1st February 2020 / Beth Oleyar: Melbourne’ Property Market Set for Busy Start to the Year

Melbourne's property market is set for a busy start to the year, with mortgage brokers across Australia reporting an influx of inquiries and home loan applications over the Christmas break.

According to Domain, the increased activity 'comes as house prices are tipped to continue to grow in the first half of 2020 following a strong rebound late last year due to the combination of several interest rate cuts, relaxed lending conditions and renewed market confidence following the Federal election'.

With the majority of applications coming from upsizers and first-home buyers, Melbourne based Finance Director and Mortgage Broker, Will Unkles, said banks were no longer scrutinising spending habits like they were six months ago.

'Deals are going through far easier, there are less questions from banks. Lenders are being less critical'.

The softer approach comes as welcome news for first-home buyers, many of whom are racing against the clock to secure funding for a house deposit through the Federal Government's First Home Loan Deposit Scheme.

After coming into effect on 1st January 2020 approximately 3,000 first-home buyers have already reserved a place under the scheme, with 190 having received pre-approval. To put things in perspective, the government will approve 10,000 loans each financial year and there are approximately 100,000 first-home buyers in Australia every year.

In response, Domain Economist, Trent Wiltshire, suspects 'the 10,000 places might run out pretty quickly. I think first-home buyers will be very active in 2020. They will try to get in before prices rise too much'.

Following a rapid market turnaround which saw strong auction clearance rates and soaring house prices at the end of 2019, momentum is expected to continue into Winter. Buyers, sellers and investors have been told to anticipate price gains for at least the first six months of the year.

ANZ Senior Economist, Felicity Emmet, forecasts a 4.3% increase in house prices across Melbourne for 2020, with consumer sentiment showing a comparable trend in the market. 'ME's Third Quarterly Property Sentiments Report has found that 42 per cent of Australians in the property market feel positive about it,' writes Cameron Micallef from Smart Property Investment.

In addition, with an increasing population and rental vacancy rates remaining low, investors can expect a positive outlook in the long-term, which will see the low volume of rental supply equate to a direct increase in rent prices.

The rise in property listings across February and March suggest a bumper year for Melbourne's property market in 2020.

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