Is this the bottom of the cycle?

This week, CoreLogic reported that over the past week, across the five capital cities, property values increased by 0.2 per cent (Sydney 0.4 per cent, Melbourne 0.2 per cent, Brisbane 0.1 per cent).

Locally, in Geelong, we have witnessed several great auction results over the weekend, with the standouts being:

• 19 Layton Crescent, Newtown, sold by Tom Butters (Buxton) for $2.535 million – a cracking result on the reserve of $1.5 million!
• 7 Connor Street, East Geelong, a neat little renovated weatherboard dwelling well located to Geelong CBD on a 432 sqm allotment – with 70 groups through, this property sold for $1.56m after the auction, and
• 202 Autumn Street, Geelong West, sold for $2.05 million by Marcus Falconer (Hodges) – a high-end renovated dwelling, yet lacking a garage or swimming pool, this is a great result for this property.

Although we have started to see an increase in auctions, and more property coming on the market, across the country we are still 28.4 per cent down on the number of auctions at this time last year.

Melbourne recorded the highest number of auctions up by 74 per cent on the previous week (1,043).

This is great for Geelong as our market certainly benefits when the Melbourne market shows strength.

Auction clearance rates are still down, but not too uncomfortable at 62.5 per cent.

However, sellers are still on strike, and there is a lack of ”good quality” properties on the market.

Commercially we have also seen some great results, Tim Darcy (Darcy Jarman) auctioned 10 & 12 Riversdale Road, Newtown, two neghbouring vacant land allotments, zoned mixed-use, and achieved a result of $2.5 million, equating to $1,953 per sqm (1,280 sqm).

This creates a very interesting dynamic as the Pegasus antique site, located on the river end of Latrobe Terrace, is now also up for sale.

This site houses an old wool store warehouse, with a land area of 3,673 sqm, also zoned mixed-use, this EOI closes on April 4 with Colliers Geelong.

I will be very curious as to what level this property climbs to, as a unique and compelling development site.

Post-release of the Central Geelong Framework Plan, we have also seen the settling of several inner city development sites in recent days, and we can expect the cranes to roll in very quickly.

23-25 Myers Street (Kings Funerals site) has now passed possession to the developer, who will begin construction of a 14-storey building with residential and social housing outcomes… and several more I cannot tell you about just yet!

Of concern for everyone, however, will be what’s happening in the US and Europe with several banks in the US in trouble, the collapse of Silicon Valley Bank and Signature Bank, and the rescue of Credit Suisse only a week ago.

The fear that we should all start to consider is a credit crunch, this crunch will certainly slow down the US and European economies.

Perhaps this is the start of the US recession that had been predicted for nearly two years.

I imagine our Reserve Bank will consider the implications of this stress and perhaps we may start to see the end of the present aggressive interest rate hikes.

Locally, this could be exactly what we need.

The wait-and-see attitude is what is robbing the market of demand from buyers and sellers.

People just cannot make buying decisions whilst the Reserve Bank keeps moving the goalposts.

I hope that an easing of the interest rate hikes will provide much-needed certainty, and we will get used to the new cost of borrowing money, adjust, and get on with our lives.

Perhaps it’s too early to say we are at the bottom of the cycle, but if you ask me, the signs are all there.

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