We have relocated from the country to the city and are currently renting. In anticipation of buying a PPOR in about nine months when our lease is up I have been spending a lot of time researching properties for sale in our area (Melbourne eastern suburbs), including going to OFIs and auctions. I haven't yet been to an auction where the property has sold at auction, people just aren't bidding they are waiting for it to be passed in and then negotiating from there. Most properties are selling but not at way above the advertised price like they would have a year ago, they are taking a bit longer and often being discounted.
Welcome to the strange world that is the Melbourne eastern suburbs property market. In search for another PPOR, we tried the tactic of waiting for a particular property to be passed in at auction. Instead, the property sold to a young couple who, in a moment of sheer emotional delirium, paid $40k over pre-sale projection and some $90k above the previous recent sales on the street. This may be the exception now but it still happens.
A pattern has emerged in our search, well presented homes in good neighborhoods are selling near or over the high end of their price range (if under 700k). Poorly presented properties in good neighborhoods are sitting on the market a little longer but eventually move. The sweet spot seems to be in the $550k-$600k range where well presented homes in this price bracket are moving.
I am seeing properties going off the market after a month or so, then coming back on the market with a new agent but at a lower price. I reckon prices in this area are down an average of about 5%. Properties above the $800K mark and below $400K in particular, the ones in the middle are holding up better I think
The issue is all the new or near new stock for sale in outer eastern suburbs like Berwick, Pakenham, Cranbourne and now Officer. The commute is horrible but the price of nice homes are more affordable. Even towns as far out as Drouin are growing, amazing.
Because you have to give a name and number when you go to OFIs I am almost being 'harassed' by estate agents at the moment even when I have told them I'm not interested in a particular property or that I am just doing research at the moment (I'm quite up front with them that we are not ready to buy just yet).
Get use to it, there's a lot of stale property on the market with the usual glut of spring listings on the horizon. Hardly a day goes by that I don't get call from an agent.
Regarding renting, the property we have rented was empty for a month when we rented it in June and we were the only people interested in it. I was stunned as I had been told getting a rental was almost impossible (only wish we'd negotated a lower rent now
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Careful about generalizing here. Nice rental homes in my area are snapped up quickly with many applicants.
Yes, times are a changing (IMO). We are seriously thinking of continuing to rent for a few years if real estate prices stay flat or continue to drop - why buy an asset that is not going to appreciate? The last thing we want to do is borrow money to pay off something that is going to drop in value
Yes, you can hang out for further market drops but population growth in Melbourne is likely to sustain prices into the future here. Here's a quote from the Vic governments 2008 report...
"
Projections for Melbourne
Melbourne is experiencing record population growth. It grew by 273,000 between the 2001 and 2006 censuses.
Overseas migration is the main contributor to Melbourne’s growth, with almost a quarter of migrants coming to Australia settling in Melbourne.
Melbourne’s share of Victoria’s population has been increasing reflecting a worldwide trend to urbanisation.
Melbourne is projected to grow from 3.744 million in 2006 to 5.525 million in 2036, an increase of 1.781 million.
The number of Melbourne households is projected to increase by 51 per cent between 2006 and 2036, compared with a 41 per cent increase in population.
The Next Twenty Years
To accommodate this increase, 600,000 extra households will be required in Melbourne over the next 20 years.
Between 2001 and 2006, the City of Melbourne was Australia’s third fastest growing local government area, reversing a trend of losing population during most of the twentieth century. It is projected that the inner city revival of Melbourne will continue, with a projected increase of 120,000 in the City of Melbourne.
In recent years, the population of most established suburbs has increased and this is projected to continue.
Fast population growth is projected to continue in Melbourne’s growth areas – Wyndham, Melton, Hume, Whittlesea and Casey-Cardinia."
This and other reports tell a similar story, Melbourne is growing well into the future and this I must admit does not support the case for a large drop in prices here going forward. Any price drop is likely to be of short duration given future population trends and shortfall of new home construction.