Quarterly Property Market Update – May 2010

Based on The Age Sunday Results*

Supply Good… Demand Greater

It’s not an under supply, but an unrelenting demand that is driving our market. As can be seen from the figures above, market turnover has been solid both at the end of last year’s auction season and the early stages of 2010. Weekends of 800 and more offerings, are big weekends at any time of the year and in the last few auction months we have seen a number of them. Nevertheless, in spite of these high numbers, buyers are snapping the properties up. A continuing auction success rate over 80% each week is also nothing short of phenomenal! Back in the ‘80’s and 90’s, any weekend which achieved an 80% or better success rate, was revered and celebrated… Today, anything under is almost regarded as a market slump!!

As mentioned often – barring left field catastrophes, the key to this run maintaining its momentum is the interest rate picture. We are still at very low levels historically which “feels good”. The increase experienced in recent months has largely been anticipated and factored in by most. Mortgage rates up to and around 7% as we are now approaching, are a comfortable maximum in my view. Another 1 or 2 percent on top of that – should it occur, may cause current borrowers some unexpected pressure and the marketplace we are seeing at present likely to lose some momentum. Does this mean prices stabilize, or even come down? Yes, quite possibly…However there are many “ifs” and timing is nearly always impossible to predict. Thinking long term is the key.

Happy house-hunting,

Bruce Renowden