Startling verbal calamity, blah, just good times ahead

By Gareth Kent, Director Preston Rowe Paterson

Things are starting to heat up in the Geelong and Surf Coast property markets in recent weeks.

Last weekend’s auction results across the region averaged 65% with some 47 properties changing hands on the weekend of October 7th.

Listing numbers across the region have also increased with data suggesting an increase of 12% in listing numbers through the September month, as the market builds into a more traditional active summer selling season.

The numbers of listings hitting the market across the region has increased far less than in Metro Melbourne, with listing numbers in Melbourne increasing by 24.9% over the same period.

This bodes well for our demand levels, as reduced supply will provide for a more competitive market.`

Being a careful observer in the Geelong region market place for many years, I’ve noticed that over covid we lost sight of some small characteristics that uniquely define this market, like the small holiday our market takes when local sports clubs contest in netball and football finals.

For a two or three week period our market hibernates, as a large chunk of the population head to ovals and netball courts around the region.

This characteristic returned again this year with three weeks of noticeably low enquiry levels in the later part of September, which appears to have since bounced back again. This is another sign that we are returning to pre-covid market conditions, and heck how good is our town that we do life this way.

So what about all the noise? Firstly, a lot has been made of Tim Pallas’s startling verbal calamity, when he surprised even his own cabinet with the announcement of the expansion of the vacant residential land tax charge across the state. Essentially, residential properties that have been left vacant for six months, and land that has not been developed for five years will be subjected to this new tax.

He makes a good initial argument, that we need developers to get on and build, and we need all homes occupied.

However, the consensus of the property industry is that this tax will have almost no impact on either of these issues. For one thing it’s reliant on self-reporting (I hear you laugh).

Secondly, there’s going to be quite a lot of contention about what is ‘suitable development land’ to be taxed.

For example, if a developer has purchased land and been knocked back on a permit, will they be subject to it? My thought is let’s not waste any more time on it, lest it has about as much impact as his Windfall Gains Tax. Tax, tax, tax: does our Treasurer know any other way?

Of more interest is the predictions by many senior economists; that 2024 will be a boom year for property.

NAB’s latest Residential Property Survey estimated that the property market will grow by a further 2.0% in 2023 and 7.4% in 2024.

ANZ also recently changed its official property predictions indicting that house prices will grow by between 4-5% throughout the year 2023 and another 5-6% in 2024.

The predictions of a bumper 2024 are being reiterated across the industry, with many quoting wage growth, continued migration and confidence all heading in favorable direction to support growth.

The mortgage cliff we all expected throughout 2023 does not seem to have had the feared negative impacts that were forecast, and I think the banks all need a pat on the back for the steady hand and common-sense approach to refinancing much of that risk out of the system.

There will still be many that will try to use this summer peak season to recalibrate their lending position, hence I expect to see some good buys coming through in the next few weeks.

However for sellers and agents I caution, new lending is very different to refinancing existing debt.

Purchasers establishing new loans to buy at auction or private sale need to satisfy more criteria than ever before. This will have an impact on how people buy in this market. Sellers and agents should be aware that unless they are careful auctions may fall flat as potential purchasers may be locked out if they require, longer settlement periods, finance clauses or smaller deposits. To create competition to drive the best price, your agent is likely to need every tool in his shed, so flexibility should be provided and the agents should be chasing all enquiries down prior to auctions to ensure they are given an opportunity to bid.

Its going to be a great summer. Warmer weather is overdue, and I can’t wait to see the waterfront pumping again. See you in the sunshine.