Looking toward 2011 there are a number of trends that will influence the local residential property market.
Interest rates and housing affordability
House prices may have stabilised over the past six months but the
cost of home ownership has not. As a result of multiple increases in
interest rates, which have not been matched by higher incomes, the
affordability of housing has been substantially eroded over the past 12
months. Further interest rate increases would have a negative impact in
2011. As a result, in 2011 suburbs at or below the median will increase
Auction stock levels
Many home owners looking to sell in 2011 will have watched the
performance of the auction market over the last few months and noted the
drop in the clearance rate to around 60 per cent. This is likely to
lead to a number of sellers looking to use private sales rather than
auctions as the selling method in the same way that high clearance rates
in 2009 led to more auctions in 2010. This is then likely to increase
competition for the homes at auction.
First home buyers
With the promise of a 20-per-cent cut in stamp duty from 1 July 2011,
we are likely to see a small increase in first home buyers in the
second half of next year.
There still remains a substantial gap between the Victoria’s
population growth and the supply of new dwellings; this gap won’t be
closed in 2011, resulting in ongoing pressure in all segments of the