Each quarter we survey a number of real estate agents across Melbourne for their views on the current property market and what they expect in the next three months.
In our last survey, they made the gutsy call of a 4-5% price increase for the December quarter. Guess what - they were right!
The average Melbourne property price rose by 5% to $901,951 according to Domain.
But can this move be repeated or even sustained?
Read on to see what the agents are predicting for the March quarter.
Property Supply
All agents report a shortage of stock.
A number of agents reported November as the busiest month ever for sales and all are scrambling to get appraisals done in order to secure stock for sale in the coming months.
Agents are having discussions with both owner occupiers and investors who were holding back from selling last year, about selling in the first half of the year.
So you can expect to see a greater number of properties (particularly investment properties) coming on to the market over the next few months.
Property Demand
Agents are reporting extremely strong demand from buyers, particularly for houses, town houses and older apartments.
Almost all unsold properties from pre-Christmas were snapped up by keen buyers during January.
Agents are seeing large numbers of people attending house open for inspections (from 2/3 groups this time last year, to 12/15 groups now). One agent reported 70 groups attending an open for inspection for a villa unit in Brighton. There is however less demand for newer apartments.
The current demand is being driven by:
first home buyers taking advantage of the Commonwealth Governments Deposit Scheme in some areas;
cheap finance (loans now down to 2.8% p.a.) and expectations of lower rates;
banks easing their credit criteria;
population growth (Melbourne grew by 537,000 people since 2015), and
FOMO (fear of missing out)
Although property supply may increase in the next quarter, agents believe that demand will more than make up for that increase.
Agents don’t see any flow-on effects from bush fires, coronavirus or Chinese travel bans (yet).
Method of Sale
With a strong and rising property market, agents are recommending sale by public auction, as that brings competition and higher prices.
We have seen some very strong (and unexpected) results in the latter part of last quarter.
Late last year Tower managed a family home which was assessed by the agent to be worth around $1,250,000. With some clever presentation works and good marketing, it was sold for over $1,750,000 by private auction. That made for some very happy vendors!
Property Prices
Although agents see strong buyer demand, some believe there is a limit to the amount people can borrow (and push up prices) as there is little wages growth and most families rely on two incomes to meet loan repayments. We just aren’t at the point yet.
They see prices for the more affordable properties being pushed higher, as there are now more people able to buy using the deposit scheme. Overall prices are still rising so don’t be surprised at another 5% increase this quarter.
Agents are finding that buyers are relying on the price range contained in the Statement of Information, resulting in fewer calls from buyers about properties. This is see as a positive.
So what does it all mean?
The Melbourne residential property market is expected to continue to be strong into 2020. Prices will continue to increase; we could see another 5% rise this quarter.
Available properties for sale should increase in the next few months, but the strong demand will absorb that stock, so there will be little dampening of prices.
Unless there is good reason not to auction, sale by public auction is the best sales method. Expect to see high auction clearance rates continue.
Remember that good presentation is the key to getting the best sale price, as that makes your property more appealing to more buyers.
If you would like a copy of our Seven Steps to a Successful Sale, click here - http://towerpa.com.au/7steps-to-a-successful-sale
We are always happy to talk to anyone thinking of selling their property who may need some advice on sale strategy, or to find out how a vendor advocate can help manage your sale.
Robert Allanadale
Director
