After the second week this year of more than 1000 sales we can see the market is moving into the balanced market that was predicted in early January. 66% as a clearance rate from the auctions and the balance of 1184 sales being made up from the private sales of last week means we should see price growth average about 1% per month for the next few months at least.
With a relatively solid economic outlook and very few, if any experts predicting a rate rise from the Reserve Bank, we should see a steady market throughout Melbourne, with the exception of “New Estates” We will still see the “amazing” results: I attended an auction in Balwyn on Saturday where a property was announced on the market well within the band of fair and reasonable buying, in fact it was announced on the market at the exact price our property report had said was fair, but two bidders battled out the final amount to 20% over reserve.
This and the other aberrations in the market place do not mean property price are increasing at out of control speeds again. There were plenty of properties that sold exactly as they should. There were a few that sold below what they should have and there are plenty that did not sell at all. A unit in Surrey Hills opened on a vendor bid of $510k, after a campaign quoting $500k – $550k. With only one genuine bid of $521k, the property could not be negotiated and remains unsold.
The market is poised for a solid year, with plenty of people ready to enter the market. Investors under $700k are rife. Property turnover is reasonable and at the moment good investment properties are selling at reasonable prices. As long as the stock levels don’t dry up price growth should remain steady.
Established second home buyers are the more difficult sector to foresee. These people usually have enough money to “overspend” if they like the property enough; however, they are usually the slowest to find the “right” property. The sector between $700k & $1.5M will be the trickiest to negotiate through this year. Stock levels are the tightest for good property and I believe growth will be the greatest in this sector.
The upper end, $1.5M plus will always have more aberrations than any other sector and although these properties are often talked about more than any other, they make up a very small percentage of the overall market. There is plenty of stock, and the agents are saying they have plenty to come. I do not believe the buyers will necessarily keep up. If supply outstrips demand, then growth in this sector will stall.
If you are in the market for a property this year please do not hesitate to call or drop in for a chat. There is no obligation for an initial meeting.