Monthly Property News 9th Edition 2022.

Is our market just more normal?

Hi Guys, it’s Dean OBrien from OBrien Real Estate with the ninth edition of the monthly property news for 2022 where real estate information is on the house.

The meaning of Equilibrium is when the desires of the sellers and buyers meet on price? The price of Real Estate is generally determined by 3 factors, the first being the availability of property listings, the second being the cycle of interest rates and the third employment.  Our marketplace has transitioned from a 20% over supply to now be more in line with normal supply, however the pendulum is swinging and interest rates are driving the fluctuations in both demand and supply so movement in prices is being seen. Employment is at a 30-year high which is helping buyers to remain active. The most active buyer segments we are seeing right now are first home buyers and investors who are looking for an opportunity to buy at a more equilibrium price and specially for investors they are also taking advantage of more attractive yields. Upsizers are also trending to be more active right now, a slight downward shift in the market favours those that sell to upgrade to a larger property.  

Corelogic released its August Home Value Index on Thursday 1 September and the downward pressure on prices eased in Melbourne in comparison to last month recording a 1.2% fall for the month for combined units and houses whereas in July Melbourne fell 1.5%. Prices in Melbourne have now officially dropped into negative territory of a rolling 12 month period, now being 2.1% lower than the where 12 months ago. For Regional Victoria, home price values also eased recording a decline of 1.3% , which is the second time this has occurred in the last 12 months, however regional Victoria is still 9.9% up in prices over the rolling 12 months.

Looking at the rental market, rents for units and apartments in Melbourne increased by 7.5% for the month of August, which brings gross yields for investors to now be 3.9% and mind you this return is based on generally only a 20% cash investment with the other 80% leveraged, that’s the advantage you get in real estate over other most asset classes. The trend for higher density living is revived with units and apartments coming back into favour over houses, which is a reverse of the Covid trend where people escaped to larger properties while in lockdown. The signs for the rental market are pointing towards further rental price increases and increases in yields for investors for the remainder of 2022 and into early 2023.

That’s all for this month, I’m Dean O’Brien and remember the information provided is of a general nature you should always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.

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