It was another strong weekend in the Melbourne property family home market, with a clearance rate in the 70% range. Some properties sold strongly, even after they passed in at auction – due to very good (and experienced) selling agent work. While many bought, many people didn’t, and the challenges for buyers continue. 

How do you buy a good property in the current Melbourne market?

For many buyers, the time has come to reset.

Despite what the media has been saying since the early Covid days, the market has not dropped, and, for the special properties, it continues to go up.

The government has a vested interest in the market remaining buoyant. Nearly half the state’s income comes from property taxes and this relies on increasing prices and turnover.

Turnover has dropped.  

Gone are the days where a buyer bought and sold, or sold and bought, taking a property out of the market but also replacing one back into the system. This we often referred to as a ‘local market’.

The number of buyers, however, has continued to increase and the days of a ‘local market’ have diminished. The market is made up from usual buyers in the cycle, such as first home buyers and families needing to upsize and downsizers, with now the added pressure of new buyers in the market such as migrants needing somewhere to live, ex-pats wanting to move back home, overseas investors seeking a safe investment and renters feeling pressure from rising rent rates.

The scales are not balanced, and, unless something changes, buyer demand will continue to outweigh the available homes for sale.

For as long as we have been working as advocates, there are three items for consideration to maximise your purchase outcome.

Unless you have a strategy where you have the budget to be able to pay more than the rest (because you can) for the property that ticks all the boxes, how will you achieve your objective?

Most buyers don’t find themselves in this fortunate position. Therefore if the goal is to buy a house, it is important to work out the areas you are willing to compromise on and be prepared to be flexible.  One way to be flexible is to buy a B-grader that could be an A-grader. 

An example of a hot result this past week where buyers had deep pockets was 231 Kooyong Road Toorak, which went to auction and sold circa $12 million with five bidders. This was a comfortable (but not state-of-the-art) family home on approximately 970sqm, originally quoted $8-8.8million.

Vendors in good homes, unless there is a pressing need or desire, are not going to be selling their homes. They are sitting it out often because they cannot find what they want to move into, as it is not there.

Without a doubt, the quality of stock over the past 12 months has been average at best, with only a few gems for sale; however, that doesn’t mean that a number of these houses couldn’t become gems down the track. This is where there are opportunities for buyers to still achieve their goals.

Working out what you need or what is most important is paramount to the task.

• Is it size?
• Is it location?
• Is it land?
• Is it being on one level – ie single-storey?
• Is it being close to the shops, or a school, or the station?

And then be prepared to make some compromises, because price is unlikely to be one of them.

If it ticks all the boxes, the flexibility is likely to be price – find more money to buy it.

Having said that, there are still opportunities.  

How do you recognise the opportunity though? 

At WoledgeHatt we look at properties through an architect’s eye. We are consistently out looking at houses and have bought many properties over the years where our clients have benefitted greatly (both financially and emotionally) from buying a B-grader and renovating or tweaking it (sometimes over time) to become an A-grader because the fundamentals were right – land size, location and orientation.

In addition, we have had many meetings with owners around the proposition of ‘Do we renovate or are we better to relocate?’ 

Sometimes it is better to stay where you are. Not all the stories of working with architects and builders are bad ones, but keep in mind not all the homes that need work are good ones to work on. Every situation is different.

Perhaps an extension down the track could turn that ‘B’ grader into an ‘A’ grader, but how do you identify if this can be done? Will it be an easy renovation or a money pit?

One such opportunity presented on the weekend – 1 Berwick Street Camberwell. This was a solid period home with lovely original period features and good block width within a quieter street with western rear orientation. While it did have lovely front formal rooms and bedrooms, it was lacking an informal living space at the rear and the kitchen and utility areas were dated. This property passed in at auction and sold afterwards for a bit over for $2 million.

 

Meanwhile a few hours earlier, a stone’s thrown away at 16 Broadway (south rear, period re-production, dark inside, busier street) sold very strongly at auction for around the $3.5 million mark. Sure, the land was a little bigger and the property provided better covered car-parking; however, renovation costs are the same no matter where the house is located and we think ultimately the long-term opportunity lies with Berwick Street (if the renovation is done well). 

Below is a concept that we think could transform 1 Berwick Street (subject to council approval):

 

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

 

49 Claremont Avenue Malvern – John Morrisby/Andrew McCann, Jellis Craig

22 Laver Street Kew – Lloyd Lawton/Nick O’Halloran, Jellis Craig

 

 

‘Off-market’/Pre-market Properties:

 

• Family home, 4-2-2, east rear, pool, ~639 sqm, Malvern – circa $5m
• Family home, 4-3-2, renovated, over three levels, ~379sqm, Armadale – circa $6m
• Cal Bungalow, 5-4-3, renovated home, west rear, ~750sqm, Glen Iris – circa $3.5m
• Townhouse, 3-2, over two levels, north rear, ~135 sqm, Prahran – circa $1.85m
• Edwardian home, renovate or rebuild (STCA), ~611sqm, Malvern – circa $3.5m
• Victorian, 2-1, single fronted, north rear, ~172 sqm, Windsor – circa $1.35m
• Art Deco, 2-1, apartment on top floor, South Yarra – circa $800,000
• Double storey brick home, 4-2-2, ~1154 sqm, Ashburton, – circa $2.5m
• Modern 4 level w lift, 4-3.5-2, water frontage, Docklands – circa $4.5m
• Pretty, renovated, single fronter 2-2-2, Thornbury – circa $1.3m
• Single fronted brick Victorian, 3-1-1, NE rear, Albert Park – circa $1.55m
• Renovated ’50s home w pool & alfresco, 4-2-2, Brighton East – circa $2.7m
• Californian Bungalow, 4-2-2, near amenities, Hampton – circa $3m
• Edwardian single fronter, 3-1-1, well positioned, Sandringham – circa $1.7m+
• Double fronted Victorian, 3-2-0, walk to shops, Brighton – circa $2.2m
• Family sized TH, 4-2-2, near beach & train, Brighton – circa $2.5m
• Large 6-6-6 multi-generational home, Beaumaris – circa $6m
• Single level Californian Bungalow, 4-2-2, ~680sqm, Hampton – circa $2.8m

 

Auction Spotlights:

 

10 Auburn Grove Armadale

Set among Armadale’s beautiful treelined streets, a large crowd of approx. 150 people witnessed a competitive auction play out for this elegant Victorian family home. A slow start with a vendor bid of $4.5m quickly turned into a race between two when the property was announced on the market at $5.050m, eventually selling for $5.1m.

 

2 Glencairn Avenue Brighton East

The family home on offer at 2 Glencairn Avenue delivers on space and functionality. The near new, upscale volume builder home attracted a large pool of families keen to be near the schools and amenities of the area. Come auction day, however, only two families converted this interest into bidding. The home had been quoted $3.6-3.96m throughout the campaign. Stephen Smith headed up the Marshall White team, commencing the auction with a vendor bid of $3.6m. He was greeted with a long silence until one family asked to place a $5,000 bid. This was rejected and they eventually offered $50,000.  Again, a very long silence until a second family placed a strong $3.8m bid and things moved relatively swiftly to $4.05m. At this point, bidder two indicated they had no more and a break was called to chat to the vendors, who were not yet ready to call it on the market. No further bids were placed and the home was passed in to bidder 1. The home sold after for a considerable ‘lift’ above the buyer’s bid price.