Experts fear that the massive number of landlords exiting the market is the major factor causing Victoria’s auction numbers to swell to a four-year high for July.
PropTrack figures show the state recorded a 60.5 per cent preliminary clearance rate from 432 early auction results yesterday.
In total, about 930 homes across Melbourne and the regions went under the hammer this week.
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The rental vacancy rate hit a new low in February, with incredibly strong population growth putting added pressure on an already strained market.
The last time that many auctions were held within a week of July was 2021, when the state emerged from a Covid pandemic lockdown in time for 937 residences to go under the hammer.
Real Estate Institute of Victoria president Jacob Caine said at that stage, many sellers were seeking lifestyle changes or bigger homes under a wider trend that took Australia by storm in 2020-21.
And while Mr Caine said other factors could be at play, a lot of rental providers were now selling due to the skyrocketing cost of living; multiple interest rate rises that have come in since May 2022 when the Reserve Bank of Australia started lifting the nation’s cash rate; and the Victorian government hiking land taxes on secondary and investment properties worth $50,000 or more, reduced from a $300,000 threshold before January.
Real Estate Institute of Victoria president Jacob Caine.
Melbourne’s median weekly rental price increased from $520 a week in June 2023 to $575 a week in June 2024, or by 10.6 per cent in the 12 months, according to PropTrack.
“Putting all these factors together, retaining an investment property is no longer affordable for some,” Mr Caine said.
He added that many first-home buyers were also selling due to surging owner’s corporation fees, which he attributed to soaring insurance premiums which “have gone bananas in the past 12-18 months”.
PropTrack’s director of economic research Cameron Kusher said there has been a heightened number of people leaving the market in Victoria for the last three or four years.
Mr Caine said the number of investors dropping out of the market was bad news for the nationwide rental crisis that Tenants Victoria’s patron, Professor Kevin Bell, last week described as “a housing disaster”.
Recent Suburbtrends data estimated more than 41,000 landlords sold Victorian homes in the past financial year.
PropTrack’s director of economic research Cameron Kusher said Melbourne’s median $575 weekly rent in June, a sum 10.6 per cent more expensive compared to 12 months earlier, had forced many tenants into sharehouses or to move back in with their families.
PropTrack is expecting 933 auctions in Victoria next week.
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