Why Melbourne Homes Have Become More Affordable: A Shift from Second to Fifth?
In This Week’s How's The Market | Edition 93
Why Melbourne Homes Have Become More Affordable: A Shift from Second to Fifth?
Nambour c.1897 – Where Grandeur and Leisure Unite
Weaker Selling Conditions Impact Auction Clearance Rates
Why Melbourne Homes Have Become More Affordable: A Shift from Second to Fifth?
After years as the second most expensive city to buy a home, Melbourne has fallen in the rankings.
Melbourne is experiencing lower average home prices compared to smaller cities due to various factors.
PropTrack's latest Home Price Index indicates that the national median home value has reached $800,000 for the first time.
Sydney is the most expensive capital, with a median dwelling value of $1.1 million, followed by Brisbane, Canberra, and Adelaide in terms of typical home values.
Melbourne has become the fifth most expensive capital to buy a home, a favorable move for first-home buyers and owner-occupiers in the city.
Home prices in Perth, Adelaide, and Brisbane increased by 18.7%, 14.6%, and 12.6% respectively in the past year, with Melbourne experiencing the only price decline.
Strong growth in smaller cities indicates strong demand, resulting in faster home values growth than Melbourne.
Starting 2024, Victoria's tax-free threshold for land tax decreased from $300,000 to $50,000, increasing costs for investors, while the absentee owner surcharge rate doubled to 4%.
The number of properties on the market has increased due to a decrease in loans to investors.
Since November 2023, the number of homes for sale in Melbourne has increased by 9.6%.
The rise in supply and decrease in investor demand have impacted Melbourne's home values, thereby enhancing its affordability.
Melbourne's higher home construction rates, particularly in metro areas, have led to a greater supply of new homes since late 2018.
What The Agents Are Saying
Buyers are starting to understand that it is a buyers market which can actually make it more challenging for both buyers and sellers to get deals done.
We are hearing from potential clients as well as agents that many buyers are now in the marketplace looking for bargains.
An agent told me this week that she is finding it common for buyers to make a single offer at the bottom or below the range and then refuse to negotiate at all.
If the vendor doesn't accept them then move on.
We spoke with a buyer recently who told us that their current strategy has been to offer $200k - $300k below the quoted range and see if the vendors will accept it.
Unfortunately, for them, an agent told them they could do this on one of their properties that was struggling at the time and this has resulted in them thinking this is the standard practice and they have since missed out on multiple good properties.
Agents have said this is a common problem, but that also, many vendors are still chasing the prices that could have been achieved last year.
In these final weeks before Christmas, it is a great time to negotiate, but remember that value isn’t determined by the quoted range. Some agents quote above, some quote below.
The Wow Factor!
29 Hawthorn Grove, Hawthorn, Vic 3122
'Nambour', a stunning Queen Anne-inspired villa in Hawthorn Grove, blends heritage and modernity in a spacious resort-style family setting with a tennis court and swimming pool.
The glorious facade of a significant family domain features a bellcast candle-snuffer slate roof, surrounded by a Eugene Gilligan-designed garden and a historic oak tree.
Nambour, a Melbourne landmark, that is located on Hawthorn's premier street, offering exceptional lifestyle convenience near sought-after schools.
Uncover the Charm of Family Grandeur and Resort Luxury!
Price Guide: $20,000,000
In The Media
Weaker Selling Conditions Impact Auction Clearance Rates
The preliminary combined capitals auction clearance rate fell to 62.4% last week, the lowest so far this year, indicating weaker selling conditions due to increased stock levels.
Auction volumes decreased, with 2,597 homes taken last week, below the spring peak of 3,135 auctions. This week's schedule is expected to see further reductions.
Last week, 1,207 Melbourne auctions were held, with 67.0% of the results being positive, the highest preliminary result since October's last week (68.5%).
Sydney saw a decrease in homes under fire, with a preliminary clearance rate of 57.5%, the lowest of the year and nearly 8 percentage points lower than the previous week.
The auction clearance rates are preliminary and are published weekly, with CoreLogic collecting 99% of results.
Final Thoughts
Melbourne's affordability is expected to remain strong if demand in smaller cities increases, listings increase, and new home construction rates persist or improve.
But, if housing stock growth slows or demand shifts back to Melbourne, relative affordability may be short-lived, potentially leading to an increase in home prices.
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 tristan@tomii.com.au
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.
