How’s the Melbourne Property Market? June 9, 2022
Could this be the recession that changes a generation?
The generation I’m referring to are the millennials, which I am a part of, and if you bought your first property within the last 11 years, these are uncharted waters for us. The change will be in spending habits. We have all heard parents say, I lived off 2-minute noodles and baked beans when the interest rates were 45%!! Just like they walked to school in bare feet, and in the snow right?
Well, the reality is, we haven’t experienced this before, and it is a real thing, our costs are going up so we might not be able to go out as much or buy that thing at a whim but is that such a bad thing? Have we been living in a fantasy for too long?
Two rate hikes in the same amount of months, with no end in sight is certainly scary, but we are coming off such a LOW baseline, that even a 2% increase over the next 12 months really isn’t that bad and I’d say it’s still cheap money.
But anyway, let’s get on with it.
What the agents are saying
A shock to the system is probably the best way to illustrate what the overall sentiment was like initially, but as the week went on the agents grew into more of a relaxed state, and accepting of the fact we might have a few slow weeks.
With vendors moving into hibernation, we noticed this week the agents have slowly started to talk more about what’s coming up in August, with a bit of “It’s too cold and I want to go to Noosa, where are you going?”
We noticed trends throughout covid with a pent-up demand coming out of lockdowns with people going nuts for the first few weeks, then it would cool until we went into lockdown again.
I believe these rate increases will be a similar thing. The first week after the rate rise, enquiry falls off a cliff, then week two it picks up, week 3 picks up again, week 4 and beyond, back to normal.
Movement in the markets we were working in
$2m plus
Areas that have grown a lot over the past 12 -24 months will start to feel some cooling which is to be expected. Areas like Bayside, Beaumaris, for example, is an area that has gone from $2m to $3m in a very short amount of time and is double what the rest of the market experienced. These areas will come off 10-15% in the coming months, but it’s short term and buyers will just need to hold to get through and into the next cycle.
Time on the market clock - 11.00 o’clock - I see there being a high in the market very soon, with a slump and then a quick swing back to steady growth (5-6% YOY) once the overseas arrivals and immigration get back on track.
$1m - $2m
I was told by a college, that a good villa unit in Brighton quoted 1.2-1.3m, which was fair, sold for $1.7m!
Time on the market clock - 10.00 o’clock
Sub $1m
Enquiry here has probably halved compared to the end of last year with 4-6 offers per property
I would say this is still a competitive marketplace and one we do like to operate in with our investor clients because it’s where the competition does continue in almost all market conditions.
Stock availability
Definitely slowing down, and as last week, agents will sign sellers up with the view to run off-market campaigns through the colder months and if not sold, launch end of July/early August.
In the media
"RBA interest rate hike could crash house prices by 25 per cent”
https://www.news.com.au/finance/economy/interest-rates/rba-interest-rate-hike-could-crash-house-prices-by-25-per-cent/news-story/e3ced0ae4f1b32cd1b183687b55af528
Bullshit.
Final Thoughts
This market really is our time to shine as buyers agents. We can negotiate harder, spot trends in the market ahead of time, and get access to those off-markets.
Catch you on the next one.
