Time to relax in anticipation for a busy end to 2025

The second term has finished nearly as quickly as it started.

It has been quite an eventful couple of months, featuring a federal election, turbulent global politics and warfare, and this has had an impact on the Melbourne real estate market with less activity and supply.

Vendors are holding onto high hopes that the recent interest rate cut will encourage buyers to pay more, just because they might be able to borrow more.

It doesn’t always happen like that and buyers are becoming more savvy. Some properties simply don’t deserve more to be paid for them. The belief that, if a vendor or agent knows that a buyer has more money to spend, the buyer should just spend it to secure a home that maybe isn’t worthy, is just not right.

Key observations this month (which has mainly been a market of off-markets/pre-markets) include:

• Low quoting – it is working for the homes that need money spent on them.

‘A’ grade properties, requiring work, quoted well below market price have sold with good competition at expected price levels. It is important to note that, although they may appear to have sold well above the market, they have really only sold where they should have. It was only a low quote that made them look like they sold well above expectations:

• 1 Kerferd Street Hampton – quoted $2.09-2.39m, sold $2.83m
• 11a Binnie Street Brighton East – quoted $1.15-1.25m, sold for $1.61m
• 37 Northcote Avenue Balwyn – quoted $2.65-2.915m, sold $3.345m
• 5 Madden Street Balwyn North – quoted $3.2-3.5m, sold for $4.21m
• 69 Littlewood Street Hampton – quoted $2.1-2.3m, sold $2.605m

• A number of properties that have failed to sell have been repackaged with a new agent and presented for sale again, often with the same asking price (or more)!
  • 4 Missouri Avenue Brighton
  • 22 Garnet Leary Ave Sandringham
  • 9 Hillcrest Ave Brighton
  • 2 Cosham Street Brighton
  • 29 Shakespeare Grove Hawthorn
  • 57 Beaver Street Malvern East
  • 27 Leopold Street South Yarra
  • 9 Goldthorns Avenue Kew

• The market is awash with a lot of main road properties ideal for development, yet this is not being taken up – possibly due to a lack of development companies in existence and also the planning system is transitioning into a more streamlined process.

 

Planning and zoning is a topic in the front of many buyers’ minds. A number of suburbs around train stations have been identified to become new activity centres, with significant proposed changes to site coverage and height controls; however, for most, guidelines or details in place are not yet clear on what will or won’t be able to be built.

Homes that have otherwise been in very high demand, due to their proximity to stations and shops, are now vulnerable to some nervousness from buyers, who are not sure how future developments may affect the property.

It may be worth noting that, even with the proposed zoning changes, the properties in these locations will need to be acquired, designed and built. Developing can be risky, especially when undertaking larger scale constructions. Developers will also expect to make a profit.

Development isn’t going away, but hopefully developers will get the design and quality right. Sustainability is becoming a key focus, which is a good thing. But if the dollars don’t stack up at levels buyers are prepared to pay for the completed products, then the buildings may not even get built.

A trend we are seeing in converse to this is the selling of established ‘total’ apartment or unit blocks, which will likely be replaced by one single dwelling. The reason? The unit structure is dated and the rising costs of land tax and compliance costs do not make profit numbers stack up anymore for owners/corporations. The problem with this, as we see it, is a likely reduction in density – for example, three apartments serving three households could be replaced by one. There is also the loss of embodied energy that comes with the removal of existing building fabric that, in the main, really has nothing wrong with it. In our opinion, in the context of discussions around the housing crisis and shortage of homes, this issue is not being discussed enough.

 

Moving toward the second half of the year the talk from agents has been all about more stock coming on in Spring.

It will be interesting to compare their expectations with the reality and whether the volume will be more of the generally unwanted, over-priced stock, or whether it will include a variety of family home and downsizer options. From where we see it, there doesn’t really seem any imminent great desperation for vendors to sell.

With increased volume in stock, price will also be tested, because if the number of buyers doesn’t increase to match the increased number of homes, the scales could tip the other way and prices not rise as expected and spruiked by both the media and agents since our interest rate reductions.

For the short term, we hope everyone stays warm, enjoys the school or other holidays and we look forward to a more ‘normal’ second half of the 2025 year. Unlike at the start of 2025, there will be plenty of time and good opportunities for vendors to sell – but will they get the soaring results they are looking for?

 

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

 

9 Macedon Avenue Balwyn North – Daiman Kane/Lily Zhang, Marshall White

20 Woodmason Street Malvern – Jack Resic/John Chartres, Thomson

3 Linacre Road Hampton – Jonathan Dixon/Marty Pask, JP Dixon

 

‘Off-market’ Properties:

• Art Deco, 3-1-3, multiple living ~700sqm, Canterbury – circa $3m
• Renovated single level villa 3-2-2, Glen Iris – circa $1.95m
• English brick 2 storey, 5-3-3, ~1,020sqm, Camberwell – circa $4.0m
• Single level dbl front Victorian, ready to update, Hawthorn East – circa $2.25m
• Victorian, 3/4 bed, 2/3 car, ~600sqm, Armadale – circa $4.0m
• Renovated dble front Victorian, 4-3-3, Prahran – circa $7.0m
• Brick dble front Victorian, 3-1-1, ROW, needs reno, Malvern – circa $4m
• Refurbished brick 3-4 bed Edwardian, ~650sqm, Malvern East – circa $2.5m
• Renovated brick single fronter, 3-1-1, Prahran – circa $1.6m
• Brick Edwardian, renovated, 3-2-2, ~360sqm, Prahran – circa $2.2m
• Extended double fronter, 3-2-0, St Kilda – circa $1.75m
• Renovated brick dble fronter, 3-2-0, Port Melbourne – circa $2.05m
• Renovated 5 apartment full block for investment, Elwood – circa $5.25m
• Large contemporary, 5-3-2, Brighton – circa $3.2m
• Renovated family home, 4-2-2, pool, Mentone – circa early $3m
• Freestanding 3-1-1, brick, well positioned, Hampton – circa $1.3m
• Large 80s brick w granny flat, 5-3-2, ~725sqm, Glen Huntly – circa $2.5m
• Home w plans/permits for new, McKS zone, ~780sqm, Bentleigh East – circa $2.25m
• New 32 square TH, 4-3-1, Bentleigh East – circa $1.69m