2nd January 2019 / Bradley Brown: Melbourne Property Review

After five years of tremendous growth in the Australian property market, the real estate industry has experienced a changed landscape for buyers and sellers alike, who are now adjusting to a "new normal".

There are several key factors that have resulted in a more price sensitive market.

Stricter lending conditions have impacted on the ability of potential buyers being able to secure finance in a timely manner to purchase a property. In response to the Royal Commission Investigation into the Banking, Superannuation and Financial Services industry, banks tightened their expense and income verification of potential borrowers and have generally become slower and more cautious, but are still lending.

In practical terms, this has meant that buyers have also become more discerning as they attempt to navigate this new landscape. In general, they have been less willing to purchase property not priced to market or requiring major work, or those homes that have perceived faults. Homes that are renovated, in quiet streets and that are close to schools and other amenities continue to attract a great deal of interest in the market.

It is now more likely to see just one or two bidders at each auction, or alternatively, properties passing in and then selling in post auction negotiations. For sellers, it's important to have a strong negotiator handling the sale of your home. For potential buyers, the advantage of being the highest bidder on auction day is that if the property does pass in, you have the first and exclusive right to negotiate for the property.

Obtaining expert advice on the sale method that's right for your property and circumstances is crucial, particularly in these changed market conditions. Often a private sale or expressions of interest campaign can be the most effective way to market your property. Your agent should explain the different methods available to you and recommend the appropriate strategy for your home.

In the coming year, Domain Economist, Trent Wiltshire forecasts that by 2020, Melbourne house prices will rise by about 4 per cent. In 2019 and 2020, unit prices are expected to grow by about 1 per cent. The tighter lending conditions and more cautious consumer sentiment will still have some weight on Melbourne property prices in 2019. However, this is tempered by a falling Victorian unemployment rate, strong population growth and the Reserve Bank of Australia once again leaving the office cash rate on hold at 1.5 per cent in their final meeting of 2018.

There are certainly some fantastic buying opportunities at the moment and if you're considering purchasing a home in the near future, we recommend that you take advantage of the current market conditions. We have seen real estate circles like this before (2008/2011), where buyers have tried to pick the bottom of the market and outsmart themselves. Particularly if you are upsizing on your property, now is the best time to act.

Our advice to property owners considering selling in 2019 is to focus on the presentation of your home and together with your agent, develop a marketing strategy that is tailored to your property. A multi-channel marketing program is essential, ensuring that from a large pool of potential buyers, we can showcase your property to serious, qualified buyers in a highly targeted manner.
We would be thrilled to assist you with any advice or preparations as required in 2019. It is an especially exciting year for us, and we look forward to sharing it with both our existing and new clients!

On behalf of the entire team at Fletchers, we wish you all the best for a refreshing Summer and a wonderful New Year.