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.
The Melbourne inner suburban investment property market is in recovery mode
The inner suburban investment property market is in recovery mode. You won’t see it in the statistics published in our metropolitan daily newspapers because they concern themselves with city-wide data which, as the table shows, only indicate a flat market.
But you are undoubtedly more interested in what is happening to investment-grade assets 2-12 kilometres out from Melbourne’s CBD! The feedback from our team of property advisors who are in the market 6-days a week is that prices for this category have clawed back around half of the decline in prices experienced since the previous market peak in 2010 – a testament to their resilience and quality even in a challenged market.
A further illustration of this two-speed market is auction clearance rates. Melbourne-wide, these are sitting at around 60% for 2012. That in itself is good news, being several percentage points higher than the corresponding numbers for the second half of 2011. Nevertheless, we are finding a higher clearance rate for top quality investment property – it is back at around 75%. This tells us that there is a perceptible shift in the balance of power from buyers to vendors.
The pace of the upswing is measured – the market isn’t exhibiting the volatility that can appear when it really takes off – at least not yet. That’s good news, as it provides more certainty and transparency about what is fair value for market participants.
Another positive for the market is the reasonable level of quality stock at the moment. If you’re looking for a quality asset, now is a time you can be confident of finding it. Similarly, those who are seeking to sell can expect growing interest from buyers.
Rate cut impact
With this backdrop of an already recovering market, the 50 basis points drop in the cash rate by the Reserve Bank on Tuesday, plus the prospects of further cuts in coming months, can only provide further support.