REA Group reported Victoria's auction clearance rate was 86% for the week ending Sunday 16 May, while Domain reported a clearance rate of 77% in Melbourne up to 15 May.

However, Propertyology's head of research Simon Pressley has called such metrics "misleading" and a "smokescreen".

"Those with an interest in Melbourne’s property market would be wise to stand back from today’s metrics-of-the-moment and objectively assess the fundamentals," he said.

“Melbourne’s weak economy, declining population, record high rental supply, and the ratcheting up of new housing construction are a collective group of fundamentals that are as weak as what Darwin and Perth saw throughout the last decade."


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 Star Customer Ratings
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Quick and easy online application process.
Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
Apply in minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
Disclosure
6.09% p.a.
6.11% p.a.
$3,027
Principal & Interest
Variable
$0
$250
60%
  • No annual fees – None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
Disclosure
5.69% p.a.
6.16% p.a.
$2,899
Principal & Interest
Fixed
$0
$530
90%
  • Available for purchase or refinance, min 10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Flexibility to split your loan with both fixed and variable rates
Disclosure
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

The ingredients to the "smokescreen"

A construction boom and falling migration to Melbourne are the two key ingredients to its "fragile" property market.

Propertyology's research shows nearly 41,000 dwellings were listed for sale in Melbourne as of 30 April.

That's 18.9% higher than a year ago, and "a significantly bigger supply increase than any other capital city". 

Pre-COVID housing supply pipelines were also around 45,000 extra dwellings per year.

Mr Pressley said Melbourne's median house price declined by $134,000 between January 2018 and May 2019, "caused by an over-stimulated construction sector". 

"Construction has always been integral to Melbourne’s economy. Stimulating this sector at a time when the population is effectively declining, and other economic factors are fragile, is not a recipe for property price growth," he said.

Australian Bureau of Statistics (ABS) figures show net migration fell more than 20,000 in six months to September 2020, when Melbourne usually welcomes up to 80,000 per year. 

“The impact of Melbourne’s four-month lockdown reminds us of what happened in Perth in 2014 when commodity prices tanked, inflicting several years of pain. Both economic events marked the beginning of a sharp reversal in migration patterns,” Mr Pressley said.

“The diminished housing demand is one thing, but the billions of lost revenue from those who left town, going on to spend their household budget elsewhere has just as much impact on a city’s property market.”

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Simon Pressley, head of research at Propertyology. Picture supplied. 

Stamp duty increases "suppressing economic growth"

Ahead of this week's state budget, the Victorian Government announced stamp duty and land tax increases:

  • 0.25% land tax increase on properties between $1.8 million and $3 million.
  • A 'Premium' stamp duty on properties above $2 million - $110,000 plus 6.5% dutiable value.

Victorian Treasurer Tim Pallas says $2.7 billion would be raised by such measures, with the land tax increase affecting only 10% of Victorians who pay it and the 'Premium' stamp duty applying to more than 70,000 properties.

There will also be a 'windfall gain' tax, with profits as a result of council rezoning taxed up to 50%.

However, such increases have been slammed by groups such as the Real Estate Institute of Victoria (REIV), the Property Council of Australia, the Property Council of Victoria, and the Housing Industry Association (HIA).

Mr Pressley added to the chorus, saying the increases will 'suppress' economic growth.

"While every government around the world borrowed money to fund COVID economic stimulus, Victoria borrowed much more than other states," he told Savings.com.au.

"Sadly, I reckon the Victorian economy will now be one of the worst performers in the nation for many years.

"They have placed themselves in the same spot as Queensland with an enormous debt meaning an inability to sufficiently fund infrastructure and to support industry."

Standard and Poor's (S&P) downgraded Victoria's credit rating two notches from AAA to AA, the first time in 18 years the state had not retained the highest rating.

S&P forecast the state's debt to be more than $155 billion by 2024. 

Moody's Investors Service also downgraded Victoria's credit rating to AA1 from AAA late last year.

Melhousing.jpg

Image by Titus Aparici on Unsplash





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