Melbourne property micro markets: what is selling well?

The market is very quickly splitting into two – the good and the not-so-good. Prices are very quickly reflecting the two splits as well.

In any given week, you’ll read or hear stories about the ‘Melbourne property market’ travelling high or low – prices are going up, or maybe the boom is about to bust. But it is too hard to narrow the Melbourne property market into just one market.

There are a number of micro markets within Melbourne, all travelling at different paces. So what is selling well?

It still comes back to supply and demand. There are still more buyers wanting these three types of properties than there is supply available to buy:

  • Blue chip suburb, A grade land.
  • Ready to move into, fully renovated or new build family homes.
  • Single storey, independent but still easy to lock and leave homes.

Why are these properties holding strong, some even still rising, in a generally falling market?

The quality, single storey, well located home. They’re just not being built any more in volume. Whereas in the ’90s, they were commonly built by developers who were subdividing larger blocks into two, the profit margin is no longer there for builders who have turned their focus to larger developments such as apartments. Find one of these either ready to move into, or not requiring too much additional work (cosmetic only) within 500m of the shops and there are bound to be multiple downsizer buyers interested.

Turn key family homes. Previous generations had the luxury often for one partner to stay at home or work part-time, providing more time to manage larger projects, such as major renovations or a new build. As the market tightens up and interest rates increase, most vendors, unless circumstances require (eg divorce, career relocation etc) tend to bunker down and ride the wave, comfortable that their property is going to suit for a while to come. For those wanting/needing a larger home for their family, the one thing they can’t buy is time as their families grow. Finished homes, in reducing markets where building costs and interest rates are rising, provide more certainty regarding future costs as they don’t need (or require less) additional unquantified money on top of the purchase price.

Land. Over the past 20+ years , many blue chip suburbs (such as Toorak, Malvern and Brighton) have seen the older, original homes replaced with larger, more functional homes to suit modern families. A number of buyers are still looking for the option to build their ‘dream’ home in these locations; however, where there used to be an over-supply of older homes ready to be razed, the numbers are now in shorter supply, particularly as buyers become more aware of what constitutes a good property and why (such as orientation, width, slope, zoning etc). Buyers looking for this option are already prepared to spend large additional amounts of money on the build and often have a bit more flexibility within their budget to push further to secure the property, comfortable in the knowledge that these properties are starting to present less and less.

Examples this week alone include:

Land
5 Masefield Street Sandringham – on a quote of $2.2-2.4 million, one block in from the beach with a north rear sold for $3.05 million.

Downsizer
1 Judd Street Camberwell – on a quote of $2.2-2.4 million (increased to $2.3-2.45 million), single storey, own title on approx. 512sqm, easy walk to Camberwell junction – sold for $2.875 million.

Family home
23 Gray Street Brighton – good building volume in a great local area, sold in the $4 millions.

Should buyers wait for the market to ‘bottom out’?

If you can identify the bottom, maybe. But it’s only a good time to buy at the bottom of the market if the property you want to buy is actually for sale. Buying something just because it is cheap usually results in dissatisfaction because ultimately you’re probably buying something with too many compromises – but ‘hey … it’s cheap’!

In the more recent past, when there has been ‘bad news’ spruiked continuously over the news and in the papers, we have seen stock tighten even further with less homes hitting the net, resulting in less choice for buyers.

Certainly some vendors may want to sell and quickly, particularly if they are not going to be able to manage their mortgage if the interest rates rise significantly. But they still may not be selling the type of property you are after.

If the interest rates go up, say only ½ or 1 per cent, it may not have too much of an impact on the properties in the areas we are looking at. It may just mean one less meal out or one less takeaway per month for vendors.

Of course, if the interest rates go up, say, 2-3 percent over the next 12-24 months, it could be a different story!

We therefore default to our usual practice of helping our clients buy the right home first and foremost that ticks the key boxes they are aiming to achieve, ideally with a longer term hold in mind (at least five years) to weather any fluctuations in the market place.

Buying well can sometimes mean that a property can still increase in value, even if the general market is not.

 

Some of the better properties scheduled for Auction; an architect’s view

2 Kyarra Street Hampton – Jenny Dwyer/Sandra Michael, Belle Property

47 Guildford Road Surrey Hills – Tom Roberts/Carl Sacco, Nelson Alexander

2B Northbrook Avenue Malvern – Adam Cashmore/Ross Savas, Kay & Burton

 

‘Off-market’ Properties:

  • 2-storey family home, 5-3-2, good land, Glen Iris – circa $3.7m
  • Large Edwardian family home, Sackville Estate, Kew – circa $7.5m
  • Weatherboard single fronter, 3-1-1, Glen Iris – circa $1.6m
  • Single level Victorian, looking for updates, Malvern East – circa $3m
  • Partially updated double fronter, Malvern – circa high $2ms
  • Victorian single fronter, 2-1, potential OSP, Armadale – circa $1.7m
  • 2-storey Victorian terrace, 3-2-0, South Yarra, circa $1.9m
  • Pretty, renovated double fronted Victorian, Prahran – circa 1.65m
  • Period family home, in McKinnon Sec zone, Ormond – circa $2.4m
  • Family home, partially renovated, close to beach, Mentone – circa $2.4m
  • Renovated family home, Bay views, Brighton – circa $7m+
  • Modern family home, close to amenities, Brighton – circa $7.5m
  • Brick single fronter, 3-2-1, dated extension, Albert Park – circa $2.6m

 

Auction Spotlight:
24 Glendearg Grove Malvern

John Morrisby heads up the Jellis Craig team at the auction of 24 Glendearg Grove 

Under a group of umbrellas a reasonable crowd looked on to watch this auction.

What was on offer was at home with wonderful bones, a lovely period facade and a preferred western orientation in one of Malvern’s better streets.

Auctioneer John Morrisby open the auction at $3.2 million and it didn’t take long for buyers to enter the fray.

Property ended up selling for $3.4 million. Pretty good value this, however, in the current climate when renovation works are not favourable with the general public, it probably makes sense.