12 October 2019
Buying good homes in Melbourne is about to become even harder.
Why do we say that?
We think the market we are currently in (whether prices are up or down) is the new normal and will be for at least the next few years while interest rates are low.
Stock levels are unlikely to increase significantly. A lot of what is out there is now very different to five years ago. Apartments and townhouses are making up a larger percentage of the offering. The roads are getting busier and lives are getting busier.
Traditionally, the market in Melbourne was a local one. There were more seller/buyers. That proportion has dropped significantly. More buyers are now coming from overseas and interstate or are first home buyers or are buying investment properties – hence they do not have anything to put back into the market.
If we compare the same weekend five years ago, there were 189 reported sales in the Bayside, Port Phillip, Stonnington, Glen Eira and Boroondara council areas, with 91 apartments/townhouses sold, or 48% of the overall offering.
Last weekend, there were 95 reported sales (half the amount of five years ago) of which 55 were apartments/townhouses, making up 57% of the overall offering and nearly 10% more than five years ago.
For families wanting the traditional family home and a backyard for the kids, the options are decreasing.
As a vendor lucky enough to own one of these properties, unless you need a better/different location, bigger or smaller home/land and can’t renovate, the desire to move is unlikely to be strong.
As a buyer, fewer good options is likely to result in continuing increased competition.
We are also seeing buyer frustration around quoting.
Many homes are now selling well above the quote range. Even if the vendor is a seller in the range, most buyers (for the good ones) are now prepared to bid comfortably beyond the advertised prices if they want to out-bid their competition.
We do not think that means you should just keep bidding because you can. In 2016 and particularly 2017, many buyers used this tactic; however, the recent slump saw a number of those buyers become sellers for a lot less than they had paid.
The property has to tick the right boxes, due diligence needs to be thorough and we believe there are stop limits for most properties.
We understand quoting can be harder to manage in a rising market; however, there are a number of more recent homes that could be included in Statement of Information quotes and yet are not because agents have more recently chosen to not disclose the amount at all when reporting the property sold.
While eventually the property prices will become public, usually once the transfer has been registered through the Titles Office, it is often too late by the time they are released post-settlement. A lot of this information is known within the industry but not outside it.
In the meantime, the frustration continues to build, and the importance of making good decisions through accurate information and intel as a buyer is greater than ever.
One of the better properties scheduled for Auction on 26 October; an architect’s view
44 McKinley Avenue Malvern – Darren Lewenberg/Grant Samuel, Kay & Burton
- Double fronted Edwardian looking for a freshen up, north rear, Malvern – circa $2.7m
- Modern two storey family home, Malvern – circa mid $4m
- Mediterranean inspired Townhouse, 3 bed, 3 bath, DLUG, Toorak – circa $4.75m
- Single fronted Victorian, renovated, 3 bed, 2 bath, OSP, Armadale – circa $2.4m
- Fully renovated & extended Edwardian, pool, approx. 577sqm, Malvern East – high $3m
- Edwardian brick home, extended some years back, pool, Elsternwick – early $2m
- Single fronted, two storey, renovated Edwardian, Elwood – early $2m
- Semi-attached brick Edwardian, 3 bed, 1 bath, Balaclava – circa $1.4m
- French provincial family home, automated, north rear, Brighton East – circa early $3m
The family sized Edwardian at 8 Heath Street Sandringham had gathered solid interest both during the campaign and at the auction on Saturday. The 45 feet frontage limited the stately nature of the front rooms to an extent, but the land’s depth (delivering approx. 792sqm) and extension, carried out quite some years ago, do deliver a solid family package. A good-sized studio in the rear offers further flexibility. While on the south side of the street, the street itself is regularly a popular choice for families.
The campaign had been headed up by Charles Darlow and Scott Hamilton from Buxton, quoted at $2.45-2.55m.
Following Mark Earle’s preamble, the auction swiftly got underway with a $2.45m bid. A second bidder entered and the two traded offers before bidder 1 stepped out and was replaced by a third party. The home was declared on the market at $2.59m. Bidder two occasionally tried to gain the upper hand with larger jumps in bids and was eventually successful, securing the home for $2.73m.