What’s been happening in the Melbourne real estate market over spring?
Spring is typically a bumper real estate season in Melbourne. But, school holidays, footy finals and spring racing cause minor disruptions to the season. As we’ve followed a sluggish winter season, vendors have been slow to put homes on the market. This has forced buyers into furious competition for quality homes. In turn, this has buoyed vendor confidence and more stock came on to the Melbourne real estate market in spring. However, it hasn’t quite reached levels seen this time last year.
With final auctions finished on December 14th, with 75% clearance rates, the market is finishing quite strongly. Melbourne’s average values are recovering after a slump in 2018, though we haven’t quite made it back to 2017 prices—yet. The Reserve Bank is keeping rates low and the removal of uncertainty about taxation following the election has boosted confidence.
So, what should we expect in summer?
We always say there’s a new market each year, with new and unique conditions to consider. However, with a strong finish to 2019, we expect a strong start to 2020. January will be very quiet. Campaigns will start in February, with auctions scheduled four weeks later. It’s a short selling season, thanks to the nine-week school term, leading to school holidays over Easter in April.
Meanwhile, we expect to see more off-market activity in the lead up to the Feb/March market surge. Properties that failed to sell this spring may be relisted for private sale at a reduced price (we have our eye on a few).
Summer off-market sales provide a few advantages
Discretion means there’s no glaring real estate board outside your home, prompting unwanted questions from neighbours. Plus, there’s the chance to eliminate expensive marketing and auction expenses. Buyers can also enjoy the opportunity to negotiate in a less pressured environment (compared to an auction). As property advocates, we help buyers access off-market opportunities. Plus, you get unbiased advice on strategy and investment value.
Our advice for first home buyers in this market
First home buyers are least affected by the stall in property supply. Competition remains fierce in the sub-$1million market. There’s an undersupply of quality apartments for first home buyers, despite an oversupply of low quality, high density newer stock. (Please don’t buy off the plan – here’s why.) Some first home buyers are purchasing up to $2 million. If that’s you and we see the increase in stock we hope for in the new year, you could be in a good position to buy in the coming months.
Our advice for upsizers
Is your family is growing and you’re seeking a larger property? You may find less competition as the value climbs above $2.5 million. By selling your smaller property in a strong market you should enjoy strong gains. This leaves you more purchasing power as you move up the property ladder.
Our advice for downsizers
This market is still competitive, so good properties will do well. But, if your home has obvious problems or is undesirably located (say, on a main road or near a train line) you may struggle to compete. Is your home is out of date? Buyers may give themselves a discount to account for the money they need to spend modernising it. Consider undertaking the makeover yourself. It will make your property more attractive to buyers, allowing you to potentially command a premium price point and (hopefully) a bidding war at auction.
The top end of the market is a bit soft. So, if you’re selling between $2 million and $4 million you may find fewer bidders at your auction. However, properties around the $1million – $2.5 million price point are enjoying strong demand.
Sellers: should I put my home on the market in these conditions?
There is a good window of opportunity to sell in February and March 2020. So, start planning by researching and recruiting the right agent to prepare your sales campaign. There will likely be a surge of sales in May before the winter season quiets down. So with a good quality home, it would be advisable to beat the market influx. Sell earlier when you’ll get more competitors bidding at your auction.
Buyers: should I buy a home in these conditions?
Take a holiday over summer. It’s best to wait till the February and March properties become available. While there are a few off-market opportunities to consider, we suggest waiting for more volume on the market to make the wisest purchase. Enjoy your break!
What’s happening in the investor market?
Investors are still pretty quiet. There are some investors around, but they’re seeing competition from first home buyers. Plus, the royal commission has resulted in tighter lending restrictions meaning fewer investors getting access to finance. We suggest investors also hold off until February and March to see what happens in the market. As an investor, it’s a less emotional purchase so waiting and watching the market is the right strategic move at present. Investors would do well to consider commercial properties as there’s plenty of stock around (provided it comes with a good tenant).
Need help buying or selling your property?
We’d love to chat with you during a free consultation. Tell us your property goals and we’ll help formulate a strategy for success. Contact us to book in a discussion today.