With a clearance rate of 87% on 450 reported auctions and a further 675 properties sold by private treaty negotiations, the market is simply moving from strength to strength. It is not simply first home buyers fuelling this market. Unfortunately the people reporting the property news are not necessarily the ones working in the day to day negotiations of property.
We all remember the article from The Age 10/6/2009 “Global crisis hits Toorak property”
This article explained how property prices in Toorak have plummeted by $205,000 and the “Bargain Hunters” were “circling at a mortgagee’s auction” in Hopetoun Road. The article also went on to say financiers were hoping to cover losses if the property fetched about $6.5M.
Most people who actually know anything about the property market in Melbourne would tell you there is a distinct shortage of stock especially in the range of $800k – $1M and the range well over $2M. The above property sold for $7.075M. There were 5 bidders in all. There are 4 other people out there with money in this level to spend.
The majority of our clients above $2M are not selling their existing homes. They are keeping them as investments. This will have an enormous impact on the future of property prices. With supply getting tighter and tighter, we know that as demand increases, property prices will go up. Our enquiry levels for buying services are now far stronger than anytime in 2007.
I noted a comment from a leading Melbourne real estate agent on Saturday afternoon. He thought it was generally accepted that a quote range being 20% under reserve (what the vendors are hoping for) would be seen as normal in the market place now.
The market at the sub $600k level has maintained its current upward movement as well. Whilst most commentators are talking about First Home Buyers being the only reason this market segment is moving; they are forgetting the “Mum & Dad” investor. Most conservative people are not ready to dive back into the stock market just yet. Therefore, direct property investment is seen as a strong alternative for investment.
The only market segment I see not sky rocketing forward over the next two years is in that of new homes. With the government offering $32k within the metro area until October and then dropping $7k until the end of the year, I think this market will be artificially increased. And in February next year prices may fall a lot more than the drop in the government grants.
When Adrian Jones, president of the REIV, was reported to have said “it may be more sensible and less trouble to rent than buy” He qualified this by saying buying might be better for regular snow bunnies. This was reported in Saturday’s Herald Sun. This was a quote in response to the question “is now a good time to buy” I can only suggest the market that Mr Jones was talking about was the new home market. Otherwise he may have been misquoted or he may be a little out of touch.
Good property is scarce. There is a huge demand which is growing daily. If you are in the market for property you should seek professional advice. JPP Buyer Advocates are the market leaders in this field. Call now for a free, no obligation meeting to discuss your needs for your next property purchase.