Melbourne, A Buyer's Market
Melbourne property values have seen the second straight month of growth and are up 0.2% in July. On the back of falling values throughout the widely reported market slowdown, prices are now starting to improve.
Over the last quarter, while prices have been steady, it is units that are doing well, with this sector of the market up 1.1%. We are also seeing vacancies considerably lower than Sydney, which is another positive for the Victorian capital.
Following a subdued period of market inactivity in the lead up to the May Federal election, investors sentiment appears to be on the up.
According to Melbourne buyers agent, Cate Bakos, “After the election, our inner and middle ring markets bounced back (literally overnight).
“Sentiment improved in response to rate cuts, a Liberal win, and a general feeling that the bottom of the market has been and gone. Enquiry, activity and investor appetite increased very rapidly.”
So while the market looks to be gearing up, the balance of power still remains on the side of the buyer.
Aussieproperty.com director, Steve Janes suggests that “the buying process remains in favour of the buyer, representing an excellent opportunity for informed investors to achieve both better returns and possibly short term appreciation.
“In general, well-positioned stock (both price and location) is transacting within reasonable timeframes, say between 4-6 weeks.
“Vendor expectations are more realistic, again affording good buying opportunities, with many transactions taking place both off-market and pre-auction, “ said Mr. Janes.
Sound auction results provide further evidence that the Melbourne market is in recovery.
“Buyer:property ratios are very high right now with our stock shortage. We’re seeing quality properties selling at auction for far more than the appraised amount and they are mostly flying past the reserves too.
""In many cases, up to ten bidders have been present and active at auctions. It’s a buyers market and our auction clearance rates indicate this,” said Ms. Bakos
A tightened supply of rental properties is placing upward pressure on yields.
“Positive yields are more commonly available north of 5% which is due to both relaxed pricing and vast tenant demand,"" said Mr. Janes
Ms. Bakos aggress claiming, “rental properties are tight in supply. Tenants are aware of this and many are queuing at OFIs for rental properties.""
In many instances, ""tenants are putting in applications at higher weekly rents than the advertised price, and landlords are often underselling themselves when they price the property at a modest price, only to find they receive multiple offers on the first OFI,"" said Ms. Bakos.
As we come up towards Spring, however, investors need to keep in mind that the emergence of new stock in the market may impact this current balance.
“Naturally the Spring market will see the availability of more stock which may affect supply and demand dynamics.
""This will most likely continue to affect high-density apartments, therefore I expect no positive market growth in this space for the foreseeable future,” said Mr. Janes.
But for opportunistic would-be homeowners and investors who have been priced out of the Melbourne market, current conditions could provide the perfect launching pad.
“In some cases, property in Melbourne has all of a sudden become affordable! Now is a tremendous time to invest in Melbourne as population growth drives exceptionally strong rent demand.
""In a broad sense, the market does appear to have leveled out and the astute investor is able to transact at reduced levels and achieve higher rental results,” said Mr. Janes.
July snapshot - Melbourne in numbers