Monthly Property News 11th Edition 2024.

“$70K less required to buy now than in April 2022”

Hi everyone, I’m Jason Mudford from OBrien Corporate with the eleventh edition of the monthly property news for 2024.

With the release of CoreLogic data for October 2024, based on the median house price, it can now be said that is costs $70,229 less to buy a house in Metro Melbourne than it did in April 2022, which was the last month of historically low rates of 2 percent before we saw 12 interest rate rises over the next 13 months.

To outline the effect of the increases in interest rates that commenced in May 2022 to today the borrowing capacity for buyers seeking mortgage approval has diminished approximately 40% and borrowing costs to service a mortgage has increased approximately 70%.

The released inflation figures released last Friday, has Australia’s annual headline inflation dropping to 2.8 per cent in September. Inflation is now within the 2 to 3 per cent range however the trimmed mean is sitting just above the range at 3.5%.

After the inflation numbers were released, CBA moved its first interest rate cut prediction from December 2024 back to February 2025 to now be in alignment with the other big banks NAB, Westpac and ANZ. So far, the big four banks haven’t been close in predicting where interest rates will be over 2024, let’s hope in 2025 they have predicted the future a lot better.

CBA and Westpac are predicting four 0.25 per cent cuts by the end of 2025 to bring the cash rate to 3.35 per cent. NAB thinks there will be five 0.25 per cent cuts with one cut per quarter, which would take the cash rate to 3.1 per cent in early 2026. ANZ is predicting three 0.25 per cent cuts in 2025, landing the cash rate at 3.60 per cent by the end of the year.

Looking home price numbers below, Melbourne sits at annual decline of 1.9% in median home prices and Regional Victoria is in a similar vein with a 2.1% decline.

Furthermore, from a rental perspective, the growth numbers below, point to more subdued rental growth as we have known it, but based on Melbourne’s declining home values yields have never looked better. We are still seeing investors leading the upswing in mortgage related activity with the value of lending up 34.2% in the past year, more than double the increase in owner-occupier lending at 16.8%.

That’s all for this month, 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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