Mixed messages
David Sciola - Partner & Auctioneer
May 2024MAY 2, 2024
There is no clear consensus on the state of Melbourne property market right now. Ask 10 people how the market is, and you’ll receive 10 different answers, ranging from ‘about to crash’ to ‘about to take off’, and everything in between.
From my perspective, the market seems great right now!
I had two auctions in Prahran on Saturday. 9 Larnook Street sold under the hammer with three bidders.
An hour later, 25 Ivy Street sold under the hammer with five bidders.
25 Ivy Street had 84 groups inspect during the campaign, 20 contract requests, five bidders, and a couple more buyers who would have bid but didn’t get the chance.
And this was an unrenovated home needing a fair bit of work, that had been in the same family for 60 years.
But the cost of renovating did not deter buyers getting excited about Ivy Street, as they saw the potential, and more importantly, the value.
Jellis Craig achieved an 81 percent clearance rate on Saturday across 63 auctions.
This week I also sold a house in Armadale after just one inspection. This was our 100th sale for the fin year so far for Team Fetter/Sciola, and we are on track to have our second-best year ever by way of volume.
All seems very positive, don’t you think?
But perhaps we have rose-coloured glasses on?
Perhaps Stonnington is performing better than some other markets? Perhaps we are outperforming the market given our ability to bridge the gap between buyer and seller through the right advice and expertise.
Because it’s not all roses and multiple bidder auctions out there.
Domain reported a quarterly price drop in Melbourne of 1.5% in the first three months of 2024.
Prices have been flat for 12 months now, up just 0.7% compared to this time last year, which means they have gone backwards factoring in inflation.
Regional and lifestyle markets like Ballarat and the Mornington Peninsula seem to be stagnant, with stock sitting for months on end.
Even in town, at the upper end, or in the off-the-plan space, there doesn’t seem to be much transacting.
There is new talk of possible rate hikes later in the year if inflation continues its stubbornly slow downward trajectory.
Higher land tax is become untenable for many investors, who really haven’t seen much capital appreciation in the inner city for the last seven years (houses) or 15 years (apartments).
Beach houses and country houses are now being viewed as an unachievable or unnecessary luxury – like a boat… or Foxtel.
Melbourne prices have seriously lagged other capital cities since COVID, with only a half or even a quarter of the growth of the likes of Sydney or Brisbane.
We are receiving mixed messages – prices rising in some markets, but falling in others; immigration booming, but sticky inflation and cost of living pressure; strong jobs market, but unemployment edging upwards; a huge housing shortage, but investors exiting in droves; rates going up, or rates going down.
So which is it? Good or bad? Bull or bear?
Perhaps all these countering forces are negating each other to create a fairly calm and stable market?
It’s not a bad thing if prices stabilise for a year or two, as they have done.
It removes the fear of missing out, for one. Buyers can be more measured and less compromising.
It also gives vendors confidence. You know what to expect.
If you present, market and price your home appropriately, it will sell well.
There are plenty of buyers in the market ready to pounce and compete for quality properties if they are seeing value, and especially if they are seeing some social proof from other buyers by way of busy opens and competitive auctions.
According to the REIV, the clearance rate in April across 2,605 auctions in Victoria was 78.75%, slightly up on March’s 78.2%.
That’s a pretty healthy market by historical standards.
And if you were to take the average of the 10 people asked to comment on the state of the market, I think you’d find that the market is just fine.
Unfortunately, ‘fine’ doesn’t make for catchy news headlines or high click-through rates.
So, I’ll stay tuned for more articles about impending rate hikes or the mortgage cliff that never eventuates. And in the meantime, as always, we’ll continue to sell quality homes in Stonnington.
Disclaimer - This has been written for informational and entertainment purposes only. The views and opinions expressed are the author's own and not those of Jellis Craig.
