Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
Melbourne property investment market operating smoothly
I want to let you in on a little secret. Despite all the media commentary about falling clearance rates, buyers sitting on their hands and vendors fretting about the value of their property, the Melbourne investment-grade property market is operating very effectively.
Each weekend, there are around 20 properties scheduled for auction in Melbourne that we have identified as investment grade. With total weekly sales in Melbourne somewhere between 700 and 1100 a week, this is clearly a fraction of the total stock.
The clearance rate for these select properties under the hammer is around 75 per cent, with apartments doing slightly better and houses slightly worse. This difference in clearance rate between houses and apartments reflect slightly stronger demand in the sub-$700,000 bracket than the $700,000-plus sector at the moment.
Of the remaining 25 per cent of investment properties, the ones that are passed in, around half are sold in negotiations the same day and pretty much the rest are sold within 3 or 4 days of the auction.
The lesson for prospective investors is thus: select your asset well and only pick investment grade property and you will rarely have trouble finding a buyer when you eventually want to sell, regardless of how tough broader market conditions are.
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