In This Week’s How’s The Market | Edition 156
I truly believe that the next 6 weeks to 6 months might be some of the best buying conditions for upper-end Melbourne that we will ever see.
At least for the next 5 years.
These are also the best buying conditions I have seen since joining the real estate industry.
Some of the purchases we have made for clients this year and the conversations I am having with agents is really showing me that there are opportunities to secure properties for hundreds of thousands of dollars less than what they were selling for just a couple of months ago.
If you are upsizing or downsizing, this is a warning to say that you DO NEED TO BE CAREFUL as I have also seen some buyers and potential clients get into trouble from purchasing or selling in the incorrect order and shifting the risk profile too much out of their favour.
The market is ripe with opportunities, but also risk if you don’t have a strategy and a plan.
Below is a breakdown of why I think this is the best market to buy a premium property in Melbourne and why we might not see conditions like this again for a long time.
Market Conditions
Interest rates have risen twice, with two more potentially on the way.
Interest rates disproportionately affect the upper-end markets, as that is where the most debt is.
War & petrol have sent shockwaves through the nation.
It even acted as a catalyst for a national address from the prime minister last week.
Whilst this doesn’t create a huge economic impact for most families on a week-to-week basis, it does create a huge amount of uncertainty.
And sentiment does create a huge economic impact in real estate.
The election also creates a huge amount of uncertainty in the marketplace. For both owner occupiers and investors.
Will negative gearing change?
Will prices get more expensive or cheaper?
Will there be stamp duty savings if I wait?
Maybe I’ll just wait until the election is over before I make a decision so I can see what the actual policies will be…
This is the thinking that stops so many people from acting on the great opportunities of today by going against the herd.
Listing are 12% above year to date 5 year averages thanks to the calendar cycle of 2026.
This has been predetermined as agents spent all of Jan & Feb scheduling March to be a large month, knowing that Easter, school holidays (now) and ANZAC Day were going to wipe out the entire month of April for large auction weekends.
Auction clearance rates have been at some of the lowest levels in the last 5 years.
Over the last 3 weekends of March, there were over 5000 auctions in Melbourne.
HUGE numbers.
The clearance rates were as follows:
Mar 15th – 48.11%
Mar 22nd – 46.84%
Mar 29th – 45.04%
This is an average clearance rate of 46.66%.
From the total of 5,171 auctions in the last 3 weeks, there are 2,759 that passed in and were unsold by Tuesday and remain on the market.
This is specifically in the auction markets of Melbourne, which is typically over $1m.
Why Upper Melbourne Specifically Shows An Opportunity
Melbourne’s median house price is now roughly $600,000 below Sydney’s.
That’s the widest gap since 1999.
Melbourne has been overtaken by Brisbane, Perth, and Adelaide on median price.
For anyone who’s been watching Australian property for more than five years, that’s extraordinary.
Melbourne was always the number two city. Now it’s number five.
At the premium level, that relative value is even more pronounced.
You can buy a period home in Hawthorn or Armadale for what gets you an unrenovated semi in Sydney’s inner west.
The quality per dollar in Melbourne’s inner ring right now is arguably the best it’s been in a generation.
The long-term fundamentals haven’t changed either.
Melbourne is forecast to lead Australia in population growth, driven by international migration.
Victoria’s land tax also disproportionately affects the upper end of the market.
This is because the land values at this level are substantially higher than any other market.
I’ve seen properties worth circa $3m in Albert Park & Middle Park where the entire annual rent doesn’t cover the land tax bill.
This has forced many investors providing rental accommodation to sell assets as they would be making a loss on a home that doesn’t even have a mortgage attached to the property.
This is forcing many renters out of the blue-chip markets as well, but that’s a different post.
The Opportunity
All of the above put together is creating an environment where there is high stock sitting around after being passed in, low demand due to high uncertainty and falling prices, particularly in the upper end of the marketplace.
We are seeing vendors panic-selling and getting calls each week for price drops in the hundreds of thousands of dollars.
If you know how to navigate this market correctly, there will be some incredible purchase results that I believe we will look back on in the years to come and wonder how we purchased properties for the prices we did.
What The Agents Are Saying
Extremely quiet weekend over Easter.
Many agents took the entire weekend off; however, some did work through as well and reported low numbers at inspections.
Many agents are still reporting slow results with less stock coming on in the coming weeks due to market timing.
The Wow Factor!
362 Beaconsfield Parade, St Kilda West, Vic 3182
Landmark waterfront position.
Why it WOWs:
- Incredible location with waterfront views across the park.
- Amazing Federation facade.
- Nearly 1000m2 of land.
- Incredible period features throughout.
Price guide : $11,000,000
Final Thoughts
Melbourne is currently experiencing what we believe to be a once in a lifetime opportunity of deflated prices.
Considering where Melbourne is at in its market cycle, we believe this will be a short lived opportunity to buy very well.
Though there are risks involved if you don’t have a strategy.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at [email protected]
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
