It has been an interesting two weeks. For the first time since we can remember, we have attended auctions on the middle and last weekend of the ‘Easter’ holidays, as well as a number of new campaigns showing their first inspection at the start of the holidays, rather than the end.
For those who may be less familiar, the Melbourne market is usually broken into four quarters, defined by the school holidays. But this year that seems to have been put aside and, while auction numbers were lower than the last couple of weeks in March, they were considerably higher than we would normally expect.
According to the REIV, this weekend had 907 auctions reported, with a clearance rate of 86%. Compare this to the same weekend last year, with only 149 auctions held and you can clearly see the change in holiday activity.
With May this year featuring five Saturdays, the auction selling system for sellers is well catered for. At the end of this period, we should get a good understanding of where things are at.
Selling a home can be expensive (advertising, staging, storing of furniture etc). In the past, agents and vendors have been reluctant to auction properties or commence new campaigns while much of their target market is on holidays. It appears that this year, the agents were either confident that no one was going away or there were enough buyers around that even if some were away there were enough remaining to create a competitive marketplace.
After attending some of the first opens and auctions (with inclement weather), we can confirm that this was correct. Many properties had large crowds and/or queues to inspect.
Buyer numbers are still increasing. Two main reasons why (we think) are:
A number of local residents are coming to the realisation that even if they don’t want to work from home, it may be forced upon them. With a number of larger corporations restructuring or making plans to sub-let their floorspace, employees who were working from home in makeshift spaces (ie bedrooms, kitchen benches or tables etc.) are realising they are going to need a bigger/more functional home as the changes become permanent.
Expats coming back need somewhere to live. Australia is becoming increasingly desirable as other countries battle to get the virus under control. For those who have been living overseas, sometimes for 10 years or more, they are now returning to Australia, often with partners and/or extra children and often with deeper pockets.
Most property inspections we are attending feel more like a party line-up than a home inspection. The streets are lined with parked cars and there are queues (prior to the open time) of people waiting to get in the door.
Many buyers are making decisions out of fear and believe that buying something is better than buying nothing. Money is still ‘cheap’ and looks to remain that way for the foreseeable future. Unless history changes, however, rising markets (at some stage) come to an end and in the event things don’t turn out as planned, buying the wrong property now may cost more than waiting for the right one to come along in the future.
Some of the better properties scheduled for Auction on 8 May; an architect’s view
48 Kerferd Street, Malvern East – John Morrisby/Sarah Sharp, Jellis Craig
1 Wolseley Grove, Brighton – Nick Renna/Andre O’Brien, Jellis Craig
- Townhouse, renovated, central South Yarra – circa $2.25m
- Victorian family home on approx. 630sqm, Hawthorn – circa $3.5m
- Large, renovated, Art Deco on good land, Elwood – mid $4m
- Californian Bungalow on over 750sqm, north rear, Glen Iris – circa $2m
- Contemporary home, approx. 1,200sqm, Hawthorn – circa $9.0m
- Victorian home w. 2 studios at rear, pool, Balaclava – circa $2.4m
- 2 bed Townhouse with north courtyard, Ripponlea – circa $1.2m
- Family home in the Castlefield Estate, Hampton – circa mid $2m
- Contemporary family home, pool, Hampton – circa $3m
- Updated townhouse, 3-2-1, Windsor – circa $1.3m
- Single level 3 bed home, prime Brighton East – circa $3.4m
- Modern family home, tennis court & pool, ~1,300sqm, Surrey Hills – circa $5.3m
- Development opportunity, Activity Centre, dual access, Highett – circa $1.65m
- Double fronted Victorian on approx. 400sqm, Prahran – circa $2.85m
- Californian Bungalow, heading work, over 950sqm, Hampton – circa $3m
- Large family home, 3 levels, pool, Brighton East – circa $6m
- Modern family home, very close to beach, Sandringham – circa $4.5m
- Edwardian home on approx. 1,300sqm, tennis court & pool, Brighton – circa $12m
Immaculately renovated and presented, the single level home at 2 Killeen Avenue Brighton East was always going to be an attractive option for downsizers. Proximity to St Leonard’s College would also bring in smaller families. While Matthew Pillios from Marshall White had plenty of location benefits to talk about, the crowd was hesitant to start things off. After placing a vendor bid of $2.0m, it took some time for a bidder to offer $2.025m. More silence led to a lengthy ‘half-time’ break. The vendors were clearly hoping for more (the home had been advertised at $1.95-2.1m), but no further bids were forthcoming. The property was passed in, later selling for $2.265m. A good result for the seller we feel.
The Melbourne property market over recent weeks has been particularly strong. We believe one of the reasons is that there is still a great demand and urgency from property buyers to buy, for many reasons: fear of missing out, having a greater appreciation/need of living at home, greater savings and not having much to spend on…. the list goes on. There is a lot of talk out there about there not being enough supply. We feel that supply is not necessarily just the issue but also the high demand from buyers.
Some other key observations:
- Bank loans are taking longer to process due to resourcing issues.
- Many people that bought in regional/Peninsula areas are possibly starting to question that move. As employers demand more people return to the office in person, some people are finding the extra travel onerous.
- While there will be a slight pause for Easter and school holidays, May is looking to be a particularly busy month (there are five Saturdays). With such a good steady run of selling opportunities, will this flush out a lot of the demand? By the end of May, we should know where the market is really standing.
All of the above is predicated on Melbourne not experiencing any significant future Covid-related interruptions.
As you might have read in the media, there have been some very strong results in the past few weeks.
Many homes have sold before auction, more often still with competition. There are some properties out there, however, that have struggled or failed to attract buyers.
As a general rule when out and about, many buyers have decided a good strategy is just add 10-20% to the quote and you’ll be about right.
That is one strategy, but what if the quote is accurate already? Do you add 20% and then make an offer? You could be the only buyer at this level and well above everyone else – or possibly on your own.
While the market is still positive, if vendors don’t get the quote right, or, more importantly, if their expectations are not in line with the market, then they may not see a positive result for their home. For example, here are some pass-ins from last weekend:
- 16 Mountview Road Malvern – quoted $4.65-5.1m and passed in VB $4.65m
- 24 Anderson Street Malvern East – quoted $3.8-4.1m and passed in for $4.055m
- 22 Warley Road Malvern East – quoted $3.25-3.5m and passed in for $3.26m
- 6 Lileura Avenue Beaumaris – quoted $2.3-2.5m and passed in for $2.42m
- 20 Benson Street Surrey Hills – quoted $2.6-2.75m and passed in VB $2.6m
- 20 Fairmont Avenue Camberwell – quoted $2.5-2.75m and passed in for $2.61m
- 130 Sackville Street Kew – quoted $4.7-4.9m then reduced to $4.5m and passed in for $4.59m
For the type of properties these were, in the context of ‘their’ market, these results did not necessarily surprise us. Vendors need to know how their property fits into the market. Just because a house around the corner achieved a certain price, it doesn’t necessarily mean that nearby houses will fetch the same.
There were also some very big sales over the last week:
- 107 Prospect Hill Road Camberwell – quoted $2.7-2.9m, sold just under $3.3m
- 72 Elgin Street Hawthorn – quoted $1.8-1.98m, sold for more than $2.4m
- 31 Carson Street Kew – quoted $4.18m, sold for $4.563m
- 12 Portland Place South Yarra – quoted $2.65-2.7m, sold for $3.34m
- 42 Toorak Road West South Yarra – quoted $4-4.4m, sold for $5m
- 11 Davie Avenue Cheltenham – quoted $1.85-1.98m, sold for $2.401m
- 69 Kerferd Street Malvern East – quoted $2.27m, sold for over $3m
- 30 Asling Street Brighton – quoted $2.7-2.8m, sold for just under $3.2m
So where to from here?
Easter (and the school holidays) may provide some time for buyers to pause and reflect. The recent results may also instill confidence in some vendors to take the plunge and put their homes on the market.
There could be an increase in homes for first/second time buyers in the market. Changes to the Residential Tenancies Act come into place this week, with landlords and their homes required to meet minimum standards of living for their tenants.
A number of landlords have owned homes for 20, 30, 40 years or more with little or no maintenance to the properties over the years. For some, costs to meet the new standards may be $50-100k or more, of which many may not have the cashflow to fund, possibly resulting in more choices for buyers if they are prepared to do some work. As we’ve found for some of our clients, looking for a B-grader that could become an A-grader could result in greater opportunities in the coming months.
Generally, however, Melbourne and Australia are continuing to prove a great and safe place to live. Expats are still moving back and families are wanting to enjoy their homes with the thought that if we are ever locked down again, at least it will be something a little more comfortable. Stock and interest rates remain low, so possibly things won’t be too different after all. But who really knows?
Some of the better properties scheduled for Auction; an architect’s view
85 Finch Street Malvern East – Joanna Nairn/Maria Vovos, Marshall White
44 Hawthorn Grove Hawthorn – Sam Wilkinson/Gerald Delany, Kay & Burton
- Edwardian on approx. 1,300sqm with court & pool, Brighton – circa $11m
- Timber Edwardian on corner block, Malvern East – circa high $2m
- Two storey brick Edwardian, 4-3-2, approx. 800 sqm, Malvern east – circa $5m
- Fully renovated Victorian Terrace, 4-2.5-2, South Yarra – circa $5.65m
- Brick Edwardian, 3-2-0, approx. 187sqm, Armadale – circa $1.8m
- Well positioned older contemporary home, approx. 720sqm, Camberwell – circa $2.3m
- Fully renovated/extended Edwardian w pool, Hawthorn – circa $6m
- Fully renovated 3 bed home, close to beach, Sandringham – circa $2m+
- Single level, fully renovated family home, Brighton East – circa $3.4m
- 3-4 bed period home on approx. 505sqm, St Kilda East – circa $1.8m+
- Contemporary family home on approx. 772sqm, Brighton – circa $5.75m
- Large, renovated, family home, approx. 800sqm, Elwood – circa mid $4m
- Updated 80s family home on over 700sqm land, Brighton – circa high $2m
- Timber single level Edwardian, pool, Brighton – circa $2.5m
- Extended period home, looking for update, Brighton – circa mid $3m
Positioned on the corner to Coppin Street, 52 Finch Street Malvern East offers the new owner the opportunity to work with the original front of the period home to create their dream family home (stca), on a good sized block of approx. 811sqm, with a bright north rear aspect. The front rooms deliver lovely proportions to work with, while the whole rear would benefit from a fresh start.
A large crowd of interested parties and neighbours came to watch or participate in the auction, run by Iain Carmichael on behalf of the Jellis Craig team. Opening with a vendor bid of $3.1m, two bidders dug deep to secure the property. The home ended up selling for a solid $3.575m.
Buyers, sellers, agents, analysts and reporters woke on Saturday morning with an air of optimism as the Melbourne property market hosted the largest auction weekend since the pre-Covid days in early 2020. They weren’t disappointed. Traditionally the end of February is the first big weekend of a new year, as it is four weeks since school resumed and campaigns can run uninterrupted.
There was an 84% clearance rate and some of the highest results we have seen. This is not just compared to pre-Covid; many properties sold at levels higher than the highs of 2017.
Many quotes were smashed, sometimes by more than 20-30%, such as:
- 62 Kinkora Road Hawthorn – quoted $4.7-5m, selling for $6.55m
- 37 Gladstone Street Sandringham – quoted $1.9-2.09m, selling for $2.78m
- 17 Dalmor Avenue Ormond – quoted $1.6-1.7m, selling for $1.967m
- 58 Alfred Street Prahran – quoted $1.6-1.76m, selling for $2.25m
- 26 Parslow Street Malvern – quoted $3-3.3m, selling for $3.675m
- 36 Campbell Street Brighton – quoted $2.9-3.1m, selling for $3.5m
For many buyers, it will be back to the drawing board. For the moment there are three options:
- Find more money
- Move to a suburb (or two) further out
- Be prepared to accept a less comfortable home
With the first option perhaps being the hardest for many buyers, recalibrating the search area and the property non-negotiables may be the best option for success.
We are encouraging our clients to be flexible with the property, with the knowledge that it can become what they want down the track. This isn’t always easy to determine. Having an architect on board certainly makes it easier to focus on the B graders that can turn into A graders. Not all homes can become what you want/need and some can cost a lot more money to achieve the same outcome. Buying well is important – and sometimes passing on properties is important too, as many properties are just not worthy (or possible) of a renovation.
On a brighter note for buyers, many homes currently on the market are likely to see an updated Statements of Information this week. Where it has been hard for agents to find sales within 2km, in the last six months, this is now no longer the case.
This could help buyers make better decisions around their chances of success, as some of the due diligence undertaken requires financial outlay such as contract checks or pest and building inspections with no certainty of success.
We saw many homes on the weekend sell with 3, 4, 5 or more bidders vying for the keys. That would suggest there are still multiple buyers searching for their new home. With the stock levels for ‘the right homes’ still very low, we don’t expect to see much change to the current market sentiment.
Of course if vendors suddenly decide that they want to sell and expect that the market will see 10% plus increases each week, the market could very quickly start to see some more pass-ins, as buyers may not be able to keep up with their expectations.
Open for inspections were also very popular on the weekend, with some agents recording groups of 50 or more on the well-presented and marketed homes. Are stock levels low? Well, not really if you look the numbers; however, the buyer numbers are so great now (i.e. those that still haven’t bought from last year, expats coming back and also many ‘new’ buyers), the demand is certainly outweighing supply.
Some of the better properties scheduled for Auction; an architect’s view
11 Lyall Street Hawthorn – Campbell Ward/Peter Vigano, Jellis Craig
6 Lileura Avenue Beaumaris – Errol Driver/Jim Kalogerakis, Hodges
- Land opportunity, wide north frontage, approx. 682sqm, Toorak – circa $6.6m
- Fully renovated brick single fronter, 2-1-0, South Yarra – circa $1.2m
- Art Deco family home, pool, DLUG, fully renovated, Ripponlea – circa mid $4m
- Renovated single level brick Edwardian, 3-1-1, Prahran – circa $2m
- Contemporary, dated, family home, approx. 700sqm, Hampton – circa $2.3m
- Brick period with modern rear, 3-2-2, Elwood – circa $2.3m
- Land with plans for dual occ or family home, Camberwell – circa $2.25m
- Golden mile family home on approx. 360sqm, Brighton – circa $3.7m
- Brick Edwardian semi on approx. 400sqm, Glen Iris – high $1m
- Modern family home on over 700sqm, Glen Iris – circa $4.7m
- Renovated 80s family home, Malvern East – circa $4.7m
- Single level renovated home, Hawthorn – circa early $2ms
- Gascoigne Estate, family home, two storey, Malvern east – circa $4.75m
- Updated single level home, Malvern – circa $5m
The home on offer at 46 Retreat Road Hampton ticked many boxes for families looking in the area – a well presented updated home with a good range of spaces. It’s proximity to shops and the suburb’s amenities, coupled well with the park only one door away. As a bonus, the playground is currently undergoing a major redevelopment.
The auction was late in the day, so a buzz of expectation was palpable in the crowd, having seen some strong results at auctions earlier in the day. The opening bid was placed at $2.3m, matching the lower end of the quote range. From here it quickly went up in $50,000 bids, picked up another bidder, dropped the first and exceeded the reserve of $2.6m. More bidders stepped in, although offers now ranged between $1,000-$10,000. The home was very nearly knocked down at $2.736m before a bid was placed in the very last second before the contract hit Halli’s hand. This brought forth a flurry of activity, with neither of the last two parties willing to give up the keys to the home. The property was eventually sold for $2.872m to enthusiastic applause from the crowd. A reasonably strong result for the offering we think.
Welcome back to the 2021 Melbourne property market.
What a difference Christmas and New Year can make to media sentiment. The doom and gloom being reported by the media for much of 2020 has now been replaced with positivity and talk of the strength and resilience of the Melbourne market.
With limited holiday opportunities, buyers have been eager to inspect the stock and many of Saturday’s open for inspection were greeted by long queues of hopeful buyers, some returning to continue their search and others out for their first inspections.
Stock levels, however, remain low. Although the unofficial opening of the market is not until next weekend (after the Australia Day holiday), our early conversations with agents suggest that there could be fewer homes again than normal for this time of year.
We expect to see more of the following:
- Return of the traditional three week (four Saturday) auction campaigns, rather than zoom auctions.
- More scheduled open for inspection times, rather than private appointments.
- Good competition for homes that are ready to move in (no work required).
- Good homes selling quickly, possibly before auction or closing dates.
- Off market properties volumes remaining at similar levels.
- Vendors wanting above market prices are still likely to find it harder to sell.
Saturday 27 February is shaping up to be the first high volume auction weekend for the year, which should provide a guide leading into Easter. What happens beyond Easter may depend on any future Covid-19 outbreaks, consumer confidence as JobKeeper/JobSeeker payments finalise and any changes to stock levels.
For the moment, though, the most important thing a buyer can do is be prepared so that if the right property does present, you don’t miss the opportunity to buy it.
Some of the better properties coming up for auction; an architect’s view
57 Mary Street Hawthorn – Cameron Ingram/Bruce Bonnett, Nelson Alexander
8 Kerferd Street Hampton – Peter Hickey/Sam Harrison, Buxton
It’s hard to believe that we are coming to the end of another year when, in many ways, it feels like we are still just starting 2020.
The Melbourne property market has experienced a number of ‘firsts’ this year. Some of the bigger firsts include:
- first total lockdown (no physical inspections)
- first only ‘one on one’ inspections
- first ban on public auctions
- first ‘online’ auctions
The media sensationally suggested the market would crash, anywhere from 10%-40%, depending on what you were reading.
We didn’t see it.
Many Melburnians remained confident to both buy and/or sell.
The good properties, with realistic vendors, saw continued strong results. Our auction (when they returned) clearance rates were consistently above 70% and the last two weeks have been over 80%.
We saw a number of new buyers enter the market. Our forced lockdowns, for those lucky enough to remain employed, resulted in incomes being saved and not spent. Overseas holidays were cancelled; in fact, nearly all holidays were cancelled. Less money was spent on food and entertainment. Forced savings perhaps, but the results were the same and, for some, the savings were enough to take that first step into the property market.
Not everything sold though. A number of vendors (many with homes that came with some challenges) campaigned in search for a ‘dream’ price, well above the market, and will no doubt have some time over Summer now to reflect on whether they want to remain in their properties for 2021 or meet the market and move on with their lives and plans.
What does this mean for 2021?
We believe the 2020 year has resulted in buyers making more considered choices around where they want to live and how the house will work for them. Changes to lifestyle, including working from home, have identified some flaws in the modern floorplan. While open plan is good, breakaway rooms offering privacy and silence for meetings/calls make it much easier for larger families living under the one roof.
We are hoping the recent results will encourage more vendors to sell. If low numbers remain, it is likely the supply/demand scale will also remain, with demand, particularly for the good ones, resulting in competitive auctions and strong results.
Being optimistic, for younger/first home buyers, we may see an increase in properties in the second quarter. New tenancy legislation (postponed during Covid) is due to come into effect from 29 March 2021, with some changes around mandatory requirements for homes being tenanted. Depending on the condition of homes, some vendors may opt to sell their properties rather than undertake works to make them compliant, providing more choices for buyers.
In general, though, unless we see more instability, the market is likely to take off where it has finished up.
As an Independent service which prides itself in only offering Buyer Advocacy real estate services, our best advice for buyers as they start their search in 2021 is be prepared. Have a plan and have your finances sorted, because if the right house comes up, it would be a shame to miss it because you weren’t prepared.
We would like to take this opportunity to wish you all a very Merry Christmas, a wonderful break with your families and a safe entry into the New Year.
Off the back of a few weeks of 70% plus auction clearance rates, the property market in Melbourne is humming along nicely. In some cases, prices are surpassing historical records. The auction system is working well for the experienced agents and, as a general rule, the scales seem to be tilted in the favour of the seller – if the property is correctly priced.
Many agents have commented that when a new property lists, it is inundated with enquiry and inspection requests the first week. If the buyer isn’t in that first enquiry mix, the property is more likely to take quite a while to sell.
Ready to move in homes are driving market success. Houses don’t have to be perfect in terms of current renovation, but they need to have a good floorplan with the right mix of rooms and good outdoor spaces.
The desire to have one large open plan living area is not quite as high on the list as it previously may have been. COVID-19 lockdown has proven that breakaway rooms and studies are required for a family to function effectively for a long period of time in the home – particularly if there are a number of parties needing privacy for calls or zoom meetings. Bedrooms work to an extent for separation; however, it can become quite depressing if you are resigned to being in your bedroom all day and night.
Hampton, a market that has been particularly strong and forgiving of properties’ faults for many years now, faltered over the weekend. A number of properties advertised with ranges inside $2-2.5million were auctioned and passed in – 40 May Street, 122 Linacre Road, 108 Ludstone Street and 35 David Street (David sold later). Why? We think the homes had compromises – on offer were a mix of homes with orientation, slope, mixed levels, busy road and narrow road issues. Most needed more money spent on them to improve in some way.
We mentioned in our June blog https://www.woledgehatt.com.au/20-june-2020/ that buyers were making decisions around lifestyle, in particular relocating to more rural areas such as the Mornington Peninsula, as working from home looked like becoming more acceptable post-COVID-19 and into the future.
It appears that the same decisions may also be being made more locally by buyers still wishing to stay closer to family, schools, work etc. However, this is more around the offering of the home itself rather than the position first.
Highett has been considered the more affordable suburb to Hampton. 21 Haynes Street auctioned on the weekend. The property offered a quiet street, pretty façade, single-storey living, good bedroom separation, multiple living zones plus a study, along with a pool and outdoor entertaining area. While the Hampton properties struggled to find a bidder collectively on the weekend, 21 Haynes attracted six bidders, pushing the price to $2.1 million.
A similar property in Carnegie, not quite as current but with an equally functional floorplan, saw four bidders push the price to $2 million.
We are not saying these properties were poorly located. On the contrary, both were in good positions with an easy walk to local shops and the station. What we have noticed, however, is that some buyers are choosing the better home in the slightly lower priced suburb over the suburb first.
On the building front, renovations are becoming more expensive, often with unknown surprise expenses once you start. Of course, good planning and advice is key to avoiding surprises – many people we hear set off on the wrong foot (i.e. are poorly advised) and therefore fall into big trouble many months on. With the possible future economic uncertainty, quantified amounts seem to be preferred, particularly in certain price brackets. And it pays to get good advice from a qualified architect.
What do we expect for the rest of the year? We think a slow down as we edge closer to Christmas – but that may not be until December 24! Since the market resumed, agents have had to change how they manage their time. Private inspections and then strict number limits have meant many more hours have been spent at properties (compared with the typical 2 x 30 minute set times of the past), leaving less time to focus or the need to work longer hours to get everything done. The recent buying activity has meant more sellers looking to ‘test’ the market through a soft campaign (i.e. digital only). Traditionally, many agents like to be spending the next few weeks selling what is already on the market and with far fewer sales for this time of the year, compared with previous years, it is likely many will look to put 2020 behind them, and launch in early 2021. That’s not to say there won’t be any off-markets now; we have bought four in the past five days. Two were completely ‘off market’, the other two via a ‘blast email’ from the agency database. There are opportunities out there, you just need to know where to look and who to ask.
Some of the better properties currently on the market; an architect’s view
12 Sorrett Avenue Malvern – Abby Innes / James Tomlinson, Marshall White
18 Pasadena Avenue Beaumaris – Alex Schiavo / Eleisha Doherty, Kay & Burton
- Californian Bungalow looking for update, over 1,000sqm, Malvern East – circa $3m
- Two storey family home with north rear, ~700sqm, Malvern – early $3m
- Brick Edwardian, ~600sqm, north rear, Malvern – high $3m
- Updated Victorian weatherboard, single level, Malvern East – circa $2.4m
- 1940s single level, family home, ~520sqm, Elwood – circa early $3m
- Double fronted Victorian, single level, Canterbury – circa high $3m
- Californian Bungalow with a north rear, Hampton – circa high $2m
- Hawthorne brick, 2 storey Victorian, ~1500sqm, Hawthorn – circa $10m
- Victorian single fronter, 2-1-0, north-west rear, St Kilda – circa $1.3m
- Family home, corner position, overlooking park, Sandringham – circa $2.3m
- Large art deco home over two levels, Brighton – circa high $4m
- Modern family home with pool, Brighton East – circa $3m
- Californian Bungalow, near central park, Malvern East – circa $3m
- Contemporary family home, good land, pool, Hampton – circa early $3m
It feels like we have reached a juxtaposition where nothing is changing yet things are changing (finally). History may show that this period we’ve experienced in the property market will never happen again. Is this best for buyers or sellers? Time will tell.
Auctions can now take place outside with a maximum number of 10 persons, plus the agents and vendors involved in the sale. When the limit of 10 is filled, agencies are then using online portals to accommodate additional bidders. Will this radically change the way property is transacting at the moment?
While many agents are commenting on how much they are enjoying one-on-one inspections, others are mentally exhausted as they stand on one property for sometimes three or four hours or more as they allow individual 15-minute inspections to take place, one after another. As a buyer, you need to be super-organised, and for many properties 15 minutes just isn’t long enough to view the home, so buyers are needing to come back multiple times, or, in some cases, they are just finding it all too hard and moving on.
For some buyers, they are discovering that there are vendors happy to negotiate and sell before all the interested buyers have even inspected the home. As a buyer, it could be heartbreaking to find out the property you had been waiting for is going to sell before you’ve even had a chance to inspect it. Who would buy a home unseen? Well, some people have…
Agents are saying there are a number of new buyers to the market since this most recent lockdown. Some are ‘hot’ to buy; however, there are also a number of agents who have commented that some buyers are taking advantage of home inspections to get out of the house. Others are future vendors checking out, for their own interest, what similar properties are worth.
As a buyer, it is important to be front-of-mind with the agents; however, to do this you are likely to need to disclose a lot more information about yourself, your budget, your potential to sell (if you buy) etc. than you would have done pre-Covid. You may even need to provide finance approval documentation. This may not necessarily be in your best interest as a buyer, particularly if you are the only party interested in a property, but withholding information may result in missing out on some homes for sale, particularly ones for sale quietly.
Asking prices are also harder to judge. Many quiet properties are asking for ‘high’ prices, well above what makes sense. Others, however, are very reasonable. As a buyer, knowing the market you are buying in is even more important, as the ‘social proof’ provided by ‘open for inspections’ and ‘public auctions’ of the past is not currently available.
Where to from here? With restrictions easing, we will see more properties come on the market publicly and, due to limited time running in to Christmas, we will see auctions take place on days (possibly mid-week evenings) other than Saturday, which is the traditional auction day in Melbourne.
Large numbers of off market homes are also likely to remain until the end of the year. It’s easy to get caught up in the romance of an ‘off market’ but many of these homes can be overpriced or have other concerns. Due diligence is important when considering off market properties.
Finally, with interest rates remaining low and finance possibly becoming easier to obtain in the new year, combined with no real pressures (yet) for vendors to sell, a shortage of quality stock will likely remain the issue for buyers.
Properties we like currently on the market; an architect’s view
28 Claremont Avenue Malvern – Simon Curtain/Hamish Palmer-Hill, Abercromby’s
54-56 Bamfield Street Sandringham – Greg Downes/Campbell Cooney, Hodges
Some of the better ‘Off-market’ Properties we have been privy to:
- Contemporary family home, adjoining park, Brighton East – circa $3.3m
- Large modern family home with basement, Brighton East – circa $5.2m
- Edwardian home on large land, Hampton – circa $2.7m
- Townhouse, 3 homes from the beach, Black Rock – circa $2.25m
- Single level weatherboard home, Beaumaris – circa $1.45m
- Large family home on good land near beach, Black Rock – circa $3.3m
- Renovated Victorian, 2 storey, 5 bed, 2 bath, 2 OSP, Armadale – circa $3.45m
- Fully renovated Victorian, 4 bed, Malvern – circa $6m
- Newly renovated Edwardian, Malvern – circa $3m
- 1960s style home or over 700sqm land, Malvern – circa $2.6m
- Renovated brick Edwardian, north rear, Malvern – circa $4.5m
- 1990s two storey family home, 5 beds, pool, Malvern – circa $6m
- Californian Bungalow family home, fully renovated, Malvern East – circa $3.75m
- Semi attached art deco looking for renovation, Kooyong – circa $1.75m
- Edwardian brick family home, Malvern East – circa $2.8m
- Modern family home on good land, Camberwell – circa high $3m
- Adjoining homes for individual sale or development w. plans, Camberwell – circa $5m
- Edwardian family home with tennis court and pool, Canterbury – circa $6m
- Edwardian family home on large block, needing update, Camberwell – circa $7.5m
- Californian Bungalow family home, Glen Iris – circa $2.5m
- Californian Bungalow, renovated, 3 bed, 2 bath, 1 garage, Hawthorn east – circa $2.7m
- Weatherboard single fronter, needing reno, South Yarra – circa $1.45m
- Edwardian brick single fronter, fully renovated, Prahran – circa $1.35m
- Spanish style, river facing, looking for update, South Yarra – circa $4.5m
- Contemporary renovated home, 3 bed, 2 bath, 2 garage, Prahran – circa $2.3m
- Refurbished Californian Bungalow with studio, Prahran – circa $1.9m
- Victorian timber single fronter, 4 bed, 2 bath, 2 OSP, Windsor – circa $2.2m
- Townhouse, 2 bed, 2 bath, 1 garage, Elwood – circa $1.3m
- Fully renovated period home, 4 bed, 2 bath, 2 car, St Kilda East – circa early $2m
Baby steps, but the Melbourne property market is reopening today.
While we still await a final directive from the REIV (Real Estate of Victoria) confirming the approved activities, the DHHS website says:
Private inspections for residential real estate can also resume with one client (dependants and a partner may also attend) and is limited to 15 minutes. Residents who are living in the home must not be there. The 5km rule does not apply when inspecting a house for rent or purchase. You can only leave your home for a maximum of 2 hours to attend the inspection and you cannot travel into regional Victoria.
We are not expecting to suddenly see vast numbers of new properties hit the net. Conversations with agents this morning suggest associated services such as copy writing, floorplans, staging etc. can also recommence, however, it may take a little bit of time for these properties to filter through.
Having said that, the number of advertised new listings has slowly been increasing. Possibly homes that were prepared for sale and about to launch before the lockdown at the start of August?
This will not be a full opening of the market. We believe the intention is to help stressed vendors (many who had purchased before selling prior to the lockdown) and buyers (particularly those who have recently sold) to transact and avoid possibly difficult financial situations or with nowhere to live.
We expect vendors will have contracts and section 32 statements prepared. Homes could sell after one inspection if the price and terms are acceptable. Buyers should be prepared to act quickly if the home suits.
Prior to the second lockdown, more often than not, homes were being sold subject to finance, sometimes for up to 28 days and with long settlements. Vendors lucky enough to have multiple interest may be more attracted to an unconditional offer or short settlement, even if the price is not quite as high as another offer.
It’s still hard to predict where the market will be when/if it resumes with some sort of normal. If Sydney is anything to go by, The Australian reported this morning that Sydney had 815 auctions on the weekend with a preliminary clearance rate of 74%, although it’s perhaps a tiered market with the strongest clearance rates in northwest Sydney at 83% while the west saw only 63% clearance.
We see our next three weeks being very busy with all hands on-deck, calling agents, inspecting properties and continuing on with virtual meetings with clients – old and new.
Based on the latest Victorian Government announcements, it looks likely that the property market will remain on hold until at least 26 October (cases permitting) when regulations are expected to relax and ‘one on one’ inspections can resume.
Real Estate will still be operating in a restricted capacity when it finally reopens; however, it will at least allow some buyers/sellers, who are no doubt quite stressed at the lengthened lockdown, opportunity to buy/sell.
We think a number of homes could sell very quickly when the market reopens (possibly even after one inspection), as there are a number of vendors who have already purchased and need to sell. The motivation for a seller may also shift slightly and, while wanting their ‘best price’, they may also consider accepting the offer that provides the ‘best result’ – possibly a short settlement and unconditional offer.
There will also be some buyers wanting/needing homes as they have already sold.
For buyers, we think finance approval will be a major key to being able to buy after lockdown and we recommend you remain in contact with your bank/finance broker, to ensure you are ‘buy fit’ should the right property present.
For sellers, we think having a current signed section 32 statement and contract ready for re-opening on the 26th October is the most important thing to focus on, as without it the home cannot be sold.
There may still be some properties that sell during the extended lockdown. These include:
- properties viewed prior to the Stage 4 lockdown, currently being negotiated
- properties with no or limited value in the home (ie. land value/new home site/development site)
- properties purchased sight unseen
We do not encourage purchasing sight unseen. Purchasing a property is one of the biggest expenses you will make in your life. Stamp duty is 5.5% on top of it. That adds up to a lot of money if the home isn’t right.
The feel of a home is so important. Sometimes it can tick all the boxes on paper but, walking through, it just doesn’t feel right. How can you determine this from a video?
Will the video show you everything you should be looking at, or only what the operator wants you to see? What about neighbouring properties, slope, light, overlooking, building condition, ceiling heights, room sizes etc?
The video operator will likely be the vendor or resident, as agents, photographers, copywriters, etc are unable to attend any properties until 26th October (unless to facilitate actions related to moving into/out of properties and rentals).
For those wanting to auction, the first weekend (using the traditional 3 week/4 Saturday model) for restricted auctions is 21st November and advertising preparation can’t be done until access from 26th October.
We therefore think the ‘private sale’ market, more commonly now called ‘off market’, will dominate initially and possibly right through until Christmas, as well as some unlisted quiet ‘off market’, although vendors of these homes may not be as motivated to sell.
If you’d like to chat in more detail, don’t hesitate to contact us;
Adam – 0413 318 079
Kristen – 0408 625 965
Alexandra – 0419 727 578
Stage 4 Restrictions and Its Effect on Buyers
For most Victorians, the last week has been the strangest week of our lives as we familiarise ourselves with curfews, limited outings and the, hopefully only temporary, closure of work places, including the real estate industry.
Our thoughts are with all those who are finding themselves in a position of insecurity as a result of the closures and we hope for a speedy improvement to the current COVID-19 situation.
Closer to home, there are vendors who have recently sold and were planning on buying or renting something to move into when they settled, who now find themselves unable to inspect anything. Equally, some buyers have bought with the intention of selling their current home and find themselves in the stressful position of possibly holding two homes.
For those buyers, sellers and renters who have already entered into contracts, it may come as a relief that activities relating to moving can still take place; however, for those buyer/sellers who may be caught out as above, it is likely only to add to the stress.
New property campaigns expected to slow down
Although we saw a sprinkling of new properties hit the net last week, we don’t expect to see many new properties launch sales campaigns over the next few weeks, particularly whilst the uncertainty about when and how inspections will resume, remains. Many of these are advertising ‘contact agent to arrange an inspection’. Perhaps they were pre-programmed to hit the net before the shutdown, but with all inspections banned, we’re not sure how many buyers would want to buy a home sight unseen. From experience, many look better online and avoid showing any of the weaker features.
We anticipate the second half of this lockdown will become a little more active. While agents won’t be able to view properties before listing them for sale, many vendors may be comfortable to sign and prepare so they are ready to go as soon as they are allowed.
We anticipate an increase in the number of off market properties when the rules relax and the possibility of homes selling with only one or two buyers through, if the price is right for both parties.
Why the number of off-market properties is anticipated to increase?
- For those wanting to sell quickly, there will be time to prepare contracts and section 32 statements (many solicitors/conveyancers will still be able to work from home) before anyone comes through, so the home will be ready to sell straight away if a buyer is found.
- For those wanting a public campaign, unless the marketing steps (photography, copy, staging etc) were pre-prepared prior to the lockdown, this will still need to be done and takes time, usually about a week, and possibly longer if the number of sellers starts to increase.
Buyers can use this time to prepare
The biggest constraint for buyers when they find the right home is underestimating the time it takes for finance approval, particularly if you have a complex income/tax structure. Again, this is something that can be done from home and the banks and many mortgage brokers will be able to assist you remotely.
In addition to obtaining finance, it is worth considering the time between purchase and settlement as bank requirements are changing daily. If you’re considering a long settlement, finance approval granted now may not be approved come settlement time.
How it will affect the market
The market when it returns is perhaps a bit more uncertain. Six weeks is a long time. Will it hold the strength that was still around (for the good properties), as late as last week? We anticipate a slowing in the number of international and interstate buyers coming into the market as they will be unable to visit to view properties.
This reduction in buyer demand may create a more balanced market (ie. the gap between the number of buyers and sellers levelling out), with a more even number of homes for sale and buyers looking.
Some areas, however, may still see increases in demand. Speaking with agents over the last month, we note in particular the number of buyers who have purchased in the bayside suburbs of Brighton, Hampton and Sandringham, from areas such as Balwyn, Glen Iris, Carnegie, perhaps searching for a more relaxed lifestyle location.
In the meantime, we hope everyone makes it through the next six weeks safe and healthy.
As WoledgeHatt, we are ready to answer your questions and guide you through the problems and concerns you might have during this time. You can call us on 03 9509 7258 or contact us by filling out the contact form here.