An imbalance beyond the seesaw seems set to continue
With the depths of winter and school holidays almost behind us, we are hopeful that stock levels will be on the rise and some of the nervousness demonstrated by vendors, unsure whether it’s the right time to sell or not, will have passed. However, it is likely Melbourne’s property market will see a continuing pattern as it contends with an ongoing deficiency of stock, at least for the short term. To us, there certainly seems a lot of people looking to buy.
This imbalance between supply and demand is creating a unique landscape for both sellers and buyers, reflecting a market where the latter currently still outweighs the former for the right homes.
However, despite the rising demand, there seems to be a reluctance among homeowners to sell their properties, leading to a contraction in the availability of certain types of homes, in particular the renovated family homes and single storey downsizer properties. With rising costs, many investors are certainly thinking about selling and engaging agents to test the water in an off-market setting, but the numbers need to stack up.
A lack of stock, as well as low rental availability, is deterring vendors from selling before they buy because they are nervous that there will be nowhere for them to move into.
This has led to an interesting dynamic where increased numbers of buyers are competing for the same properties, leading to escalating prices and faster sales. While this is great news for sellers, it is increasingly challenging for buyers who often find themselves in bidding wars.
It is not uncommon for buyers to feel rushed or pressured in this type of environment. With the current market conditions, competition can be fierce and prices can still exceed historical records. In some instances, you must act quickly in order to secure a suitable property. But before making any impulsive decisions, it is important to prioritise your needs and understand what non-negotiables are required for you and your family and try not to get caught up in any pressure from the agent to purchase the wrong home. If you had to sell again in a short period of time, it could cost hundreds of thousands of dollars.
On a positive note, there has been an increase in the number of agents more recently saying they are talking to more vendors about selling. The yet unknown question is ‘when they will convert to sellers?’
The news last week of interest rates being kept on hold was, in the main, a welcome relief; however, there is still an expectation of them rising by the end of the year and this is within the thoughts of most buyers. This, combined with an increase in land taxes, suggests that this should lead to more vendors putting their homes up for sale later this year and before the next year of land tax is due. For many, this tax can be a very significant amount.
On a local level, Boroondara Council seems somewhat insulated from the above factors, as we are seeing an influx in international buyers. This is creating a unique situation and local buyers need to be aware of the competition, as some properties are being dominated by international interest (in particular, Chinese and Indian), which is helping drive up the prices. In addition, wealthy ex-pats are returning home and students are coming back. For locals, currency conversion rates may also be impacting their ability to compete with these buyers.
As seen in 2008, where the strong recovery in the Boroondara market (led by Chinese buyers) had a flow-on effect into other councils, this may start to occur again.
Some of the better properties currently on the market; an architect’s view
12 Callanish Road Camberwell – Geordie Dixon/Peter Vigano, Jellis Craig
6 St Kilian Street Hampton – Amanda Thomson/Nick Jones, Hodges
25 Kennealy Street Surrey Hills – Shamit Verma/Hamish Tostevin, Marshall White
- Edwardian, single level, 4-2-1, ~600sqm, Canterbury – circa $2.8m
- Modern home on ~780sqm, 3-2-2, single level, Kew – circa $3.75m
- Large contemporary home on good land, 5-3-2, pool, Hawthorn East – circa $6m
- Edwardian brick single fronter, 2-1-0, Prahran – circa $1.7m
- Renovated 2 storey timber Edwardian, 3-2-1, Armadale – circa $3.5m
- New townhouse, 4-2-2, north one of pair, Glen Iris – circa $2.6m
- Period style timber family home, 4-2-2, Mont Albert – circa $3.1m
- Tidy home or opportunity, 4-3-4, ~660sqm, Brighton – circa $3.75m
- Californian Bungalow on ~740sqm, 4-2-2, Hampton – circa $3.1m
- Modern family home, 5-3-2, ~1200sqm, near beach, Brighton – circa $10.5m
- Californian Bungalow, 4-2-1, south rear ~600sqm, Hampton – circa $2.9m
- Fully renovated villa, 2-1-1, walk to beach & amenities, Hampton – circa $1.05m
- Single level, plans to develop, ~600sqm, Brighton – circa $3m
- Fully renovated Edwardian w studio, 5 beds, Middle Park – circa $7.5m
- Extended single fronted Victorian, 4-2.5-1, Albert Park – circa $4m
- Victorian Terrace, 3-2-1, MCG precinct, East Melbourne – circa $3.6m
7a Moor Street Sandringham ticks a multitude of boxes for prospective downsizers – single level, comfortably presented, lovely north light, a nice sized garden, a bonus little studio and really well positioned to the beach and amenities. The sticking point for many, however, is the train line along the rear boundary. Whilst on the less busy/non-freight Sandringham line and behind a very high rear fence, the impost on outside living may have swayed numerous parties to hold back bidding. The property had been quoting an attractive $1.85-1.95m throughout the campaign.
Ryan Castles headed up the Belle team, opening up proceedings with a $1.8m vendor bid. He was made to work hard for an eventual single bid of $1.82m to gain negotiating rights. While the bidder went inside, they did not take up the reserve of $1.975m. At time of writing, the home has offers in and looks like it will sell imminently. A good package we feel.