Despite the rising interest rates and low stock levels, we are still seeing property prices hold in the inner ring market.
Low stock levels are historically common in the Winter months. However, with the recent interest rate movements and the possibility of more increases to come, vendors are also lacking the confidence to place their properties on the market. A combination of feeling that increased interest rates are reducing buyers in the marketplace and the fear of not being able to secure their next home, again due to low stock levels across the board.
Despite these current conditions, we are witnessing first-hand a very different story whilst actively in the market. There are still many buyers out there with strong borrowing power and motivation to purchase the right property. These include double-income households, professional couples as well as first home buyers, investors and cash buyers who have sold and are not reliant on banks.
We are witnessing many auctions of late where there have been large crowds and multiple bidders. Some of our inner ring suburbs would traditionally have a choice of four or more properties with similar attributes, per month, although in recent times this has thinned out to as low as one property per month.
Examples of this from recent weeks.
Example 1
The tightly held Melbourne suburb of Elsternwick has seen some record prices, due to lack of choice. A motivated purchaser made a play just days prior to the auction by presenting an offer above the quote range for a townhouse in the popular Parkside Street. This forced the agents to publish a reserve prior to the auction day and whilst it saw some buyers out of the competition, the property was hotly contested and sold under the hammer with multiple bidders.
Example 2
A renovated family home in the popular Melbourne suburb of Murrumbeena was offered to the market for the first time in over 20 years. It was scheduled to auction on a four week campaign, yet after only two opens and strong interest, a buyer triggered the auction process to be brought forward to a weekday evening after presenting an attractive offer above the range. Four bidders battled it out, obtaining a strong outcome for the vendors. Thus, leaving three disappointed buyers still looking with limited options available.
The see saw of supply and demand continues.
How do you set yourself apart from other buyers to successfully secure a home in the current market conditions?
Whilst there is strong competition for what are considered A-Class properties ie. fully renovated, walk in, nothing to spend, equally well positioned homes are passing in and being overlooked due to the fear of the potential cost involved to aesthetically transform them. It’s worth considering being able to see past paint colours, condition of carpet and other compromises that are acceptable to gain your ideal location.
Having an open mind and strategy when purchasing a home that’s in need of a refresh comes with the benefit of not overpaying for somebody else’s renovation, along with manufacturing your own capital growth. Prior to considering this alternative, confirm your lending capacity will allow for this option along with doing your homework to understand the cost involved. This strategy could well see you benefit in your long term return and set you apart from the rest of the market.
