Labor’s federal budget housing shake-up is facing a brutal Melbourne reality check, with families still being forced into fierce bidding wars.
Melbourne’s housing market is facing a brutal reality check after Labor’s federal budget property tax shake-up.
This weekend close to 900 Victorians will be testing the market in the aftermath of Treasurer Jim Chalmers making significant changes to negative gearing and capital gains tax and how they interact with property investment.
And while it’s tipped to impact investor activity, there are unexpected signs that families looking to buy a home will still be doing it tough this weekend.
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There are 10 registered bidders slated to contest a $1.2m-$1.3m family home at 26 Buckingham Drive, Rowville, at 12.30pm today.
OBrien Real Estate Rowville agent Rene Mawad said the level of competition was extraordinary in the current market.
“It is unusual. It is one in 100 in this current climate,” Mr Mawad said.
“Every single home I have seen recently in that $1.2m-$1.3m bracket has been tough. Those campaigns have been passing in, sitting there, and then selling two or three weeks later at a reduced figure.
OBrien Real Estate Rowville agent Rene Mawad said 10 registered bidders for a $1.2m-$1.3m home was “one in 100” in the current market.
“Then all of a sudden, here we are with 10 registered bidders on a home quoted between $1.2m and $1.3m.”
Mr Mawad said the bidders were ordinary family upsizers, not big-money investors.
“These are not wealthy people. They are not big-money buyers,” he said.
“They are very normal, very hardworking Australians.”
The move-in-ready home at 26 Buckingham Drive, Rowville, has attracted 10 registered bidders as families fight to avoid costly renovations.
He said buyers were fighting for “walk-in ready” homes because renovation costs had scared many families away from properties needing major work.
“Renovations cost so much now that buyers are terrified of buying something that needs major work,” Mr Mawad said.
“That gives families confidence. They can move in, live there, enjoy it and not be hit with a massive renovation bill straight away.”
Mr Mawad warned wider market uncertainty could create a short-term “sugar spike” as buyers and sellers rushed to make decisions.
“My biggest fear is that we are about to see a big sugar spike in the market over the next six weeks,” he said.
“People will move quickly. There will be momentum. Buyers will rush. Sellers will react.
“But those sales may have been inflated by that temporary sugar spike.”
Mortgage Choice Greenvale broker Rebecca Stella said Melbourne’s housing market had become a “survival of the strongest borrower”.
Mortgage Choice Greenvale broker Rebecca Stella said the market had become a “brutal reality check” and ”survival of the strongest borrower”, with fewer people able to buy but those still active taking on bigger debts.
“It’s very unaffordable out there. People can’t afford it,” Ms Stella said.
“The reason the number of loans has gone down is because people just can’t afford to buy, or they could be holding off because they think the market may drop.
“But I don’t think that’s going to happen. I think it will stabilise.”
Melbourne has 972 auctions scheduled this week, up 4 per cent year-on-year, in a major test after Labor’s federal budget shake-up. Picture: NCA NewsWire / Andrew Henshaw
Ms Stella said investors had sharply pulled back from her client base, while first-home buyers were still trying to secure a foothold.
“I’ve had an influx of first-home buyers,” she said.
“That’s what I’ve been solely dealing with at the moment, and not investors.
“Investors have completely dropped off for me.”
She said local agents had told her buyer numbers had fallen at inspections and auctions, but those still purchasing were taking on bigger loans because prices remained high.
“There are fewer people at auctions,” Ms Stella said.
“But people do have bigger loans now, unfortunately, and that’s due to the prices.”
Senior PropTrack economist Angus Moore said the budget would probably make established investment homes less attractive, but may not deliver a major affordability breakthrough.
Senior PropTrack economist Angus Moore said the budget would probably make established investment homes less attractive to some investors, but was unlikely to deliver a major affordability breakthrough.
“At the margin, this probably makes it a bit less attractive for some investors,” Mr Moore said.
“The modelling that we have, and there is not a lot of it, suggests it is probably going to have only a small effect on home prices, in the order of low single digit per cent.”
Mr Moore said the bigger affordability issue remained housing supply.
“It is not going to make a big difference to housing affordability,” he said.
“Solving affordability in a more long-term way really comes back to building more homes.”
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‘Inevitable’: Grim housing crisis warning for Victorians
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