With the end of 2018 now clearly in sight, here’s an overview of ‘the year we had to have’ along with some initial impressions of what the coming year is likely to bring for those who are considering making a move in 2019.
Firstly, it’s clear that 2018 was a tougher year for the property market than many expected. Whilst most planned for a flattening of activity after several years of extraordinary growth, the big change in the market that hit harder than predicted was the combined impact of tighter lending requirements from the Banks along with the unforeseen fall-out from the Banking Royal Commission. Property prices in the first few months of 2018 remained steady due to a shortage of available property. However, as the year went on overseas investors began withdrawing from the market due to tighter lending requirements and increased taxes, local investors found obtaining finance more difficult due to restrictions from APRA and many other home buyers found that a tighter financial market meant that their borrowing ability had been reduced.
As a result, we had a property market where there were less people able to buy, and many of those that could buy had less to spend. This effect became more pronounced as the year went on, with the last quarter of 2018 being particularly tough for many sellers. Mind you, the property market always gets a little more challenging for sellers the closer we get to the holiday period.
Those buyers who have not been directly impacted by the credit squeeze have still been influenced by the steady stream of negative reporting coming from the media. Almost all buyers have become more cautious, with some opting to put their plans on hold altogether and to see if prices fall even further.
Many agents have been reporting a big drop in buyer activity in the last quarter of the year. Whilst this is normal at this time of year, some agents were reporting drops of as much as 70-80% in buyer inspections, which is quite alarming. When you add in the additional impact of a substantial drop in activity by property developers, the market has certainly changed for property sellers…some to small degree, others far greater. From what we are seeing, prices have come off at least 10% across Melbourne, but drops of up to 25% have been seen for some homes in certain suburbs.
The important thing to remember is that these decreases in price are all relative to the massive increases that we enjoyed over the past 6 years. Most homes have only lost the equivalent of 12 months’ worth of price growth.
This change in the market has made the effective marketing of a property even more important than before. Whilst some sellers are driven to cut costs in a market where a result is less certain, the opposite response is often needed for those that are committed to selling for the highest price possible. In a market like this, reaching every possible buyer in the most effective way has become crucial to ensuring you achieve the best results. So, choosing the right agent with an appropriate skill-set in marketing and negotiation is more important than ever.
The good news for anyone selling in 2019 is that we are anticipating that the Victorian market will be better in January/February than it was in November/December. This tends to be an annual trend each year. With a new pool of buyers entering the market and the usual shortage of available property early in the year, we expect that those selling at the start of 2019 will probably enjoy the best of next year’s market. For those who are upsizing or upgrading their home, there are prime opportunities in this market.
If you, or one of your family are thinking about making a move in the foreseeable future, our advice would be to prepare early so that you can hit the ground running …keep in mind the old saying about ‘the early bird’.
Our office is closed from midday today (December 21st) until the 2nd of January. However, our customer service team will be calling into the office each day throughout Christmas-New Year to answer any messages and allocate enquiries to our Vendor Advocates, who will be working right through this period. So please don’t hesitate to give us a call if you would like any advice or assistance.
On behalf of everyone at Ian Reid Vendor Advocates, I wish you, your family and friends all the best for the season. I hope you have a safe and relaxing break.