VIC New wave of within reach supply or price hike in 2021?

Hi all,

I am looking to secure an investment property in the coming months and have targeted several different areas that I would consider having great not-too-distant future growth opportunities and potential for CG ("areas" I have defined as being the next big wave of suburbs located on the edge / just outside of Melbourne's metropolitan region in the northern suburbs and down the bayside area through to the Kingston CC, and have single detached homes on decent blocks of land.)

In some of these areas, monitoring over the last 6-12-18 months, my experience has been that during the peak COVID period, supply increased dramatically and prices dropped (not breaking news). IMO - In more recent times, these areas have seen an enormous amount of sales presumably gone to those who are ready made investors with money in their pockets and find themselves at a lower risk given their financial capacity, and/or to job secure families ready to make their next move. Due to this, my concern is I've missed the boat of opportunity as I just wasn't financially ready then, but I am now and fear supply is going to become of a shortage within these sorts of suburbs and properties, or will become increasingly out of reach again like with the prices we saw in 2017 -18.

I wanted to gauge peoples opinions or expertise on when they think the next wave of supply will come in these sorts of suburbs. Will the conclusion of Jobkeeper and Jobseeker see another mass wave of homes up for sale? Do you think this will have any impact on slowing down the pricing hike we are seeing at the moment?

All opinions and disagreements with the above or alternative views are welcome, thanks in advance

 

no one got crystal ball , but seems there is a big price hike in 2021

 

Housing turnover and house prices: A fractured relationship?
Interesting findings, not necessarily what one would expect.
Obviously if supply increase is due to significant increase in unemployment, then there will be bigger problems than house prices..

 

This slide is from CBA's recent investor presentation 31/12/2020 page 72, CBA have 25,000 residential loans still being deferred (47% of them located in Vic) :


The whole presentation data set here if you'd like to dig deeper:
https://cdn-api.markitdigital.com/a...access_token=83ff96335c2d45a094df02a206a39ff4

 

There's another possibility too: that there are a huge number of people waiting for the market to crash in March. If it doesn't crash, they might say; ok well we still need a house. That could be a lot of pent up demand.

I expected the market to go nuts in March. It started in Dec / Jan. Was it premature?...or is the big wave yet to come?

So the irony is waiting for it to drop may end up going in the complete opposite direction..

 

THIS is what it looks like when people are WAITING?

 

I don't have a crystal ball either, but I'm optimistic that a wave of home loan defaults is unlikely to occur when the jobkeeper/seeker is removed.

The ABS's most recent job vacancy statistics shows Vic almost back to normal when you combine both public and private job vacancy numbers (Vic 60,100 job vacancies Nov 2019 vs Vic 58,400 vacancies Nov 2020) And this data is already outdated, I suspect the next set of numbers will be much better.

 

Working in financial institution (non Big 4) our economics team remains bullish on Aus and it is clear the economy is performing well and employment is solid. While certain sectors remain impacted the vast majority are going about their normal lives. As a result, equity market investors are not concerned about the end of JK or JS

We have also seen that banks will not force people to sell and those that need to sell will easily be absorbed by the market. The 'March test of the market' is the news media trying to have something to say. I wouldn't be banking on anything changing then. At best prices prices will flatline in March for a couple of months as additional supply comes on board. The likelihood that prices will be lower seems low to me.

 

Anecdotal data but the increase in two years is mind boggling considering there was/is a pandemic inbetween

8 Cleve Grove, Heidelberg
Sold 8 Cleve Grove, Heidelberg VIC 3084 on 16 Feb 2019 - 2014888924 | Domain


6 Cleve Grove, Heidelberg Sold 6 Cleve Grove, Heidelberg VIC 3084 on 09 Feb 2021 - 2016743760 | Domain

 

From the photos number 6 looks a lot better, so that might explain some of the gap.

 

Yes clinker brick but inside is not renovated. 8 had a renovated interior and bigger floorplan.

 

If our largest lender has 25,000 and 1.4% of loans in deferral and of that 74% are at less than 80% LVR, that leaves 0.36% or 6,500 loans ‘at risk’.
I’m not sure what their normal provision is for bad loans but I’d be surprised if it’s much lower than that.
Either way with a fast recovering economy (recent employment, job creation & participation rate all strong) and with only Vic lagging due to making a mess of hotel quarantines, I can’t see a big cliff or r/e crash coming in March or other future month as most have already moved off deferrals.
Good luck all!