How’s the Melbourne Property Market? June 3, 2022
How quickly it all changed, and then changed again! Is it a bust, or just normal? Now we aren’t in the business of selling newspapers, but the honest truth is that something has definitely changed in the marketplace over the last 7 days and I would say we are in more of a “normal market.”
What the agents are saying
At the start of the week, we were getting calls, texts and emails from agents saying “price correction” or “price reduced”, but by today it changed back to “acceptable offer received of $1m, please contact us if you would like to submit a higher offer”. Only to speak with the agent minutes later to find out that the $1m is now $1.1m.
On properties that they were literally begging us to get to the asking price, they are now saying “Do you think they could go $100k over the asking price?” as is the last few days didn’t exist.
This is what being on the ground and working in the industry day in/day out exposes us to and in such a short amount of time. Having seen this before, it does allow us to move quickly and be ahead of the game and other buyers in the same market.
Movement in the markets we were working in
$2m plus
It wasn’t competitive at the start of the week, but interest has certainly risen over the course of the week. We started with properties passing in and no bidder or people even sticking around after the auction. Auctions being pushed out 3-4 weeks to capture more people, or selling prior with a single offer.
This is definitely a space we will be keeping a close eye on as it will be the start of the ripple effect.
$800k-$1.5m
Seeing a few off markets in this price point during the week, buyers are probably a little more hesitant to put pen to paper, but this weekend will give us a good indication with the amount of auctions.
Some good opportunities here based on the nervousness of other buyers.
Sub $700k
Older flats which are un-renovated are harder to sell, but I believe these will start to shine in the coming years as unit and townhouse prices keep going up around them. I’m talking 1 of 8-12, walk-up flats, not high rise apartments that is, and the easiest way to clarify this is, NO lift and NO basement.
We look for large disparities between property types, houses to townhouses and units, units to apartments. Once there is a big enough gap, sometimes 2-3 times more expensive than the type below, it’s time to dig deeper.
Units and Flats are something I believe will see good growth over the coming years based on where people want to live.
Stock availability
Stock levels are starting to dry up and we will move to more of a hibernation period as vendors wait for an August/September launch. This is where we tend to find more off-market properties and arms length deals which sometimes don’t involve an agent at all.
In the media
Household formation
This is an interesting topic and one I’ve followed since I first stumbled across it 10 or so years ago, as I believe it relates to the core basis of Supply and Demand in real estate.
Over the past 2 years, we were slammed with the pandemic, people moved back to mum and dads to save money, no new PR’s as the borders were closed so the current market increases has really only been from people living in Melbourne.
The House Formation stats are saying it will take a little bit of time to catch up from covid, but mid next year we will again be in a dwelling deficit of 10,000 per year for the next 5-10 years! So that means we have a supply issue and demand will keep growing. We won’t lose many people to QLD or Syd because they have the same issues, which means prices will continue to go up and people will need to lean on the generational wealth that has been created over the past 30-40 years if they want to live close to where they grew up, or be faced with the aspects of moving further out.
Final Thoughts
Move quickly if you are sitting on the fence, because the chances are someone else will. If you get priced out, think about moving to the next suburb now to beat the wave or change building type ie. house to a good town house/unit with a large land component.
Catch you on the next one.
