The Victorian property market has started the Spring selling season very much as it finished off the Winter, with real strength that is producing excellent results for many vendors.
Stock levels are currently around 15-20% below where they were at this time last year in many areas of Melbourne. This is forcing many buyers to compete even harder in order to secure a home, which is producing some exceptional results for many sellers.
One classic example of what can happen in the current market occurred at one of our recent auctions in Box Hill. This property had a sworn valuation of $825,000 at the time it hit the market, yet was able to attract a written offer before the auction of over $920,000. Given the level of interest, we advised our vendors to proceed with their planned auction, which amazily produced a sale price of $1.05 million. This month we have handled sales in Doncaster, Mount Waverley, Heathmont and Sandringham that all achieved at least $100,000 over expectations. Some truly outstanding results!
One trend we are noticing at the moment is a growth in interest in properties that offer potential as a smaller development site, particularly in the 2-4 unit range. Whilst professional developers seem to have become more cautious due to concerns about an over-supply of apartments in some areas of Melbourne, the smaller scale developers are now finding themselves competing with a number of first-time family developers who are looking to capitalise on the strong market by building a new home for themselves whilst they sell off the remaining units at a profit.
It is worth remembering that any talk of “oversupply” relates purely to very specific types of property in very specific areas. In fact, Melbourne’s rental vacancy rate is continuing to track around the 3% mark which is more indicative of a tight rental market than one where an oversupply of housing is an issue.
The confidence in the current market seems well founded. Recent figures from the Australian Bureau of Statistics confirmed that the Melbourne property market lead the nation for price growth in the last financial year. The ABS statistics show that our median price grew by 8.2%, which was double the national average. Interestingly, a number of market commentators are expecting further growth this year. Alan Oster, the chief economist at NAB, has forecast a further increase of 3.5% over the September quarter in Melbourne, whilst Dr Andrew Wilson at the Domain Group has been similarly bullish.
So, all-in-all it looks like the next few months will be a very positive time to be selling your property, particularly if, as some economists are forecasting, we see another cut to official interest rates prior to Christmas.