August 29, 2019 | The latest trends in Melbourne Property
Melbourne’s auction market is hurtling into the spring selling season, with the latest auction clearance rate tipping over 80% for the first time since 2017. There has been a very noticeable change in buyer sentiment, with more buyers applying for loans, inspecting properties and bidding at auctions. Bank lending is once more on the rise and cash is cheap, so investors are getting back in the market and buying property too. With the election behind us, confidence in the current government, two interest rate cuts (and potentially another on the way), APRA loosening the banks assessment of loan serviceability and cash rebates from the Federal Government, buyers are back in full force.
Property stock levels are low
The recent confidence and positive conditions have awakened buyers to a similar level witnessed in the 2017 boom period. This fast change has surprised a lot of people – especially real estate agents. Another big driver of this buying surge is the extremely low level of properties for buyers to choose from. We are currently experiencing approximately 40% lower stock levels compared to 2018 and this is putting pressure on pricing again. Buyers are now looking back at opportunities they passed up earlier in the year and in 2018, realising they missed a window of the best housing affordability since 2016.
More property buyers missing out at auction
Buyers are off the fence, and for those who are actively trying to purchase a property, the current market conditions are tough. It’s rare now to see Saturday open home inspections without a queue of people and auctions without multiple bidders. When five people attempt to buy a property, four of them miss out. These ‘under-bidders’ must continue their search, and assuming their housing requirements remain the same, they risk being quickly priced out of the market.
The switch from “seller-buyers” to “buyer-sellers”
For those people considering moving home, the conundrum they now face is where will they actually move to. This is felt mostly by older homeowners who would like to down-size into a smaller property or up-sizers seeking larger accommodation. The idea of selling their current home first is now a daunting task as new options are very limited due to such limited stock on the market.
A lot of people believe that these market conditions will improve for buyers once stock levels increase during the spring selling season. The only problem we face there is that selling agent’s pipelines are looking extremely grim for September, October and November. Homeowners have now switched from seller-buyers to buyer-sellers and this is causing a hold up of new properties hitting the market.
Entering a new seller’s market
We have quickly entered into a new seller’s market and if the upward pressure on home prices continue, we hope this will entice more sellers into the market.
If you have been navigating through tough buying conditions and are yet to secure your new home, don’t get discouraged and don’t give up. Buying a new home can be a very patient game but you have to persist and make a commitment. The right home will appear, and you will know once it does.
It’s also equally important not to be foolish with your purchase. These hot market conditions can bring out the worst in people and force you to make irrational decisions that you will regret. Understand that we are at the beginning of a new market cycle and prices could increase very quickly if these current conditions continue. Keep a calm head and ensure that you select a property that is right for you and your circumstances. Conduct your due diligence and don’t be persuaded by emotions or the ‘fear of missing out’.
Beckett Property are fully licensed Buyer Advocates and highly acclaimed Property Advisors who specialise in property acquisition services across Melbourne. They encompass over 40 years combined industry experience in acquiring, selling and developing real estate and truly understand every aspect involved in the complete property purchase process.