Winter in Melbourne: is it a good time to buy or sell?
There is no doubt the market has changed since the start of the year. Expectations, sentiment and confidence is lower and the general results support this.
Some vendors have been lucky enough over the weekend to have the opportunity to decide whether to sell or not (i.e. had bidding from two or more parties but still passed in); others have had to watch their homes pass in with no bids at all.
As an example, a couple that passed-in, in Bayside this weekend, had multiple bidders. This indicates there is now a growing gap between buyer and vendor expectations, rather than no buyers around to purchase.
- 15 Bright Street Brighton East, quoting $1.8m passed in for $1.88m with two genuine bidders.
- 133 Linacre Road Hampton, quoting $2.3-2.4m passed in for $2.315m with three bidders.
The key question for now, for both buyers and sellers alike, is should you buy/sell or should you wait?
For some, that answer may be yes.
For others, no.
Goals, needs, circumstances, and time to name a few. Families continue to grow.
There are some big reasons why one could argue that now is not the time to buy and the media is helping to fuel the negativity by providing daily reports on:
- rising interest rates
- rising building costs
- rising costs of living
- falling stocks
- dropping house prices
- the war in Ukraine
- talk of US recession.
These topics all sell newspapers, which seems to have become the main goal of the news providers.
There are other reasons for low stock also:
- Winter is traditionally a slow selling season, given the cold weather and the fact that properties don’t present in their best light (particularly gardens).
- Many families (and agents) are taking overseas holidays for the first time in many years.
So what reasons could encourage buyers to buy now?
- Less competition
- Timing – can’t afford to wait
- Potential opportunities – particularly for the properties that require work
- Low unemployment/job security
- Relative safety of investment
- Long term purchase plans.
And why would vendors consider selling now?
- Prices may be better now than in 3, 6, 12 months’ time
- They have already purchased something and need to sell
- They are needing to upsize/downsize irrespective of the market
- They are relocating for work/lifestyle.
Transactions have shifted, partially due to the start of the holiday season and partially because vendors are more reluctant to shell out large amounts of money for advertising and staging, to ‘not’ get a result, and the ‘off market’/private sale market is back.
For vendors considering selling, it is even more important to engage experienced agents who have the knowledge and skill to sell homes outside the ‘auction’ method that works so well in a strong, rising market.
For buyers, stock levels are likely to tighten further, particularly if vendors don’t have to sell.
And that is the key. If the vendor does not have to sell, they simply will hold on to the property. Simple.
There are a number of buyers who have entered the market – and these are those who are planning on renovating. This process is becoming more cost prohibitive and lengthy to undertake, so why not take that renovation budget and put it into something already completed?
We’ve noticed a number of agents/agencies starting to push the benefits of ‘off the plan’ sales. While this may seem an attractive option when stock levels are so low, buyers should ensure the full due diligence is undertaken so there are no surprises when handover/settlement takes place, sometimes two or three years down the track.
And yes, it can take that long. Before building can commence, developers often have to sell a percentage of the development before funding is approved, find a builder, hope the builder can start straight away, hope the builder doesn’t go under, hope that the development finishes on time … the list goes on.
We still recall one conveyancer’s comments that over 80% of the clients their office had, who purchased off the plan, were ‘disappointed’! That’s a high number of disappointed buyers. Whether they are disappointed because of size, ceiling heights, lack of light, quality of finish, number of faults to be rectified, overlooking, timing, smells, noise, neighbours (the list goes on …), it’s a whole lot of disappointment that is worth a good deal of consideration before signing any contracts, that promise a low up-front (sometimes refundable) deposit and no stamp duty.
For those who prefer to be able to see, touch and feel what they’re buying, in summary, there are some good opportunities around, however, stock is going to remain low over Winter.
In the meantime, enjoy making the most of the holiday season and the opportunity to get away after two years of lockdown. We anticipate a pretty solid spring selling season, and for the foreseeable future it appears that demand will outweigh supply. But as a vendor you need to have realistic expectations and the appointment of an experienced selling agent
(who has a solid track record of selling in the area) is, we think, so important.
Some of the better properties currently on the market; an architect’s view
60 Berkeley Street Hawthorn – Peter Vigano/Jessica Zhang, Jellis Craig
27 Moffat Street Brighton – Matthew Pillios/Kate Strickland, Marshall White
- Rear home with city views, 4-3-2, Hawthorn – circa $1.75m
- 80s single level home/new home site, ~830sqm, Canterbury – early $3m
- Vacant land to build, ~860sqm, east rear, Kew – circa $4m
- Renovated art deco semi, 2-1-3, Glen Iris – circa $1.35m
- Townhouse, 3-2-1, north-west garden, South Yarra – circa $1.45m
- Townhouse style home, 3-2.5-2, part updated, Armadale – circa $2.4m
- Timber 4 bed Edwardian, ~690sqm, Glen Iris – circa $3.6m
- Double fronted Victorian, 3-1-2, ~360sqm, St Kilda – circa $1.9m
- Basic single level/new home site, ~770sqm, Brighton East – circa $2.7m
- Hawthorne brick Victorian, central location, ~830sqm, Brighton – circa $5m
- Modern, Golden Mile, family home, 5-3-2, Brighton – high $4m
- Renovated period semi, 3 bed, ~360sqm, Balaclava – circa $1.8m
The family sized townhouse at 133 Linacre Road Hampton attracted quite a crowd for the morning sunshine auction. A newly built Hamptons style home with a functional floorpan for a two child family. The smaller outside space is compensated for by a number of parks within a short stroll. A little further away is the main shopping strip of Hampton Street. The home had been quoted at $2.3-2.4m most recently, after starting the campaign at a lower level. That lower level was likely where buyers were more comfortable, while the vendors were seeking to maximise their return on investment, plus the increase in building costs they encountered over the last year. Auctioneer Paul Bond represented the Hodges team, having to open proceedings with a $2.25m vendor bid. It was slow going to entice offers, eventually coming from three separate groups in smaller and smaller increments. At $2.315m the home was passed in for further negotiations with the highest bidder. The home sold after for $2.35m.