Melbourne’s toughest spring auction market in seven years has opened the door for smart buyers and sellers to cash in on Robin Hood-like conditions.
Five straight weeks of clearance rates below 50 per cent — the worst run since seven straight weeks in spring 2011 — has forced thousands of sellers to negotiate with buyers.
And with price corrections hitting more expensive price brackets harder than affordable patches, market experts say smart buyers — and sellers — can take advantage of those higher up the property ladder.
Secret Agent buyer’s advocate Paul Osborne said today’s struggling clearance rates and prices were largely being driven by a credit crunch, with lenders cutting hundreds of thousands from homebuyer-hopefuls’ budgets compared to a year ago.
“(But) there’s scope to take advantage of price falls by selling and buying into a higher bracket where there’s a higher discount,” Mr Osborne said.
“Selling a home in the first-home buyer market, $600,000 or $650,000, and buying into a higher price bracket — there’s a lot of sense in doing that.”
The toughening conditions have also seen the number of sellers contract by almost 14,000 sales, with latest CoreLogic figures showing just under 81,000 Melbourne homes have sold in the year to October 31, compared to more than 94,000 in the same period a year prior.
market experts say smart buyers — and sellers — can take advantage of those higher up the property ladder.
The firm latest’s Home Value Index also revealed Melbourne’s median dwelling value had dropped 4.5 per cent to about $697,500 since the market peaked at the end of November last year.
Real Estate Institute of Victoria vice president Adam Docking said a falling property market had benefits including lower costs for stamp duty.
Selling for $50,000 (5 per cent) less at $1 million was fine, if you bought a $2 million home for $100,000 (5 per cent) less as well, he added.
“The market isn’t going to be bullish any time soon, but this is actually a good thing,” Mr Docking said.
“This is a correction and it’s a part of a sustainable market.”
CoreLogic Australian head of real estate Geoff White said if you had to sell, sooner might be better, with scope for prices to fall further.
“And if you are buying in the same market, what you are losing on one hand you are more than likely making up on the other,” Mr White said.
However, with a strong underlying economy and population growth, the new year could yet deliver a different market.
The end of the Royal Commission into the financial services sector was likely to set the ground rules for home loans for a long time to come, and the federal election could decide the future of negative gearing.
“A fair bit hinges on those two things,” Mr White said.
“We will all be a lot wiser in four months.”
Former Olympian Anne Cross and her husband Terry have just sold their Wyndham Vale home for top dollar and used the profit to buy into a more expensive neighbourhood in Werribee South. Picture: Jake Nowakowski
HAPPIER IN THE LONG RUN
Former Olympian Anne Cross and her husband Terry (left) have just sold their Wyndham Vale home for top dollar, and taken the chance to upgrade to a pricier neighbourhood in Werribee South.
“We have been able to move into one of the top parts of Werribee,” the former distance runner said.
“With the softening market we were surprised we were able to achieve the price we got for our existing home. And we are very happy to be able to buy like this.”
Samantha McCarthy of Hocking Stuart Werribee said the pair weren’t alone, with strong results continuing in Melbourne’s affordable western suburbs.
“The price point and infrastructure have been a major selling point for our market — and that continues,” Ms McCarthy said.
“Our market is active, vendors are still willing to sell. They are aware expectations have dropped 1-3 per cent, but it’s a good time to sell as it’s still a lot more than it was a few years ago.”
The figures were also better than other parts of the city, which fell almost 10 per cent in the past year.
MAKE THE MOST OF TODAY’S MARKET
1. Bid based on where you see value, not asking price.
2. Buy with a safety margin — don’t go to your maximum.
3. Confirm you’re pre-approved for finance.
4. Don’t buy properties to flip. It should be a long-term commitment.
5. Sell before you buy (if you need to), and consider renting for 12 months.
Source: Paul Osborne, Secret Agent
1. This is the best market to sell in if you’re upsizing.
2. Presentation and imagery is the best way to get a buyer to your door.
3. Listen to buyer feedback on price.
4. Set your price based on sales within the past three months.
5. Hire an agent with experience in a correction.
Source: Adam Docking, REIV
St Kilda East 82.6%
Noble Park 16.7%
Altona North 18.8%
Ferntree Gully 21.1%
Narre Warren 23.1%