16 June 2018
How has the first half of the property market faired for 2018?
We see the market as more ‘balanced’ now, which is very different to 12 months ago. Stock levels and bidder numbers are both down and the market is far more discerning (and sometimes not even interested) when it comes to the B and C grade homes.
In this market, experience and knowledge counts. Being aware of a property’s history and what is happening in the precinct is becoming more important. This information is not always easy to obtain – full due diligence is up to the buyer of course as the selling agent is engaged by the vendor to represent the vendor.
Half year observations:
- Many agents do not have as many properties ‘locked in’ for spring campaigns as they did for the same period last year and we are noticing a number of changes within agencies regarding staff levels and office relocations. Buyers may have to be more patient in the coming months and perhaps not pin too many hopes on the traditionally plentiful Spring options.
- A lot more ‘stale, old or repackaged’ properties are around, some of these with their third or fourth agent/agency campaign, hoping to achieve a sale. For many, unless the change is combined with a price reduction, they may be for sale a while longer.
- Advertised quotes are being wound back on properties, and while the ‘new’ quoting laws have largely achieved the Andrew’s Government’s objective, the understanding of price and value for buyers is as confusing as ever.
- Suburban towers and/or medium density developments are having a big effect on nearby residential homes. We are noticeably increasing our time spent at council deciphering nearby proposals and how they may affect properties we are considering buying for our clients. Knowing what to look for now may prevent unknown surprises in the future.
- Off-street parking does not appear to be as coveted as it once was, and position is becoming even more important, particularly for teenage families and downsizers.
- Schooling in Melbourne continues to be a prime consideration for many families. In addition to buying close to schools (or public transport) to combat the traffic congestion, we have noticed a swing toward buying in public school zones keeping secondary schooling options open too.
- Less bidders at auction (sometimes due to the quality of offering and sometimes because vendor expectations are too high). We are also noticing less buyers through mid-week inspections.
- Money is harder to get from financial institutions and the impact of bank/government reforms for overseas buyers is starting to take effect, with much less activity from Chinese buyers in particular.
- More people are considering staying where they are – “Should I renovate or relocate?” Talking to architectural colleagues and builders, they are commenting that the enquiry is still strong.
We have many discussions with clients about their options. Having both a buyer advocacy and architectural services branch to our business allows us to have qualified informative discussions about the best options for each individual situation.
The market is quickly slowing down for Winter and the school holidays. Many agents (and Melburnians in general) are getting away from the cold for a month or so in June/July and the future is now fully focussed on the Spring market and what may be coming up for sale in August.
That said there are still a number of homes around for sale privately. Some have been around for up to a year or more, others are testing the market to see if they can still get last year’s price without the preparation, costly advertising and public auction. In amongst all of these, there is occasionally a genuine seller ready to transact. Buyers can waste a lot of time investigating these properties, however, particularly if they don’t have a full understanding of the market and the process.
In the short term buyers may see opportunities, however, in a tightening market we are likely to see even fewer properties for sale and even less of the ‘A’ grade properties (see our previous blog for more information on our thoughts regarding A, B & C grade properties https://www.woledgehatt.com.au/2-june-2018/ ).
As always, we think buying the right house first, is the most important goal. Price can quickly wear off and you may find yourself left with a bargain you won’t enjoy living in or lose significant money on if you decide to re-sell it. As a growing family, that can really set you back.
21 Hume Street Armadale (Will and Tim Bennison, Jellis Craig) – a neat, lock and leave single storey home, suiting downsizers and young professional couples, not far from our office. A narrow street, but central location – sold for an undisclosed price circa $2.8m
25 Kent Street Kew (Hamish & James Tostevin, Marshall White) – a large builder-spec styled home that last sold in 2013 for $2.2m (demonstrating the market isn’t all bad) – sold for an undisclosed price in excess of $3.2m
60 Carpenter Street Brighton (Brydie Hamilton/Bert Stewart, Buxton) – a well located, corner block, with a single level smaller home (great downsizer) – $2.9m
A standout ‘land’ buy:
8 Metung Street Balwyn (Elsa Li / William Chen, Buxton) – approx. 678sqm land buy, tailored for a ‘AAA Chinese buyer’ offering the location and street number. Had previously sold in 2013 for $1.28m, then again in 2015 for $2,111,000 – this time $2,545m
… wonder when this will be up for sale again next?
- good period home in Hawthorn, updated with garaging – circa $6m
- renovated period home with good garaging, Prahran – over $4m.
- modern townhouse, Prahran – circa $2m.
- period home, Brighton – mid $2millions
- large land (potential development site), Camberwell – $5m
- modern home with court, Brighton – $6m
- period home, low maintenance block, South Yarra – over $3.5m
7 Auburn Grove Armadale
7 Auburn Grove Armadale offers enormous potential to renovate and extend the existing period home into a family home for the next decades. More than comfortable to live in as is while developing plans, the home offers good land at the rear, including OSP from the ROW and is well positioned to amenities.
A crowd of about 40 people attended the auction led by Andrew McCann and the Jellis Craig team. Following the preamble, Andrew was met with the currently customary silence from attendees. Eventually placing a vendor bid of $3.5m, no one was prepared to enter a counter-bid and the home was eventually passed in at this level.
Perhaps this is an example of the shifting market and vendor expectations exceeding those of buyers’ for a property such as this. Quoting $3.7-3.9m before the auction, the home remains on the market, now seeking $3.695m.
11 Valetta Street Malvern
The home at 11 Valetta Street Malvern attracted over 50 people to the auction. Positioned only metres from Glenferrie Rd, the Victorian double fronter on approx. 416sqm of north rear land has recently had a full makeover within the original footprint making the home more comfortable for the short term. At some stage, the good sized land then provides opportunity to take the property further (STCA) when desired.
Hugh and James Tomlinson from Marshall White ran the well-attended campaign, with James calling the auction on Saturday. An opening bid of $2.4m was quickly received, followed by a second bidder and the 10k bids went back and forth swiftly. At $2.5m the home was called on the market, eventually settling with bidder one for $2.525m.