If you missed our recent Melbourne Property Market Update for June 2022, we have created a synopsis of the most vital points you need to know about the property market in Melbourne right now.
If you are making a property move over the next 3 months this information will be the one of the best tools you will need to can make informed decisions.
First Home Buyers
Across the board in all locations these buyers are feeling nervous. Agents report to be doing a lot more hand holding and guiding home buyers through the offer process.
First home buyers particularly in the $800-$1m price point are hesitant about buying. Their main considerations are interest rate rises, inflation and the rising cost of living and maintenance, repairs or renovation costs.
Second Home Buyers & Upgraders
Second home buyers and upgraders are buying and selling in the same market. They are motivated sellers who have a reason for their sale, which means they are realistic about price and aim to meet the market quickly.
Second home buyers and upgraders are less concerned by the drop in their property price from last year because they are buying back into the same market. They are excited to purchase an upgraded property at a lower price than they could have last year. Coupled with the fact that they are competing against less buyers, it is a good time for upgraders to make their property move.
Property Investors buying in the Melbourne Property Market
Whilst investment lending volume has increased when compared to the last few years, a lot of investors are sitting on the sidelines waiting to see what happens next.
In multiple markets we are hearing from agents that investor activity has reduced significantly, with only 15-20% of buyers looking for investments in the key areas we typically buy for investor clients.
Mature, savvy, well seasoned investors are enjoying the opportunity they have prepared and waited for. Due to nervous first home owners and sidelined mum and dad investors, savvy investors are pouncing on excellent properties for bargain prices.
We are seeing a lot of outstanding opportunities for investors in the $450,000-$650,000 price bracket at the moment across multiple suburbs in Melbourne.
Who is benefiting in this market
Patient investors who know the market well and can recognise good value and take fast action. They are being rewarded with higher than expected rents as the rental vacancy rates remain low.
First home buyers who are confident and recognise there is opportunity to buy at a good price in the current market.
If you recognise there is opportunity and want to take advantage of it but lack time, skill or confidence, now is a great time to leverage the skills and contacts of experienced advocates.
There are great deals out there, just make sure you choose an advocate who is patient and happy to wait for the best deals. Avoid advocates who just want churn numbers and get you into any old property as quickly as possible. Not all properties represent good buying and an experienced advocate knows the difference.
Interest rates – how are they impacting the Melbourne property market?
Second home buyers, upgraders, savvy investors and downsizers are not overly concerned by interest rate movements. It is accepted that interest rate movements are a part of life and whilst we have had it incredibly good for quite some time now, interest rates are still relatively low.
First homebuyers are understandably really nervous. Not only are first home buyers purchasing for the first time in their life, which is a big event in and of itself, they are also not experienced at paying a mortgage and dealing with rate changes. The uncertainty of this, coupled with rising inflation, food and petrol prices are causing buyers in this segment to pause.
I don’t think this behaviour will continue past September.
Once buyers realise nothing much is changing (unless there is a significant lever switched on or off that would cause a reaction in the property market), buyers will decide they are tired of waiting and will become decisive and active again.
What does this mean for you?
If you are a buyer wanting to snag a bargain, I think you have a 2-3 month period to do it.
Providing there are no external levers pushed by government or lending environment that significantly stimulates or dampens the real estate sector, I think we will see the remaining drops occur in the areas that haven’t yet reached the bottom of their price correction, and then we will see a steady market with little movement in either direction.
My caveat
There are a number of external levers the governments can switch on or off at any stage. If a lever is switched it will have an immediate and fast reaction. Which means if incentives for first home buyers are announced, the bottom of the market will be stimulated and grow quickly in value again. This will happen very fast. So if you are serious about wanting to take advantage of the current market conditions, act now. Do not wait. The minute a lever is switched on or off, you will have missed your chance.
I think it is more likely that a lever for the first home buying segment will be switched on than not.
my Guarantee
For those waiting for the bottom of the market, I can almost guarantee you with great confidence that you will miss it. If a lever is switched you will have 2 weeks to buy a property before ending up back in competitive market conditions. Now is your time to buy.
Sure, the market in some locations may still have a further 2-5% price drop (we can assist you to know if this is likely or unlikely for the area we are purchasing in for you), however there are areas that have already hit their bottom and we are not anticipating further drops.
It is imperative you understand the local market conditions in order to make smart, strategic decisions.
As we showed in our Melbourne Property Market Update webinar, each area we examined was in a different part of the retraction cycle. It’s important to have this knowledge prior to making decisions in each market.
If you are unsure and would like some expert help, we have a range of different services for you to choose from. If you would like to explore what a buyers agent can do for you please reach out to [email protected] and request a time to meet.
Melbourne Property Market Update In conclusion
- All suburbs are in a different phase of retraction
- Understanding the local market conditions will ensure you know if the area has already reached the bottom or if waiting longer is in your best interests
- Any government stimulus will change the market overnight
- Don’t wait for the bottom, you will miss it. Go now to lock in your discounted prices
- Each buyer type has a different sentiment – understand the psychology of the buyers in your chosen area will help you outsmart the competition and get a better deal for your circumstances
Recent Comments