8% year on year.
The median land size remains at 400sqm similar to early 2019.
"Throughout 2019 we witnessed some transition in land size where 300-400sqm lots were favourable, particularly in the western and south-east corridors," said Mr Portelli.
"Land 500sqm+ was popular in Greater Geelong, however in 2020 we anticipate this to decrease."
Contributed: Red23
Developers and builders are creating diverse house and land packages to fit the required price thresholds of the government schemes.
Developers are offering cash rebates on land and builders are promoting increased upgrade packages.
"We are predicting demand for land will continue its upward trend during 2020 across the Melbourne and Greater Geelong regions, which in turn will drive price growth," said Mr Portelli.
"However, it will be critical there is a constant supply of land to provide affordable housing options for first home buyers and growing families."
For comparisons on mortgage rates visit Joust here.
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