Weekly Snippets From The Melbourne Real Estate Market
CoreLogic, Head of Research, Eliza Owen stated “clearance rates and changes in home values have historically been closely correlated. At face value, the sharp fall in clearance rates implies housing values could follow”.
A new environment has emerged already via COVID-19, with speed, accuracy and great service now more important than ever before, with First Valuation Group acutely aware of the need to support these pillars pre and post COVID-19. The ability to adopt flexible ways of working has allowed First Valuation Group to again lead the industry within the sub $10m commercial valuation sector, with speedy turnarounds having always formed part of our long term core offering.
Current conditions, although challenging at times, has allowed First Valuation Group to dominate its market share through stream lining the valuation remotely.
Market conditions already point to short term pressure of commercial property values in the second half of the 2020 calendar year, more particularly, last quarter .
It will be interesting to see if most financiers will adopt a non-revaluation policy in the second half of the calendar year. In simple terms, it means that if property values start to decline, provided that loan repayments are met and are up to date, there will be no technical defaults or revaluation requirements needed. Interesting times ahead, perhaps.
Market enquiries indicate that most industries are seeing work and KPIs being achieved, with adoption of superior ways of achieving targets in lesser time frames.
The residential real estate market is generally seeing a static level of value, with a disproportionate level of listings. Also increased turnover of activity by intending purchasers. Simply, prices at this stage are holding.
Retail sector is yet to emerge from the lows of commencement of COVID-19. Concern as to rental levels applicable in conjunction with yields adopted poses many issues as to what is a secure tenure post COVID-19, especially in light of an increase in Lessee’s desire to shorten lease terms.
Industrial leasing appears to be holding its ground with no major shift evident in general terms. However, of particular concern are industrial vacancies starting to emerge for the lower end of the market ie. subdivided industrial units in the order of 100 to 300 square metres.
A differentiation in end values becoming more evident from an investor’s viewpoint compared to that of an owner occupier.
Land Tax relief, although mooted as a great idea from the State Government, is yet to gain any traction due to the complexities involved in obtaining the relief.
Based on anecdotal evidence, residential vacancy rates within the Central Business District appear to be increasing with a major culprit being the exodus of international students.
An increased level of interest for small independent office spaces as a result of COVID-19, ie. no shared amenity areas.
Residential property potential purchasers having a “wait and see” mindset, trying to grab a bargain.
Lack of genuine investor enquiry across all commercial markets, with the concern of rental discounts and tenant security.
Commercial and industrial real estate is still within the COVID-19 bubble, and in short, still requiring some form of post pandemic direction. Mooted face rentals to decrease, but how much and again with yields to factor in post COVID-19 world of commercial real estate and viability of businesses and hence occupiers and lease covenants.
For a quiet chat, opinion as to value or any formal valuations and advisory,
please do not hesitate to contact Mark Ruttner on 0411 419 674.