Most segments of Melbourne’s residential market will get a bounce from the cut to official interest rates, but none more so than entry-level properties below $600,000.
The entry-level sector is heating up. Not only are investors returning to buying units and houses in the inner and middle suburbs, but first home buyers also are bringing forward their purchasing decisions.
The Reserve Bank’s cutting of its cash rate by 25 basis points to 2.75 per cent has been matched – or bettered, in ANZ’s case – by the big banks.
The rosy outlook for mortgage finance clearly helped to boost crowd numbers at open-for-inspections and auctions on Saturday.
The clearance rate was above trend at 72 per cent from the 628 auction results reported to the Real Estate Institute of Victoria. The results of another 77 auctions are yet to be reported.
REIV spokesman Robert Larocca said that, since the school holidays ended last month, there had been ”a trending up of the clearance rate on a weekly basis”.
The under-$600,000 market is attracting more competition in part because the Napthine government will axe on June 30 Victoria’s $7000 first home owner grant for buyers of established properties.
The grant will still be available to those buying new properties and will increase to $10,000 on July 1, while stamp duty discounts for all first-time buyers will jump from 30 per cent to 40 per cent in July.
The changes have been criticised by the REIV, which says 70 per cent of young buyers opt for existing properties, but they put many buyers in a sweet spot.
The first home owner grant applies from the date a sales contract is signed. The stamp duty discount kicks in on settlement. This means that for purchases between now and June 30, and settled on or after July 1, all first-time buyers are eligible for the $7000 grant and a 40 per cent stamp duty discount.
Chris Tolhurst, Domain – The Age, May 12 2013