Why Australian Buyers Are Turning to the Mornington Peninsula
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Why Australian Buyers Are Turning to the Mornington Peninsula

The coastal area southeast of Melbourne is providing a permanent escape as the pandemic endures.

By Michelle Singer
Mon, Jan 11, 2021 4:42amGrey Clock 5 min

It’s been anything but business as usual for the Mornington Peninsula, one of Australia’s blue-chip coastal regions, an hour southeast of Melbourne.

Against the backdrop of the global pandemic, rising unemployment, strict social distancing and economic fears, the prestige coastal community has offered homeowners a refuge and demand has seen it rise to become one of the country’s best performing areas.

Once the domain of wealthy second-home owners who decamped to their holiday properties over summer, it’s become a permanent hotspot with buyers across all price brackets trying to get a foothold in the area for the best part of six months.

Offering an appealing mix of diverse housing and an aspirational coastal lifestyle, the Mornington Peninsula is a comfortable commute to Melbourne’s Central Business District and has immediate access to restaurants, cafes, wineries and recreational activities.

Peninsula Sotheby’s International Realty managing director Robert Curtain described 2020 as being “a very different real estate market.”

“Every month since March 2020 has been a record month for us in terms of total sales value and volume,” he said.

There was no let-up in interest over Christmas and New Year’s holidays after a busier than expected trading period in the winter reduced stock levels ahead of summer.

Among several notable transactions in December, was the $5.5 million (US$4.26 million) sale of a two-bedroom house on 461 square meters of beachfront land on Mentor Road on Blanarring Beach and a home on Bowen Road in Sorrento that sold for more than A$4.5 million within 24 hours of hitting the market.

An architect-designed house on MacGregor Avenue in Portsea, which has a price guide of A$6.8 million to A$7.3 million, is typical of what discerning buyers are looking for in a luxury Peninsula property Mr. Curtain said.

Designed by Guildford Bell with five bedrooms and five bathrooms, it occupies a private 3,000-square-meter block in easy walking distance of the beach.

“High buyer demand and a lack of stock creates competition and ultimately strong sales results. This year we have seen very quick and sharp increases in property prices never seen before,” Mr Curtain said of the activity.

“The majority of buyers are either upgrading existing homes or making a longer-term commitment to buying on the peninsula. Without question the restrictions on travel has changed lifestyle options for many buyers,” he said.

Australia implemented international and national border control measures and physical distancing rules to reduce the spread of Covid-19 from March 2020.

Movement restrictions and social distancing requirements resulted in a ban on all in-person property inspections and auctions across the country.

Although Australia flattened the curve and lockdown restrictions eased in late May, a cluster of cases led to a second wave of infections in Victoria. A “state of disaster” was declared and Victoria faced severe restrictions including a nightly curfew, mandatory face coverings in public and the closure of schools and businesses between August and October. The Victorian Department for Health and Human Services reports more than four million Victorians have been tested for the virus since March with the state recording several days of zero new cases in early January.

Kay & Burton Portsea managing director Liz Jensen, who has sold property on the Mornington Peninsula for 35 years, said she was shocked at the demand that followed the lift in restrictions in October.

She said while the area was usually always busy in spring, she estimated inquiry levels increased three-fold once Victorians were allowed to move freely around their state again.

Big-Ticket Sales

The momentum of spring on the Mornington Peninsula has carried through to summer according to agents. More than 32,000 people have taken a shine to a listing for a home on Wild Coast Road in Portsea, making it one of Australia’s most viewed properties in January, according to online sales portal, realestate.com.au.

Several groups have conducted private inspections since it was listed the week prior to Christmas and an offer is imminent, said Ms Jensen, who is the listing agent for the property.

With a price guide of $8.8 million to $9.75 million, the eight-bedroom luxury home is embedded among the sand dunes and is not your “usual beach house,” Ms Jensen said.

Its indulgent resort-like feel has been designed to cater for large family gatherings or to be shared with groups of friends.

“There’s not much in these areas, it’s a thin market, so there’s always a level of buyers for properties of this calibre,” she said.

“Buyers are accelerating their plans, they’re not old enough to retire, but they’re choosing homes down here to live in permanently. We have people buying everything in every price bracket from $1.5 million to $10 million and everything in between.”

Buyers, she said, are looking with intention and showing a new appreciation for the established area.

“Over the last Covid year and going into this one, I find people to be very clear in their mind that they want to live a certain lifestyle that is more relaxing and less stressful,” she said.

“They want to enjoy themselves more and be able to share that with their family and friends. That works well down here,” she added.

A Strong Outlook for 2021

The trend hasn’t been lost on REA chief economist Nerida Conisbee, who picked the Mornington Peninsula as one of her top 2021 regional performers, based on its stellar results in 2020.

“Mainly because the region has seen the biggest jump in views per listing in Australia this year,” she said.

“The most popular suburb with house hunters is Blairgowrie where views per listing have more than doubled in 2020. It suggests buyer demand is accelerating while prices in Portsea jumped 20% last year to hit almost $2.4 million.”

However, Ms Conisbee expects Australia’s best-performing regional areas to be those that are closest to a capital city as movement returns and restrictions ease.

Regional Australia

The Australian Government’s $257 billion in direct economic stimulus to cushion the blow of the pandemic and the country’s record-low interest rate have helped support the property market but it’s the explosion of people shifting from capital cities that has had a dramatic impact on regional markets.

The spike in city-dwellers fleeing urban environments for a coast or country lifestyle meant regional house prices grew faster than metropolitan values for the first time in nearly 15 years.

Regional property values jumped 6.9% in the 12 months to December 2020 more than three times the 2% figures of the combined capital cities, CoreLogic revealed last week.

CoreLogic’s Asia Pacific Head of Research Tim Lawless said it was the first time during a rising market where regional markets had outpaced capital cities. Traditionally, regional areas outperformed capital cities during downturns.

“As remote working opportunities became more prevalent and demand for lifestyle properties and lower density housing options became more popular, regional areas of Australia saw housing market conditions surge,” Mr Lawless said.

It’s a movement not lost on the Mornington Peninsula, which appears to have its short-term future all but assured with January set to be another record month, according to Mr Curtain at Sotheby’s.

“The forecast for 2021, especially the first half, is likely to stay very strong as a lack of stock with more people using their homes than ever continues and cheap money provides further confidence for buyers,” he said. “But it’s a crazy world, so I’ll leave predicting the latter half of the year to those with a crystal ball.”



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Home prices declined at a faster pace in May in major cities, while other data show a mixed picture for the world’s second-largest economy

By REBECCA FENG
Tue, Jun 18, 2024 3 min

China’s broken housing market isn’t responding to some of the country’s boldest stimulus measures to date—at least not yet.

The Chinese government has been stepping up support for housing and other industries in recent months as it tries to revitalize an economy that has  continued to disappoint  since the early days of the pandemic.

But fresh data for May showed that businesses and consumers remain cautious. Home prices continue to fall at an accelerating rate, and fixed-asset investment and industrial production, while growing, lost some momentum.

“China’s May economic data suggest that policymakers have a lot to do to sustain the fragile recovery,” Yao Wei, chief China economist at Société Générale, wrote in a client note on Monday.

The worst pain is in the property sector, which has been struggling to deal with oversupply and weak buyer sentiment since 2021, when a multiyear  housing boom ended . The market still doesn’t appear to have found a floor, even after Beijing rolled out its most aggressive stimulus measures so far  in mid-May  in hopes of restoring confidence.

In major cities, new-home prices fell 4.3% in May compared with a year earlier, worse than a   3.5% decline in April, according to data released Monday by China’s National Bureau of Statistics. Prices in China’s secondhand home market tumbled 7.5%, compared with a 6.8% drop in April.

Home sales by value tumbled 30.5% in the first five months of this year compared with the same months last year.

“This data was certainly on the disappointing side and may ring some alarm bells, as May’s policy support package has not yet translated to a slower decline of housing prices, let alone a stabilisation,” said Lynn Song, chief China economist at ING.

Economists had also been hoping to see a wider recovery this month after Beijing started  rolling out  a planned issuance of 1 trillion yuan, the equivalent of $138 billion, in ultra-long sovereign bonds in May. The funds are designed to help pay for infrastructure and property projects backed by the authorities. Investors  gobbled up  the first batch of these bonds.

Monday’s bundle of economic data, however, underlined how the country still isn’t firing on all cylinders.

Retail sales, a key metric of consumer spending, rose 3.7% in May from a year earlier, compared with 2.3% in April, according to the National Bureau of Statistics. While the trend is heading in the right direction, it is still a relatively subdued level of growth, and below what most economists believe is needed to kick-start a major revival in consumer spending.

The expansion in industrial production—5.6% in May compared with a year earlier—was down from April’s 6.7% increase. Fixed-asset investment growth, of which 40% came from property and infrastructure sectors, also decelerated, to 3.5% year-over-year growth in May from 3.6% in April.

Key to the sluggish economic activity data in May—and China’s outlook going forward—is the crisis in the property market, which has proven hard for policymakers to address.

The property rescue package in May included letting local governments buy up unsold homes, removing minimum interest rates on mortgages, and reducing payments for potential home buyers. It also included as its centerpiece a $41 billion so-called re-lending program launched by the People’s Bank of China, which would provide funding to Chinese banks to support home purchases by state-owned firms.

The hope was that by stepping in as a buyer of last resort for millions of properties, the government would manage to mop up unsold housing inventory and persuade wary home buyers to re-enter the market. In turn, Chinese consumers, who have  most of their wealth  tied up in real estate, would feel more confident about spending again, thereby lifting the overall economy.

But the size of the re-lending program wasn’t big enough to convince home buyers, said Larry Hu , chief China economist at Macquarie Group. “Meanwhile, their income outlook also stays weak given the current economic condition,” he said.

For the property market to bottom out and reach a new equilibrium, mortgage rates, which stand at around 3-4% in China, need to be as low as rental yields, which are currently below 2% in major cities, said Zhaopeng Xing, a senior China strategist at ANZ. He said that a large mortgage rate cut will need to happen eventually.

The other key part of China’s push to revive growth revolves around the manufacturing sector, with leaders  funnelling more investment  into factories to boost output and reduce the country’s reliance on foreign suppliers of key technologies.

The result has been a surge in production. But with domestic consumption not strong enough to absorb all those goods, many factories have been forced to cut prices and seek out more overseas buyers.

Data released earlier this month showed that  Chinese exports rose  faster in May than the month before.

However, the export push is  butting into resistance  as governments around the world worry about the impact of cheap Chinese competition on domestic jobs and industries. The European Union last week said it would  impose new import tariffs  on Chinese electric vehicles, describing China’s auto industry as heavily subsidised by the government, to the point where other countries’ automakers can’t fairly compete.

The U.S.  has also hit  Chinese cars and some other products with hefty duties, while countries including Brazil, India and Turkey have opened antidumping investigations into Chinese steel, chemicals and other goods.

Beijing says such moves are protectionist and that its industries compete fairly with global rivals.