Budget initiatives to skew citywide values in June

The Government’s first homebuyer initiatives are likely to skew citywide values in the June quarter, the Real Estate Institute of Victoria said today.

Announced in March, the removal of stamp duty for properties under $600,000 has resulted in a considerable reduction in the number of homes selling below this value in the three months to June 30.

New REIV data shows the proportion of sales below $600,000 for the June 2017 quarter is currently around 32 per cent, down from 41 per cent for the same period last year and 45 per cent in June 2015.

REIV President Joseph Walton said many vendors in the $600,000 price bracket had held off listing their homes until the stamp duty concessions come into effect on July 1. 

“The reduction of properties at the lower end of the market is likely to noticeably increase the metropolitan Melbourne median in the June quarter.

“This will be particularly evident in the city’s middle and outer rings, which have seen the greatest reduction in property sales below $600,000.”

REIV figures show the proportion of sales below $600,000 in Melbourne’s middle ring – that is between 10km and 20km from the city - is currently around 19 per cent, down from 32 per cent last year. 

The city’s outer ring has also been affected by the new initiatives with the proportion of sales under $600,000 falling from 53 per cent last year to just 41 per cent in the June 2017 quarter.

“These reductions are a larger drop than typically seen by strong price growth alone.”

Mr Walton added that as a result of the Budget incentives, the REIV expects the market to correct in the September quarter.  

“The September quarter median price will be a more representative figure as the supply of listed properties will better reflect overall market performance.

“The property market is seasonal and can easily be influenced by Government policy. The market is likely to correct in the September quarter when a higher proportion of homes sell at the lower end of the market. 

“The last time the citywide median moderated (December 2015) was due to a higher proportion of sales in the city’s outer suburbs.” 

Mr Walton said the inner city house market is unlikely to be impacted by first homebuyer incentives, however units in these suburbs may benefit from stamp duty concessions.