Monthly Property News 11th Edition 2022.

It’s the rate rises that can stop a nation.


Hi Guys, it’s Dean O’Brien from OBrien Real Estate with the eleventh edition of the monthly property news for 2022, where real estate information is on the house.

Interest rate rises have been galloping faster than any property market boom we have seen. We’ve had 7 consecutive rate rises now, with the latest 0.25% increase moving the cash rate from 0.10% in April to 2.85% after today’s RBA announcement, that’s an increase of 2850%. In real terms, this equates to an extra $760 each month in loan repayments based on a $500,000 home loan. We’ve seen the average new home loan fall from $698,170 in November 2021 to $589,141 as of August 2022, that’s a 15.6% and that impacts on what buyers can pay for a home and what sellers can achieve.

The federal budget was released Tuesday last week, which predicted inflation to peak at 7.73% and the ABS the following day announced inflation currently sits at 7.3% in the 12 months to September, which was higher than expected. The CBA expects the cash rate for interest rates to peak at 3.10%, and we are currently at 2.85%, which means we are one more interest rate rise from the top of the cycle if they are right, and that is likely to be February 2023. ABS also released birth rates across the country last week with a 5.3% increase in births over 2021, which equates to a little over 15,000 more births. Victorian also recorded a record number of dwellings added, with a net increase of 50,310 over 2021-2022.

There is evidence the market is providing mixed results; some homes are achieving 4 to 5 bidders at auction, and some only 1 to 2. The spring selling season is a slow one from the perspective of new listings coming to market; nationally, over the last 4 weeks, new listings coming to market are down almost 19% based on the 5 year average.

The Home Value Index for Metro Melbourne declined for the 6th consecutive month, easing 0.8% for October. The declines are easing; September was 1.1%, August 1.2% and July was 1.5%. Year to date, Melbourne prices are down 6.1%. Interestingly, at the same time last year, the rolling 12 month price was up 16.4%. For Regional Victoria, pricing eased 1.4%, with year-to date sitting at a positive of 0.2%

Looking at the rental market in Metro Melbourne, we have experienced the nation’s strongest rent growth for a capital city, with rents for units increasing 13.7% over the last 12 months. There is a shift due to affordability toward higher density living. Investors looking at the gross yield can now claim a 4.1% return, whereas regional investors for units can reap a 4.3% gross yield.

That’s all for this month, I’m Dean O’Brien and remember the information provided is of a general nature you should always seek independent legal, financial, taxation or other advice in relation to your unique circumstances.

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