Manage
-
REAL INSIGHTS
THE CHAOS MARKET
Welcome to the second edition of our Real Insights Market Update.
Welcome to the Chaos Market. Yes, we’ve dubbed it that for a reason. The real estate industry has seen unprecedented shifts and transformations, akin to the unpredictable and dynamic nature of the chaos theory.
At MRE, we have always strived to be at the forefront of innovation and excellence in real estate. Our commitment to understanding the market inside out, and our passion for helping clients achieve their property goals, drive us to deliver reports that are not just informative but transformative.
As we present this Summer Market Report, we affirm our dedication to being your trusted partner on your property journey through the ever-evolving Chaos Market. Together, we will navigate the twists and turns, seize the moments of turbulence, and transform challenges into opportunities.
-
Rental Market
This season is unlike any we have experienced before, marked by a multitude of factors that are significantly impacting both the supply and demand sides of the market.
We are currently witnessing an exceptionally sunny period, both literally and metaphorically. This warmth has coincided with a notable increase in immigration, a resurgence of international students returning to Melbourne, and a revitalised interest in urban living. These trends are contributing to an unprecedented demand for housing in our cities, particularly in sought-after areas like South Yarra, Melbourne CBD and Carlton. However, this buoyant demand is meeting a constrained supply.
Key Considerations
Lack of new building developments
This shortage is not a sudden occurrence, but the result of complex regulatory and economic factors, including planning delays and escalating construction costs, which have been exacerbated by recent global events.
Key contributing factors:
1. Planning delays
The approval process for new developments is often lengthy and complex. Regulatory requirements, community consultations, and environmental assessments can significantly delay projects. These bureaucratic hurdles create uncertainty and disincentivise investment in new developments.
2. Escalating construction costs
The cost of building materials and labour has been steadily rising. Factors such as supply chain disruptions, tariffs on imported materials, and a shortage of skilled labour have driven up expenses, making new construction projects financially challenging.
3. Global events
Recent global events, including the COVID-19 pandemic and geopolitical tensions, have further exacerbated these issues. The pandemic disrupted supply chains, increased material costs, and caused labour shortages. Geopolitical tensions have added uncertainty to the economic environment, affecting investor confidence and decision-making.
Scarcity of new construction projects
Influenced by intricate regulatory and economic dynamics
Oops! We could not locate your form.
Government regulations on investment
Recent changes in government regulations, including new tax legislation and compliance requirements, have significantly impacted the investment property market. These regulatory shifts have diminished the appeal of maintaining investment properties, leading to a noticeable reduction in rental market availability.
The increased costs and reduced profitability due to new regulations have led many investors to sell their properties. Consequently, the number of available rental properties has decreased, tightening the rental market.
With fewer rental properties on the market, the demand for available rentals has increased. This imbalance between supply and demand drives up rental prices, making it more challenging for tenants to find affordable housing.
The regulatory environment has created uncertainty and reduced confidence among property investors. Many are now reconsidering their investment strategies, leading to a shift away from property investment towards other asset classes.
The reduction in investment properties affects not only the rental market but also the broader housing availability. As fewer new rental properties are developed, the overall housing stock fails to keep pace with population growth, exacerbating housing shortages.
With over 130 amendments to the Residential Tenancies Act 1997
Increased obligations have been expensive and laborious for all concerned
Oops! We could not locate your form.
Anticipated robust rental growth
The property market is set for strong rental growth and significant capital appreciation in the foreseeable future. This positive outlook is driven by an unprecedented supply-demand imbalance, making it highly advantageous to retain your investment properties. Current market conditions offer a unique opportunity for property investors. By strategically managing and holding onto your investment properties, you can benefit from the expected robust rental income and capital growth.
Leasing Results in the Past 60 Days
MRE’s peak rental season offered numerous opportunities for property owners to maximise their returns. This season is traditionally marked by a surge in inquiries and achievable rents, this period has once again proven to be highly advantageous for those seeking to leverage the market’s dynamics.
Oops! We could not locate your form.
-
Highlight Deals
Melbourne CBD
Melbourne's Inner City
Melbourne's Outer Fringe
Oops! We could not locate your form.
-
Sales Market
The Upcoming Surge. Sales Market: Insights from MRE’s Sales Manager
In the midst of a rapidly evolving real estate landscape, Melbourne’s sales market is experiencing a significant surge, defying many prevailing expectations. Michael Fava, Residential Sales Manager at MRE, provides insights into the intriguing developments and trends shaping our city’s property market.
A boom for buyers and sellers
Compared to this time last year, our inquiries have skyrocketed by 57%. This remarkable increase reflects a heightened interest in real estate investments and a strong desire for home ownership, despite the market’s unpredictability. For you, this means that whether you’re selling or buying, the pool of potential deals has grown significantly, offering more opportunities to achieve your real estate goals.
The number of potential deals has increased
Creating more opportunities for your real estate aspirations
Oops! We could not locate your form.
Surge in transactions
We are witnessing transaction volumes like never before, indicative of a highly active market. This surge in transactions demonstrates strong confidence in real estate as a valuable asset, even amidst market fluctuations. As participants in this market, you’re in an excellent position to capitalize on the momentum, whether you’re looking to expand your portfolio or step into home ownership for the first time.
Market performance in 2024
Already in 2024, the real estate market has reached new heights, with properties spending far less time on the market than in recent history. This trend is a direct result of increased competition among prospective buyers, signaling robust demand. The dream of home ownership remains alive and well, particularly for first-home buyers targeting properties under the $600,000 mark. This demographic continues to dominate this segment, undeterred by the market’s ebbs and flows.
First-time buyers seeking homes under $600,000
Remain a dominant force in this market
Oops! We could not locate your form.
Opportunities for sellers and buyers
For those looking to sell properties within this range, you’re in an advantageous position to attract motivated buyers. First-home buyers can rest assured that opportunities abound to find a place to call your own. A noteworthy shift towards owner-occupiers over investors marks a significant change in market dynamics. This trend underscores a desire for stable, long-term residences over short-term investment gains. For our clients looking to sell, this shift suggests a market leaning towards individuals and families seeking homes for personal use.
-
Highlight Deals
Thank you!
Thank you for entrusting MRE as your chosen property partner. It is a pleasure to work with you to optimise your investment.
Your trust in us means the world especially as we navigate the ever-evolving Chaos Market, our trusted relationship remains a constant. We are committed to providing you with top-notch service and support, ensuring your investments are thriving within this dynamic industry.
Thank you for your continued support as a valued client, and we look forward to many more years of partnership together.
Regards,
PETE HOOYMANS
Founder
Want to find out more?
Get in contact with one of our Liveability Experts to discuss!