Aussie home value index rises fastest in 32 years
In a Corelogic report just released 1 April, home values in Melbourne (and Australia wide) are at a record high post the short-lived Covid-19 downturn.
In Corelogic's March report on home values, the index (which measures national home values) recorded a 2.8% rise in March alone, which is the fastest pace since October 1988.
It has meant that in many areas, buyer demand spurred by continuing low interest rates, is exceeding supply.
For those currently looking for a new home, reports like these can feel a little daunting. After the market ground to a halt in 2020 due to Covid-19, the steam in the market is definitely building.
The stark difference can be seen in our auction clearance rates this year compared to last year. Melbourne's current clearance rate is sitting at 81%. This time last year it was only 36% as Australia went into a full nationwide lock down.
However, the levels of supply in many areas while significantly higher than our Covid-19 plagued 2020 is still behind previous averages, which could be argued is further stimulating demand as buyers compete for available properties..
As a broker who works closely with clients, I hear first hand the struggles some clients are finding in breaking into the market. The danger in this situation is that the 'fear of missing out' can force new buyers into a position where they extend themselves more than they are comfortable.
Ultimately, in many cases, even when properties are being sold at auction, banks are still completing a valuation rather than relying on the sale price. This is important to keep in mind, as the cost of getting caught up in spiralling house prices could result in home buyers spending more for a property than what it is worth. And this can be a problem, especially for first home buyers looking to buy up to 95% of the value of their first home.
It is crucial therefore to work out what is 'reasonable' for a property that you are interested in. Be crystal clear about what you can afford and how far you are willing to go to secure a property. It may well mean the search is longer or more properties need to be inspected, however, this will pay off for you. Be patient and persist.