How new AML/CTF regulations are reshaping the Melbourne property market

The second half of the Melbourne property market has started very sluggishly.

An abundance of old stock remains; most is low quality and/or in weaker locations. Many still have price tags that don’t match the offer; or at least don’t match what buyers are currently prepared to pay.

New AML/CTF regulations coming into force

One of the biggest changes, which will affect both buyers and sellers, are the new AML/CTF (anti-money laundering and counter-terrorism financing) regulations.

This requires institutions such as selling agents, buying agents, mortgage brokers, lawyers, conveyancers and banks to take a risk-based approach to preventing financial crime. They must verify clients’ identities, understand the source of funds where appropriate, assess and monitor money laundering risks, keep detailed records, and report suspicious transactions to AUSTRAC. The reforms extend obligations that have long applied to banks to sectors that are vulnerable to money laundering, particularly property and legal transactions.

The government has implemented these regulations to protect the integrity of the financial system and safeguard national security. This is not new to the world, and Australia is relatively late to the table with regard to this.

It is unlikely that these checks will affect law-abiding citizens.

By requiring institutions to track and report transactions, the government aims to disrupt organised crime syndicates, drug traffickers, and terrorist groups. This tracking effectively freezes access to illicit funds and prevents criminals from laundering profits into the legitimate economy.

Potential impact of AML/CTF regulations on buyers

 It will take time for everyone to become comfortable with this new process. Buyers and sellers will need to have their financial and identification details checked by multiple parties when purchasing or selling. But note that it is not a legal requirement in Victoria (although it is in other states) for you to register to bid on a property. We’re concerned that some agents may use these new laws as a pretext to prise more information out of buyers than is necessary. Having your own buyer advocate, through a company like ours, could protect you here.

In addition to these changes, everyone is coming to terms with proposed negative gearing changes and new CGT and Trust changes as well as, for sellers, tightening of quoting regulations, increased fines for agents for under-quoting and disclosure of the reserve prices seven (7) days before a scheduled auction date.

We’re already seeing less homes listed for sale at this time of year (compared to previous years and excluding stale/old stock), and, of those homes listed, fewer scheduled for auction. Our discussions with key selling agents indicate that public listings will remain low for 2026.

There’s an increase in ‘off market’ properties – isn’t that a good thing?

Because of the changes outlined above, there has been in increase in ‘off market’ properties.

While this might seem good in theory, in practice there can be drawbacks, particularly if buyers don’t have the full picture. We’re finding many of these ‘off market’ properties are being quietly pitched at much higher prices than they would likely receive if taken to market for buyers to compete publicly. What is the property really worth? Our 20 years of expertise means we understand what the offering really is in the context of the Melbourne market, such as understanding the nuances of a precinct within a suburb, offering an architectural critique and guiding you on price valuation.

These days, most buyers would love to buy an ‘off market’ home, as they feel they are getting something that others aren’t. But we think buying any home (on or off market) at a fair price will always outweigh the romance of purchasing an ‘off market’ home where you have paid 10% or 20% more than it’s actually worth.

It’s important to buy right to avoid costly consequences

Sometimes, after a purchase, life doesn’t always go as planned. It may be that the purchase was going to be a 10-20 year proposition, but unexpected changes to work, health, marital status or finances can play havoc with plans. No one wants to lose money, unless they have no other option, and what you paid in the past comes into play for your future.

Here are some examples of homes bought since 2020 that have sold for less in the last month (plus stamp duty and other selling costs on top of the loss):

• 1 Nyora Street Malvern East – sold in 2022 for $3.0m – down about $500k.
• 216 Clauscen Street Fitzroy North – sold in 2021 for around $3.3m, sold last week about 15% less.
• 2 Ballara Court Brighton – sold in 2022 $4.5m – sold July 2026 just over $4.0m.
• 22 Wentworth Avenue Sandringham – sold in April 2021 $2.85m, sold late June around $2.5m.
• 38 The Crescent Port Melbourne – sold in Nov 2023 $3.3m, sold early July for around $3.1m.
• 37 Saturn Street Caulfield South – sold in Sept 2024 $3.225m, sold late June for around 20% less.

More roadblocks ahead

Victoria has a state election later this year. History shows that many buyers and sellers prefer to take a ‘sit and wait’ approach preceding an election.

The global outlook remains uncertain, with continuing instability in the Middle East region and mid-term elections looming in the US. At home, there’s continuing speculation around inflation, cost of living, fuel excise coming to an end, and the spectre of further interest rate rises.

All of this will have an impact on the Melbourne property market. Given the uncertainty, if vendors don’t need to sell, they won’t, leaving fewer options for buyers.

How we can help you navigate the noise

Buying a home right now can feel overwhelming. Finding your perfect house requires expertise and patience.

That is where we can help you. As independent buyer advocates, we work exclusively for you – never the vendor.

We listen to your needs, use our knowledge and relationships with selling agents to find properties you may not, and deal with compliance and paperwork so you don’t have to.

Agents may use the new regulatory framework to find out more about you than necessary. Protection of our clients’ privacy is paramount. Everyone wants someone in their corner – we offer that buffer between you and agents.

Book a complimentary strategy chat with our team today. We’ll make sure you don’t miss any opportunities and, perhaps more importantly, make sure you don’t make any mistakes.

Let’s make sure your next property decision is a great one.

 

Some of the better properties currently on the market; an architect’s view

 

‘Off-market’ Properties:

• Near new single level 5-3-2, pool, Nth rear, Hawthorn East – circa $6.3m
• Neighbouring properties, ~210sqm/~260sqm, Hawthorn East – circa $2.7m/$1.35m
• Single level 4-2-2, ~710sqm, Nth rear, Camberwell – circa $2.8m
• Renovated brick Edwardian, 3-1-0, Nth rear, Toorak – circa $2.1m
• ‘Italianate’ renovated, brick Victorian 4-3-1, Malvern – circa $6.3m
• Hawthorne brick 4-3-1, ~550sqm, ready to update, Malvern – circa $3.1m
• Brick Edwardian 2-1-0, ~225sqm, Prahran – circa $1.85m
• Large period 6-3-3, ~1000sqm, Glen Iris – circa $4.0m
• Freestanding renovated Victorian Terrace, 3-1-1, Windsor – circa $1.95m
• Brick single fronter looking for reno, 2-1-0, corner, Fitzroy – circa $1.3m
• Unique period corner home, 4-1-0, Carlton – circa $3.8m
• Classic brick 4-1-4 home on ~800sqm, Fairfield – circa $2.35m
• Modern TH near amenities, 3-2-2, St Kilda – circa $1.8m
• Period 5-3-2 on ~800sqm, near amenities, Elsternwick – circa $3.7m
• Modern, Beach Road home over 3 levels, 4-2-4, Elwood – circa $4.3m
• Large family home w studio, Nth rear, ~930sqm, Sandringham – circa $3.5m
• Prime street, front villa 3-2-2, ~475sqm, Brighton – circa $2.9m
• New modern family home incl. bowling alley, ~1200sqm, Brighton – circa $22m
• Near new 6-5-4 family home, pool, Brighton East – circa $6.2m

 

Auction Spotlight:

22 Mitchell Road Mont Albert North

Quoted $1.1-1.2m

Started $1.1m

Ended $1.44m

Bidders 3

A fresh mid-winter’s day set the scene for this auction, which about 30 people were in attendance for. On offer was a solid original home (very dated inside) on a north facing rear block in a good local street, so most would likely look at this proposition as land value.

Quoted $1.1-1.2m, it took a little bit of time for bidding to get started but it did eventually between 2 parties. Auctioneer Calvin Chan was rugged up in his puffer jacket and did a good job conducting the auction, which saw it announced on the market at the top of the range at $1.2m.  A further bidder entered into the fray not long after and yet wasn’t strong to win the auction here, with the property selling for a pretty good price of $1.44m.

 

3/4 Raith Avenue Sandringham

Quoted $1.25-1.35m

Started $1.25m VB

Passed in / sold after

Bidders 1

A beautifully renovated unit within a comfortable walk to amenities and an easy stroll to the beach. 3 bed, 2 bath and a north courtyard are all pluses.  The double garage positioned below the villa may have held some downsizers back as they contemplate the stairs for later in life. An adjoining unit had sold earlier in the year for $1.41m, with 9sqm of additional garden space.

The home was quoted $1.25-1.35m throughout the campaign and attracted good attendance on auction day.  The Belle team was made to work hard for some crowd interaction as seems to be the norm in the current market. After opening with a vendor bid of $1.25m, one bidder eventually offered $1.275m, before being passed into them.  Post auction negotiations saw the home sell for around the top of the range.