April Update

April has come and gone and we are now a third of a way through 2023. The year has flown by quickly and so has the market.

After 10 consecutive rate rises, owners breathed a sigh of relief as the Reserve Bank kept the cash rate on hold at 3.6%. This has helped steady current owners and buyers in the market and has brought confidence back into it. with economists predicting only another 2 rate rises before a stabilisation and re positioning of the rates.

Confidence in new home building is at a low. Following the fallout of Porter Davis homes in Late March, and the recent announcement of Maher Group ; Parent company of Urban Edge and Eight Homes, putting themselves into voluntary administration.

The rental market in Victoria has rebounded after a 2 year lull throughout the pandemic lockdowns. The current statistic for the Quarter ending March 2023 for Metropolitan Melbourne are-

Vacancy Rate 1.1%. The lowest the rates has been since 1.4% in April 2006. The pre pandemic March 2020 rate was 2.1%.

Median rents for 2-Bedroom units being $500 per week

Median rents for 2- Bedroom houses being $450 per week

Rents have reverted back to pre Covid level for majority of dwellings and we are now expecting increases to beyond pre Covid prices as migration levels rise.

There has been a rise in costs in holding on to investment properties particularly with the rapid movement in interest rates. Investors who are able to support the rate increases or have locked themselves into favourable long term rates are holding on for the forecasted increase in rental yields and holding out for potential capital gains. on the other side, the investors who are unable to support the holding cross increases and are unable to adapt to the recent changes for the residential tenancy regulations, are opting to cash in and move on to other investments.

The Victorian state government has released a plan to ensure an additional 1 million homes are built within Melbourne’s establish suburbs by 2050. With Infrastructure Victoria warning that Melbourne will need to build  44,000 new homes annually to accommodate an estimated 3.1 million extra people by 2051

Overall the month of April has had a stabilising effect on the market, as homeowners and investors wait for the state and federal budgets  to be handed down in May to support their next move.