VIC The Market has certainly changed direction - Melbourne

Update from James Buyers Advocate (servicing Melbournes suburbs; Boroondara, Stonnington, Bayside & Port Phillip) about the current market condition and their take on it.

Worth the read and determination of your own opinion.

The Market has certainly changed direction

 

Core logic stats
CoreLogic Home Value Index - Daily Indices | CoreLogic

Melbourne Monthly indices change -0.34% for the quater.

So their is a negative change.
I guess its expected.

 

I dont know anything about this BA,
but two things
- website looks like it was designed by my kid....when they were 5
- "Statement of Information $5,800,000 to $6,380,000. Vendor Bid $6,000,000. No Takers. Passed In on Lone Vendor Bid. Asking Price now $6,790,000."

so hes using a $6m price as an example of a falling market,
range being $5.8-6.38m, but now on private sale at $6.79

thats some serious undequoting if the reserve was the asking price

 

talking the 3+ mil above market - is a different ball game. The buyers and clientele are not as many. and it is different breed of buyers.

I have seen Doncaster places move to 1.8mil than drop down to 1.4 mil and similar in Balwyn and glen Waverley. Every suburb has its peak and plateau and unless you are like Shane Warne who does flipping in brighton or like James Hird's wife who buys places and refurbishes places in Toorak, it's a different buyer segment altogether which represents the top 15% in terms of wealth. if you talking about some indian couple buying a house in pt cook for 600-700K or like a developer who can do a small dev buying for 1 mil is more realistic.

 

Maybe Melbourne people understand all the jargon but I found it very difficult to read this BAs' article. (Maybe I'm slow eh?) but found myself wondering what was a bidderman? or a castler? I'm sure there is some good info in there but I'll need to find a spare hour to read it slowly and refer back to definitions I'm unfamiliar with - geeze what is a snowballer? Too much work to read - like seeing a foreign movie with english subtitles - I'm not up for that much work

 

Which of the 100's of Melbourne Markets are we talking about?

 

I stopped reading afte the $6m quote, the Bidderman reference, and the 8 x different font sizes

 

Melbourne feels quite today. Anyone else get the feeling we're running on fumes?

 

& @TMNT - Yes ha it's certainly not everyone's cup of tea but you take parts of it! I try to review a wide range of opinions - from PC, AFR, Property Observer right down to James Buyers Advocate, then make my own opinion... makes for a diverse scope of views and interesting reading.

If you read the article it's discussing the inner-eastern, high-value resi homeowner market and the effects of reducing local wealthy investors and Chinese community.

 

As others have said, melbourne is many markets. The pole only captures perceptions of the 'average' which is not particularly informative.

Properties with FHB appeal, close to transport between $500-$750k are going gangbusters due to the massive stamp duty concessions. This combined with low interest rates and strong net migration, I can't see these markets slowing for another 2-3 years at least

 

what do you realistically expect them to do? ie. if its another 2 years of 10% YoY (still low compared to peak gains) that means a 750k property should be worth around 900k, which means those costing 900k now should be worth more then..

A few years ago i thought peak melbourne would happen when Dallas was ~550k based on differentials to gains in other suburbs across melbourne. its one of the least desirable and cheapest of the cheap of established suburbs, and it was $300k in 2015/16. Now that it has caught onto the boom as well i think that all areas have more or less run their stride. prices seem much more level across the playing field, even if the playing field is quite high up. Rents did not more, so in 2015 you could buy in at 5.5% yield in dallas. its now more in line with the sub-4% yields across melbourne.

 

This guy is like the Rex Hunt of Property commentary....

Some interesting stats though, people are still moving to Melbourne in droves. The bracket from 2-5 mill seems to be slowing significantly. From the few auctions I've been to, areas are still doing well (South East, Bayside).

 

This is a great read. Thanks

Just shows you need more than one driver for markets to keep booming.
Also Government did meddle and APRA did work

 

Probably 5-8% growth YoY for these suburbs. More if they are close to transport with good land component.

Not as much growth as some have seen in the past, but still worth being in the market.

 

Just depends if FHB market can soak up the volume, investors are out and if interest rates rise it will impact on all markets regardless.

 

Well not necessarily, its dependent on the yield and when you talk about YoY growth that is way too broad, when markets flatten they do nothing for years, matter of weighing up debt vs growth vs whether there are better markets to jump into.

 

Melb had been a stellar performer but the worm has turned, smart investors have already worked this one out, either accessed equity or sold out, same as Syd.

I don't see the point buying property when yields are 3% and the market has peaked, it will be a long time between drinks and you still have to service debt.

Steve McKnight mentioned that did not expect Melb market to turn so quickly I believe mid last year??

 

I take your point on YoY growth being broad. But if you can seek out a property with 5% or more YoY growth in Melb with 4% yield and borrow under 4% interest rates, then it's still a very solid investment.

What we keep coming back to is the debate on likelihood of growth in a low yielding city. Sure 3-4% yield is no good if there's no growth. I'm just saying that for pockets of melb <$750k there will be plenty of FHB driven growth.

 

Clearly. People only need to hesitate in giving an opinion and have a look at the FHB markets first.