2 June 2018
With almost half of the year gone, the Melbourne property market has slipped back to a more ‘balanced’ clearance rate.
We are currently seeing the following:
- Less bidders at auction (sometimes due to higher vendor expectations or quality of offering)
- Apartments and construction works are having an effect on traditional neighbourhood areas. The major planning changes of March 2017 are noticeably impacting on suburbs now
- More people are prepared to stay where they are – “do I renovate or do I relocate?” We have many discussions with clients and prospects about this, and having both a buyer advocacy and architectural services branch to our business allows us to provide the pros and cons of both options to our clients in a timely manner
A real focus now is the Spring market and what stock is coming on in a few months, as most agents (and Melburnians in general) concentrate on getting away for a month or so in June/July. That said, there is a lot happening (or properties being tested) off-market.
The market has changed and we are entering a ‘buyers’ market. The REIV clearance rate was 62% at 6pm on Saturday and 35% of the passed in properties were passed in on vendor bids.
For buyers, this may mean opportunities; however, in a tightening market we are likely to see fewer properties for sale and even less of the ‘A’ grade properties.
One question may be, what is a bargain?
For discussion purposes, if we break the properties in three categories – A, B and C, let’s focus on the things we can’t change.
We think an ‘A’ grader is a property that is well positioned, well oriented and has a functional floorplan, often fully renovated. Finding an ‘A’ grade bargain is hard. The properties are usually easy to spot and (with less choice) buyers will gravitate toward the good ones, potentially increasing the competition.
We regard a ‘B’ grader as a property that is still well positioned, has good land content and has the potential to become an ‘A’ grader with some thoughtful changes to the property. We have the ability (Adam is a registered architect who has been practising for nearly 20 years) to identify these properties and quickly work out whether they can be easily improved. He can also make quick assessments regarding zonings, neighbours, council setbacks and overlays. This has helped our clients immeasurably, as they can make timely buying decisions and they have often been able to pursue properties at more affordable price points.
The properties where we have seen the biggest change in the market over the past six months are the ‘C’ graders. Thus time last year, properties positioned well away from amenities, with homes that were poorly designed/positioned for light, often located on busy roads or with negatively impacting neighbouring properties (ie apartment blocks) were attracting as much competition and emotion as the ‘A’ graders. Buyers for these properties have all but disappeared or the buyers are now at much lower price levels than vendors. That said, the odd one has been selling, more often than not to a desperate or ill-informed buyer.
The googled definition of a bargain is ‘something bought or offered for sale much more cheaply than is usual or expected’.
Sometimes waiting for a bargain may mean you miss an opportunity to purchase the property that is going to suit your emotional and lifestyle needs.
You could hold out and wait to buy a property that has been sitting around for sale for the last 3-6 months or more. There are plenty of them around. Many of them have had asking prices well above even the top prices achieved in 2017. If the vendor expectations have changed, you may get lucky and buy a good property; however, just because it is ‘cheap’ may not mean it is the right property for you.
If it is not an ‘A’ or ‘B’ grader, consider how long you may need to hold the property until the next boom, where you may be able to see some good growth. The last boom we recall like 2017 was back in 2009 when the government relaxed the FIRB rules – that’s a long time to wait if the property doesn’t meet your lifestyle needs.
There will be some good opportunities around for buyers; however, we think it is important to buy a property that still meets around two-thirds of your key wish list, focusing on the things that can’t change. And unfortunately, that can mean waiting.
As the market continues to change, waiting to buy at the bottom of the dip may be short lived. Vendors are more likely to hold their properties and only sell if they need to; therefore, stock levels will also tighten further and, with limited choice for buyers, we could quickly see an improvement in the market and an upward trend returning towards the end of the year.
Stonnington Council saw some good results over the weekend. Some of the properties that sold include:
- 143 Finch Street Glen Iris – large family home on good land (approx. 876sqm), ready to move in with nothing to do – $4,855,000
- 18 Plant Street Malvern – smaller (as new) townhouse style property with plenty of wow – undisclosed but circa $4m
- 14 Airlie Avenue Prahran – single storey, renovated family home or downsizer with OSP for one – undisclosed comfortably over $3.5m
- 16 Chanak Street Malvern East – single storey, renovated home with garden view impacted by large apartment tower, after passing in at auction, sold well – undisclosed over $2.5m
- A number of properties for sale on large land, Hampton – $5m plus
- Corner block close to amenities, Brighton – circa mid $2m
- Period home requiring renovation, Canterbury – circa mid $2m
18 Plant St Malvern
The near new, modern townhouse on offer at 18 Plant St Malvern was always going to attract a strong crowd. Well suited to families with older children or early downsizers the home delivers space, light and very comfortable low maintenance living. Andrew Hayne called the auction in front of the 50 plus crowd standing easy in the cul-de-sac. Opening with a $3.0m vendor bid, an offer of $3.3m followed by $3.5m – clearly showing the high level of interest in this property. A third bidder entered at this point and brought increments to a more sustainable level. At $3.6m the home was called on the market with steady bidding continuing, as a fourth bidder entered the action. The property was eventually sold under the hammer for an undisclosed amount just under $4m.
14 Airlie Avenue Prahran
14 Airlie Avenue Prahran offers fully renovated family living with period features in a prime location. An oversized master suite, spacious open plan living and off street parking (note garage too narrow for most cars) are highlights. The secondary living zone is on the smaller side. Marcus Chiminello and Nicole French led the Marshall White team for the campaign and auction. With no opening bids forthcoming, a vendor bid of $3.5m was placed to get the auction started. This did not have the desired effect and Marcus was made to work hard, give everyone time to think with an early half time break and almost passed the property in when a last gasp offer of $3.52m was made. A second couple joined in and the two parties traded offers with varying speed, finally settling at $3.715m where the property was passed in to bidder two. The home was sold in post auction negotiations at a level slightly above this.