What to Expect in 2015
Residential
In 2014, our sales data confirms how demand contributed to a significant increase in sales values and the number of properties sold. Our annual sales value has risen over 16% from our 2013 total and the volume of properties sold has risen over 40%. A number of record sales were held such as a noteworthy one in Brooklyn which was the first ever million dollar residential sale ever held for this suburb. Melbourne was referred in the media during December as “The leading property market in the year” while the Western Suburbs was constantly talked about due to the rate of house price growth outperforming other regions.
Interest rates
When gazing ahead to what to expect for the rest of the market in 2015, interest rates is the word that continues to be on the lips of both real estate agents and economists. The Reserve Bank has not shifted the official cash rate target since lowering it to 2.5 per cent in August 2013. While wage growth and consumer confidence are the prevailing factors to rates, interest rates may be lowered even further which would be great for the economy. Rate City’s Peter Arnold said in The ABC how the biggest independent rate move was in the September quarter of 2014 where a fixed rate cut by the Commonwealth Bank kicked off a round of reductions. Aside from competitive pressures and lower funding costs on international markets, Mr Arnold said the particularly steep reduction in longer-term fixed mortgages suggested that banks were expecting official cash rates to remain low. If rate cuts happen, the market will take off and stimulate further activity.
Commercial
Due to winning a Vic Roads tender and further development in our team, business expanded considerably for Compton Green Commercial in 2014 and this will only continue to flourish further in 2015. A report in December by Colliers International said commercial property investment accelerated in 2014 and 2015 would be more of the same with improving demand from tenants. Colliers International’s Chief Executive for Australia and New Zealand, John Kenny said, “The majority of sales are now to Australian investors. This is not surprising given that Australian investors are now recognised as the most confident in the world.”
Investing
Chinese investment in 2015 is set to grow and we are witnessing this demographic’s appetite. Researchers at Credit Suisse believe Chinese investors will spend $44 billion over the next seven years — an average of $6.3 billion per year to 2020. During December 2009, 1 Chinese yuan bought approximately 16 cents while today it buys around 20 cents. In the Inner West, investors recognise how our prized suburbs are showing an increase in rents. Landlords cannot wipe the smiles off their faces as Spotswood was named as the biggest increase in rental asking price in the last year. Footscray and West Footscray are also hotspots which we are constantly recommending to investors as they are suburbs underpinned by developmental projects.
Auctions
Melbourne is commonly referred to as Australia’s auction capital and it lived up to its reputation during 2014 with a record breaking year. The number of auctions we held increased compared to 2013, clearance rates were high and intense competition was a common sight. Buyers would often throw their hands up in despair at missing out at auction. This had a domino effect as they would go into the next auction willing to pay more than what they had perhaps anticipated. We are expecting that this cycle is likely set to continue throughout 2015.
First Home Buyers
First home buyers are often struggling to step onto the rung of the property ladder due to rising prices. According to The Herald Sun, PRD Nationwide analysis of Macquarie Bank mortgage approvals to first home buyers shows the average first home buyer can afford to spend $371,834. We recommend that buyers should undertake research to find the most suitable home in the current market and ask questions to feel confident before auction day. A number of our suburbs cater beautifully for first home buyers such as West Footscray where you can snap up a unit for around $350,000.
