No shortage of excitement in year of the decade Author: Chris Vedelago Date: January 11, 2010
Welcome to 2010, which is set to be the most eagerly anticipated and intensely watched property markets in a decade.
And after the twists and turns of the past two years the 2008 bust and the shock 2009 recovery it's not difficult to understand why.
RP Data-Rismark reports that Melbourne dwelling values grew 17 per cent in the year to November, a stunning reversal of the 0.5 per cent drop that occurred in 2008 during the period of high interest rates and global financial crisis.
Historically, the growth in the 2009 market fell just shy of the "boom" performance of 2007 (20.2 per cent) but was leaps and bounds ahead of 2004 (0.7 per cent), 2005 (3.4 per cent) and 2006 (4.9 per cent).
"It's a signal from the market that there is very strong demand but we don't have sufficient supply. It's a symptom of a housing shortage," said Christopher Joye, managing director of Rismark International.
With Melbourne's population still rising at a record pace and the economy on the rebound, the same fundamentals that kicked off the housing recovery in 2009 are in place to continue it in 2010, Mr Joye said.
The Real Estate Institute of Victoria reports that vendors are already showing some confidence, with the number of properties due to hit the market in the coming weeks already higher than for the same time last year.
"For a month out, to already have 100 [auctions] listed for the first week of February would seem to suggest it's going to be a reasonably busy month," said REIV spokesman Robert Larocca.
Just how strong the market will get, and there is still plenty of debate on this issue, will turn largely on what happens with interest rates.
Consumer confidence, and by extension buyer demand, can be fickle. The federal "emergency" boost to the first home owners grant ended on January 1, with the money available now back to $7000.
For properties costing less than $600,000, Victorians still get an extra $2000 for an existing home and $11,000 for a new home.
But after revelations that public funds were sunk into scores of million-dollar first homes last year, the $7000 federal contribution is restricted to people buying properties under $750,000.
Just what effect this will have on the market is another of this year's great unknowns. While many agents and analysts are anticipating read: hoping that investors will swoop in to take up the slack, they have a sizeable gap to fill.
Yesterday's auction activity was concentrated in coastal areas, with agents reporting plenty of observers but no determined buyers.
In Rosebud, the two-bedroom villa unit at 3/50 Warranilla Avenue opened at $280,000 and attracted bids from two parties before passing in at $320,000.
The reserve is $370,000. The nearby two-bedroom unit at 1/50 Warranilla Avenue passed in for $280,000 after two bidders fell well short of the $350,000 reserve.
Ray White agent Rodney Richards said negotiations were under way for both. Three bidders took the three-bedroom house at 18 Jubilee Avenue in Indented Head from an opening bid of $200,000 to $300,000 before it, too, passed in.
Negotiations are continuing. CJ Keane & Co agent Val Saunders said the property's reserve was $340,000.
