Vendors face ‘20 per cent less competition’ as interest rates fall
Melbourne property vendors are benefitting strongly as they face 20 per cent less competition from rival listings than they would in a “normal,” well-stocked market.
The city’s “low supply/high buyer interest” sales backdrop comes as the residential real estate market is clearly shifting from a downward direction to an upwards phase. And the good selling opportunities are likely to continue for vendors as low stock remains a market feature in the peak late spring and early summer selling seasons.
But there are also positives for prospective buyers. The current market is more influenced by caution and heavily-researched buyers compared to Melbourne’s boom-time market between 2012 and 2017.
The more stable conditions mean that people aiming to buy and sell in the same market have a measure of safety. And this trend to stability in buy/sell activity is only likely to intensify as stock levels spike up, albeit off a low base, in the run-up to the end of the year.
Nelson Alexander Sales Director Arch Staver says today’s buyers are not as rushed as they once were and are far better researched.
Many buyers believe they have time on their side to look at all their options when planning a purchase. This is putting pressure on sellers to set accurate quotes and reserves, or risk missing a sale.
Mr Staver says buyers often recite to agents the price that a listed property last sold for, having sourced that information on the internet.
“Buyers are acutely aware of comparable properties,” he says. “You don’t even need to be that researched because there are legislative requirements on agents to provide price information on comparable home sales in the listed property’s Statement of Information.”
The latest Real Estate Institute of Victoria (REIV) Quarterly Median Price data indicates Victoria’s housing market is returning to good health.
A springtime boost is helping to restore the property market with house prices up by 4.5% in the September quarterly data, while the price of units has grown by 3.9%.
Interest rate cuts are making the difference for buyers. The Reserve Bank’s decision to cut the official cash rate to 0.75 per cent in October was the third reduction to rates in five months.
Data from the Domain Group for the September quarter also shows a similarly robust spike in prices. The Domain figures show that across Melbourne, house prices rebounded by 4.1 per cent in three months to a median of $855,428. Unit prices were up 3.7% to a median $520,940.
According to the REIV, Melbourne’s house price growth of 4.5% is the highest quarterly result since March 2017.
The upturn was led by the northern suburbs with Preston achieving the highest quarterly growth with 25.7%, closely followed by the neighbouring Coburg on 20.8%.
Over the first two weekends of October more than 1,383 auctions were recorded by the REIV. Some 821 homes were sold at auction with 301 passed in, 130 on a vendor bid. In the first half of October the clearance rate has averaged 75% – slightly down on September’s 77%.
Auction numbers in the first half of October are up 9.1% from September (1174). More sellers are listing, encouraged by the keen buyers out there.
It’s a trajectory that’s gaining momentum, even though data from the REIV, Core Logic and Domain indicates that total Melbourne listings are running at 20% below the listings seen in 2017 and 2016.
Interest rate cuts are making the difference for buyers. The Reserve Bank’s decision to cut the official cash rate to 0.75 per cent in October was the third reduction to rates in five months.
Many buyers have been looking for months and are now finding that increased stock levels are providing more opportunity, albeit in a competitive environment.
Auction participation rates across the Nelson Alexander network indicate that homebuyers are bidding and buying with greater confidence, particularly in the $800,000 to $2 million price range.
REIV President Leah Calnan says the September quarter data has brought the news prospective sellers have been waiting to hear.
“Enthusiasm is growing as prices surge and properties are being snapped up more quickly, this is the perfect time to get on the market.” Ms Calnan says.
“The September Quarterly results make for great reading, but we are not out of the woods yet.”
The time needed to prepare a property for sale is usually two weeks to cover presentation and preparation of marketing material. Most auction campaigns take four Saturdays or three weeks spent presenting the property.
You are welcome to contact any Nelson Alexander office to discuss your property needs or to arrange for a free appraisal.
