by Carly Susic
Looking for comprehensive and up-to-date Melbourne housing market analysis? As independent property advocates, we see all sides of the market. We listen to what vendors are saying, speak to buyers about what they want, and closely observe what agents are doing.
So if you want to buy or sell a house in Melbourne over the coming months, you’ll love the detailed analysis in our latest real estate market update.
Let’s dive in.
Melbourne housing market analysis: our observations
It’s busy! Buyers who have been waiting for restrictions to ease are on the market in force. After nine weeks of hibernation, the property market is roaring to life.
However, because vendors are playing it cautiously, and waiting to see how the market performs, there simply are not enough homes on the market to meet all this buyer interest. Some sellers are waiting until next year to see if the market picks up more. This means buyers are competing heavily for quality homes.
The pandemic mortgage holidays and JobKeeper programs are coming to an end, so this might force homes on the market. Investors with tenants may have trouble with rental payments or even tenanting properties that have been vacated. In inner-city areas with a lot of medium to high density apartments, there is an oversupply of apartments for rent. So investment property owners who are reducing rents, may go from positive gearing to negative gearing. Consequently, they may decide to rethink the investment and find themselves better off financially if they sell.
Predictions for the months ahead
Typically, January is the month when agents take a break and very few sales take place. However, this summer will be different. Agents are planning to work through January to take advantage of the recently revived Melbourne property market.
Many agents are telling us that they have listings booked for next year already. So expect more homes coming on the market in January which will give it a much-needed boost.
Even Christmas will be impacted, and we expect properties will still be transacting right up until the weekend before Christmas, 19th and 20th December.
We know you are keen to get away for a summer beach holiday this January, but if you are buying or selling a home, you should reconsider! At the least, be able to pop back to Melbourne if a great home comes on the market to inspect or to manage the sales process if you are selling.
Advice for Melbourne home buyers
Be prepared to compete! Don’t make the mistake of assuming you will have the pick of the bunch due to market conditions. We are finding that buyers are missing out because properties are selling before auction and are highly competed for therefore selling well above the quoted price range. So, you should be prepared with a strategy. You need to decide if you want to make make an offer prior to auction to capture the right property before the competition beats you to it. Or whether it is best to wait for the auction.
Due to the restrictions of ten people allowed to inspect a property, you must book your inspection in advance. Agents have only ten people to let through, so they want to make sure those people are qualified buyers. Some agents are asking buyers if they have pre-approvals—you need to demonstrate to the agent you are a serious buyer if you want to secure those bookings.
As always, be strategic and patient. Don’t buy based on what’s around. If the right home comes along and it’s in your budget, of course, buy it. But don’t buy because you’re tired of inspections and getting frustrated. Buy something you know you can sell later with confidence—a property that has potential buyers competing now will have buyers competing later when you decide to sell.
As mentioned, January is a great time to buy, so be available for inspections in the new year. Getting in first ahead of buyers on holidays is a great tactic at this time. When it comes to auction, with us bidding on your behalf you don’t even have to make the drive from Melbourne on auction day!
Advice for Melbourne home vendors
With fierce competition among buyers, now is a typically an excellent time to sell your property. As more stock is expected on the market, getting in ahead of the expected rush in volume is ideal. The ring of steel is now down, so people may be away during inspections—but serious buyers will make time to inspect.
The good thing about restrictions is that people ‘just researching’ and neighbours rubbernecking are less likely to be attending auctions or inspections. Because bidders need to register for auctions under current conditions, you and your real estate agent are in a stronger position to understand the true level of interest before auction day. Anticipate that some buyers get last-minute jitters due to pandemic uncertainty, so not every registered bidder will be placing bids on the day.
Choosing the right agent is paramount. Ideally, you’ll feel confident about agents who have adapted their sales processes to maximise opportunities arising from restrictions. This may include pivoting to online auctions, changing the negotiating strategyand customised responses to auction conditions.
Decided on a tree or sea change? Selling your home now and moving to the coast or mountains has never been more popular for many Melburnians. Plus, with working from home trends set to continue, you can potentially keep your job and relocate to a peaceful way of life in regional Victoria. If you are thinking of a sea or tree change, expect to compete as regional and coastal agents have seen unprecedented buyer demand since covid hit.
Advice for upsizers
As mentioned, the market is strong. There is a lot of competition at the $2.2-$2.3 million dollar mark (depending on the Melbourne suburb you are targeting). If you can extend to $2.5 million or beyond, you will find less competition.
At the$1-$2 million price point, there is also strong competition and buyers are active. As we’ve said for buyers, be prepared to respond to offers before auctions and take a strategic and patient approach. Early next year, there should be more homes on the market to choose from, so don’t buy now out of frustration. You don’t want to see something great land on the market next month and regret your purchase later.
If you are upsizing, you should also consider the potential to substantially renovate your home instead, using the $25,000 HomeBuilder’s grant. So consider this option as an alternative to upsizing your home.
Advice for downsizers
Many downsizers are looking to wait. If you do decide to sell, there is strong demand. If your home is quality you can expect to see bidders competing at auction.
We strongly recommend selling prior to buying. This will allow you to firm up your budget and you’ll be well timed to buy when more homes are listed for sale in early 2021.
Choosing your agent is crucial here. You want to ensure your quote is realistic and you’re not just selecting the agent who quotes the highest price.
Advice for property investors
Our Melbourne property market analysis shows it’s a quiet time for investors. People are cautious because they worry about finding tenants. Oversupply of rental properties means securing tenants can be challenging. It’s been speculated that investors will start to withdraw from the market due to financial pressures. Admittedly, we haven’t seen much of this on the market yet, which is a positive sign. Investors have so many different strategies, budgets and priorities, so it’s difficult to give general advice for investors—do contact us for a complimentary strategy session if you’d like specific advice.
Advice for first home buyers
First home buyers are on the market in force! If you’ve been ready to buy in 2020 and you’ve been forced to wait, you may be chomping at the bit to start inspections. However it’s always important to be cautious and strategic. Especially with a huge financial commitment like buying your first home, you absolutely need to get this right.
You may be considering building with the $25,000 home builders grant instead. We suggest comparing the outcome of the property you will have when you come to sell. Will the newbuild home have the same market appeal as an established home? Obviously buying now has the advantage of moving in immediately without having the stress and time delay of building. But with a new build, you get to design the home to your particular needs.There are many factors to consider here so it’s important for you to carefully consider the potential costs and outcome of both options.