A snap shot of what is happening on the ground in Melbourne

Hi

I am also getting phone calls from agents for all the worst properties that they can't sell. My fault really as that was all I ever enquired about.

Regards,

alicudi

 

Yes
I flicked a DA in Croydon, so I am still on their books,
I questioned how is the market going..... the answer SOFT.. Good time to buy as getting them at a good price..... Wrong answer.

 

been overseas- but agree with your postings.

as being on the ground daily over the years - there are a lot of passed in the premium suburbs - doncasters, balwyns etc . i personally think the growth are the emerging suburbs or stuff that can be developed more are still sold - as yes there are still ppl coming to melbourne. still has one of the most sought after universities.

as for the growth zones for e.g. preston - they just keep flying AUD5.1 million on a site (buyer flew in flew out - might not be the smartest investor but yeah he could buy it), 1.03 mil in the ex-housing comm site, non growth zones also achieve 940K for ex-housing comm

Carlton - some old Art Deco 2 bedroom also smashed it by hitting 1 mil plus. something i would pay around 800Kish

You go to clayton - "3 offers of AUD6+ million dollars - sentiment?" To get offers above 5 mil is def not easy in the boom or downturn market. i guess it is so difficult to sell a dev sites according to some. Maybe crappy sites in timbucktoo or somewhere yes like those ones which no one wants.

 

Great post and generating some good discussion.

I'm also looking at the Melbourne market, and I agree it needs to be assessed on a sub-market basis. Melbourne has about 6 major sub markets, each the entire size of other capitals.

Unsure about the comments on Villa units. If we are talking inner blue chip most villa units (in the Hawthorn type suburbs and surrounds) they've had huge growth in price recently, with good examples going from $850k in 2015 up to to $1.2M in 2018. I'd love one of these but I just don't think the value is there at the moment (but will admit I'm not on as close to the ground).

For houses Outer East (Belgrave/Upwey/etc) they're still booming right now, very little stock, very low days on market. Still has another 1 maybe 2 years of this (depending on interest rates).

For houses Mornington Peninsula (Mt Eliza/Mornington/etc) still strong, similar to Outer East.

The boom started in the inner prime suburbs, passed the middle ring and still is hitting the Outer burbs (for the East / South East anyway) at the moment.

My best guess is it's only just starting to become a good time to buy in the inner prime East / SE burbs and should be for 2 years or so, before taking off again, with the outer burbs trailing by an additional 1-2 years.

These are my best guesses as I see it. Naturally some little pockets within pockets within these sub-markets.

Would love to hear some different opinions on this.

 

Hi

Not sure what on the ground research you have done or which agents and vendors you have dealt with but I am finding things otherwise in these areas. A 3 bedroom, double storey townhouse just sold in Mornington for under $600,000 and this was with bay views from a large upstairs balcony, this property would have fetched considerably more in late 2017 and the prices for the bottom end of homes in Mt Eliza has dropped at least 5%, I am talking the worst of the worst types of homes here.

The vibe I am getting when dealing with agents in Mt Eliza is not as positive as it was even 6 months ago.

Regards,

alicudi

 

I did laugh that you don’t have the energy to articulate your views. But did have the energy to post and edit the said post.

 

Hilarious.

 

Thank you for adding your on the ground and very specific observations, it is exactly what we are experiencing too.

Re Villa unit market - cheaper areas ie) $800K mark are in great demand and bidding is very strong., agree with you re eastern suburb villas are not where the value is.

 

It tells you exactly what I posted.....some areas have pulled back by 10%. You are 100% spot on FOR SOME AREAS.

How do you figure there is an oversupply? A developer turns 1 house into multiple houses. If they stop developing and hold sites (which they are literally doing, 100%), then we have 1 house on the market for sale, not 2-10 that would be there post development. So supply of housing is less, not more. Supply of development sites might increase, but not the supply of housing.

 

May I ask which areas you have seen the decline of 10%?

For myself, in St Kilda East, I remember an un-renovated (bulldoze job) single fronted federation (?) house on a tiny block sell for $1.2M a year ago, and now renovated versions of the same thing in adjoining (comparable) streets are 'private sale, asking $1.25M' today. Together with a 2 bedder unit worth around $560k but probably able to buy at $500k makes me wonder if St Kilda East has seen a 10% drop.

 

@Orion some places in the north i have seen were 700-800K 1.5 years ago are now 900-1mil 1.5 .
but some places in doncaster - that 2 years ago were sold 1.4mil struggle to sell for 1.4mil now at the prices that they were originally bought for.

meanwhile in other parts of melbourne

 

Hope you're right about a strong market for villa's, about to put one on the market in Bayside.

 

Seaford in some sections only, Prahran, Windsor, some sections and some property types in Elwood, Carrum Downs, Northcote....... We are doing analysis every day on different areas and different types of properties and these are the ones I can remember off the top of my head, I have probably missed many others too.

There are anomalies though too. Certain houses will go gang busters and may be a one-off. The statistics are not yet showing the declines we are seeing.

At the same time as I say this, there is still competition for the houses even after a 10% drop in value. It is not like they are sitting there and no-one wants them.

I am aware of houses we have considered for clients where they have had 4 people wanting and willing to pay a higher price, but the bank wont lend them the extra. So in these cases the vendor can sit and wait for a cashed up buyer (if they are not in a hurry to sell) and achieve $150K more for their property, but if they need to sell (ie timing, moving interstate for example and need the cash to buy in new location) they are likely to sell for the $150K under what they were after. This is where the mixed results get interesting.

There was a home we were going to negotiate hard on and get for about $100K under the vendors second price adjustment. (and comparable sales supported the number the vendor wanted so its not like they were being unrealistic by this stage) but they were too bullish at first and had the pricing wrong and the house failed at auction as a result. We were going to hard ball and get it down $100K from the revised pricing but last minute a new to the market buyer walked in and paid full ask. The buyer didn't overpay, they just missed out on an opportunity to go hard and save some money bc no doubt the agent did a good job at letting them know we were on the scene also and they had to move fast and at ask if they wanted it.

Again, this illustrates that the market is so varied at the moment and we are now dealing with the subtleties of asset selection and area selection to take advantage of the individual markets within the greater market.

 

Can you pm me the details?

 

I am not active in St Kilda - so don't know for sure, but sounds pretty similar to what we are seeing in many locations.

 

Message sent.

 

I sold a 2/2/1 older unit there in Feb. Market was soft, went to auction, no bids and passed in. Sold a week later to a fomo buyer, achieved over my previous reserve but only thanks to an excellent agent.

Looking at similar sales since then I doubt I'd get the same price today.

Good luck with the sale, hope you get what your after

 

Glad you got your price, what suburb was that in?

 

Hampton.

 

My best guess about the inner Melbourne market would be that prices are slowing down, but a significant number of vendors believe that they can achieve top dollar.

For example, 141 Maud Street, Balwyn North passed in at auction on a $2.11 million bid at the weekend, against a price range of $2.1 to $2.3 million. It's currently listed at $2.45 million, which might be optimistic.

At the same time, I'm seeing smaller, inner city properties, particularly those that are architecturally designed or stylishly renovated, fetching top dollar. If Domain reports on an auction going way past its reserve, it'll generally something unique.

My suspicion is that it's downsizers who're selling their big house in the suburbs who're buying these places.

If I'm right, which is rarely the case, I'd expect to see these record breaking sales fall off as wealthy Boomers can't achieve what they could a few months earlier.

The other thing that I'm seeing are a lot of small development projects hitting the market, where a house has the plans and permits for replacement with several townhouses.

I think that a lot of these are ultimately a play on rising property prices. If the margins fall below 10%, they probably won't stack up, particularly in a falling market, so developers will be trying to shift them at a premium now. Plus there are financing difficulties by the sound of it.