Market Report

Mark Pearman – Mentone Chelsea Office Manager

The real estate market is one of the best indicators of the consumer sentiment and the start of 2023 has certainly seen it respond to the hit in both local and worldwide confidence. While recent influences including the COVID pandemic, Ukraine War and subsequent supply issues are specific to this generation, the impact they have had on the economy echo what was happening in Australia in the early 1990s

After the boom of the eighties, 1990 saw the beginning of the recession “we had to have” in an effort to address domestic demand, curb speculative behaviour in the commercial property market and reduce inflation.Mirroring the statistics of 1990, the average mortgage in 2021 was approximately 28% of the average wage (calculated before the latest interest rate hikes). As home owners now come under increased pressure to meet loan repayments after 9 consecutive rate rises, the natural step is to limit discretionary spending. This means that industries such as hospitality, tourism and entertainment are forced to cut staff – and so it spirals from there.

This year (2023) will see some 800,000 mortgages come out of fixed interest periods. As an example, a family with a below average loan of $300,000 who was on a fixed rate of 2.04% could expect to see that jump to 5.5%+ – the result is an approximate increase of over $1000 per month. It is anticipated that as home owners are forced to sell due to rising rates, there will be a further drop in prices over the course of 2023. As rates and therefore prices stabilise, investors should return to the market in pursuit of strong rents resulting from increased demand and a short supply of rental properties.With prices expected to stagnate for some time – much like the 90s where the turnaround took over 5 years – we are expecting buyers and sellers to have a minimum five-year plan when considering their real estate purchase/sale.Challenging times can often lead to opportunity, please contact the team at Hodges Mentone should you want further market insight or to discuss your own personal circumstances.

(Sources include: Tradingeconomics, Corelogic and REIV)

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Metropolitan Melbourne Price Snapshot

Rental Property Report

Daniela D’Alessadro – Property Manager

With the current high demand of properties outweighing the stock available in Melbourne, many renters across the city are facing substantial rental price increases.

Increased demand has been brought about by a combination of factors that include skyrocketing interest rates making investors wary of taking the plunge, the return of renters after the mass exodus during the pandemic and many Residential Rental Providers selling their investment properties in the wake of the house price boom last year.This shortage of rental properties coupled with the increase in the number of prospective renters seeking a home inevitably drives up prices.

The Melbourne rental market has seen a recovery post-covid with unit prices rising by 42% to hit a median of $540 per week and enquiry levels increasing by 27.9% per listing.Unfortunately for renters, I believe we’ll continue to see rising rents. Addressing the supply and demand dynamic will take some time, which means that supply is likely to remain tight and the cost of renting will increase.

Daniela D’Alessandro
ddalessandro@hodges.com.au
0438 702 292

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Commercial Report

Paul Johnston – Director / Commercial

Interest rates are the current ‘BBQ stopper’ and remain the main factor for markets presently. The RBA has indicated that they still believe more work is required before inflation is brought under control. Government borrowing and spending also fuels inflation. Hopefully we will see rates stabilise soon.

How does this affect commercial and industrial property? Interest rate rises impact the yield investors expect from their investments, which of course directly relates to prices. Bayside still seems to be fairly tightly held, with not many commercial shops coming to market presently, many investors like the security of property, especially local property.You may have noticed more vacant shops around Melbourne. Total vacancy of Melbourne’s prime retail strips has risen to all-time highs with around 13% of all shops vacant. (Source: Urban Property Australia). Bayside strips seem to be holding up well, with low vacancy rates, showing the strength in the local area.

Hodges Mentone Chelsea has been very busy with new commercial leases, commercial lease renewals and organising Essential Safety Measure ESM checks. If you are the owner of a building (other than a house or outbuilding), you are responsible for its upkeep and maintenance – particularly its safety features. These are known as essential safety measures. Checks need to take place quarterly, six monthly and annually on commercial and industrial properties in Victoria. If you have a commercial or industrial property make sure that you are complying with these rules. Hodges Commercial Management can help advise you with all these requirements, just give us a call.

Paul Johnston
pjohnston@hodges.com.au
0419 582 035

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Employee Spotlight

Jeff Cowen – Licenced Estate Agent / Auctioneer

While seemingly quite different industries, there are some parallels that can be drawn between Jeff Cowan’s previous role as a well-regarded local hairdresser to the Real Estate agent he is today.On-going relationships based on trust and repeat business are just the start of the comparisons which also stretch to being part of a client’s life at milestone events. Property transactions often occur due to a significant change in people’s lives, whether that be buying a first home, having a baby or selling a deceased estate. Similarly, customers will visit their chosen salon when getting ready to attend special family occasions.
Jeff has learned the art of communication to understand his customer and uncover their true goals and with that skill has forged a successful real estate career that has just reached its ten year anniversary.Also an entertaining auctioneer, Jeff has a confident manner and is instantly recognisable calling the action in his distinguished suits. And while every sale by auction needs willing bidders, he believes it doesn’t matter whether there are two or twenty active parties – if everyone is happy with the result, everybody wins.

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Barefoot Bowls

To cap off another fantastic summer had by our Hodges Mentone / Chelsea Team, both offices gathered at one of our favourite sponsors – Mentone Bowls Club – for an evening of barefoot bowls, followed by pizza and drinks. While the competitive side of some came out, it was great to see everyone get involved and come together for a laugh and show off their best bowling skills.

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Beachside Gift

The annual Beachside Gift took place Saturday 4th February down at the Mentone Oval. Once again it proved to be a bigger and better event than previous years. Despite a heavy rainfall leading into the morning of the day, luckily enough it cleared up by 11am before the main events got underway. With over 800 entries, approximately 400 athletes over 14 events – we saw record tickets sold for the day with over 3000 spectators (not including kids).

There were Athletes from all over Australia in attendance, including Tokyo Olympic Finalist Stewart McSweyn, Commonwealth Games bronze medallist Abbey Caldwell and Commonwealth Games sprinter Naa Anang, just to mention a few. The atmosphere was outstanding with firecrackers going off at the finish line and the whole day streamed live on Kayo for those wanting to watch from the comfort of their own homes. A replay of the day can also be found on Kayo.

We look forward to yet another successful Beachside Gift in 2024 and can’t wait to get involved once again!

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This year marks Mentone Grammar’s centenary, and the school has a raft of exciting events planned for past & present students, teachers, parents and the community. From its modest beginnings in 1923 with just 56 boys, to the school it is today with over 1900 students, Mentone Grammar continues to grow, develop and maintain a reputation for excellence in education. Kicking off the celebrations was the naming of the Shane Warne Oval in honour of one of the school’s most famous past students, while events to be held throughout the year will include a reunion lunch, church service, gala ball, sports & arts exhibitions and a centenary golf day.