What a roller coaster year in real estate it has been!
Having watched the market fall for 18 months or so, the federal election in May ended up being the turning point in the market.
Market sentiment changed
I very quickly saw that there was a change in market sentiment and the market was turning around. Every day, I was telling anyone that would listen. I am sure there are people reading this right now that I spoke to at that time, who were thinking of buying but just didn't take action. Oh for the benefit of hindsight...
From 22nd May onwards, we saw interest rate cuts, APRA changes, easing of banking lending policies helping home buyers borrow more plus a return of investors to the market. All of these factors combined to boost confidence in the market and buyers were back out in force.
Melbourne dwelling values jumped by 2.2 per cent in November, with the total increase over those past three months the highest in the country, at 6.4 per cent.
Whilst housing values are rising, the recovery trend is most concentrated within the top quartile of the market, or higher priced homes. In Melbourne, top quartile values were up 8.1 per cent over the same three month period compared with a 4.2 per cent rise across the lower quartile. Melbourne's inner east has seen positive annual growth over the past 12 months, up 8 per cent.
As those inner ring areas become more unaffordable, there is a ripple effect out to more affordable areas, that then start to rise in price.
What does this mean?
We are most certainly back into a sellers market.
Just as the higher priced homes dropped most in value during the downturn, prices for those same homes have bounced back. This is due to a combination of factors, including adjustments to serviceability rules meaning home buyers can borrow more.
But one of the main price drivers in the market right now is the lack of stock. There simply are not enough homes for sale to match the number of buyers out there looking.
It's a catch 22 situation for anyone looking to buy who would also be selling. Those folks are not putting their homes on the market as they are not finding another home to buy and move in to. With fewer homes on the market, demand increases for those that are for sale and prices go up.
From auctions in February where you could hear a pin drop thanks to no bids, we have been seeing 6-8+ bidders at auctions over the past few months. I have seen a lot of homes sell for $100-$150K over the guide prices, and then some. If a buyer likes a home, they are doing whatever it takes to buy it.
Little sleeper pocket suburbs where homes were selling in the $800Ks early in 2019 are now demanding $1050-$1.15M+ (Forest Hill and Coburg are two examples).
Where to in 2020?
A raft of so called industry experts and economists have expressed surprise at the rapid rate of recovery. The basic fundamentals underpinning the market never changed, so I am not surprised at all. I am in the market every day, so can see trends and market movement well before the mainstream get wind of it.
In fact, I see a housing shortage looming in 12-18 months time.
And when houses are scarce and buyer demand outstrips the supply, we know prices go one way... Up.
A little project of our own
We ourselves bought a little project this year. It very much was a renovators delight. When you see the before photos, you will probably think we were crazy to take her on.
But when I see a home that has been left to fall into disrepair, I also see what it can be. And this little gem has revealed herself as a total stunner.
I have been taking lots of photos and doing a video diary and I will be sharing the transformation story next year.
Stay tuned, she is worth the wait. ;)
Wishing You A Safe And Happy Festive Season
Thank you so much for all your support in 2019. It has been a big year.
The Chamberlain Property Advocates team will be taking a break from today, with the office reopening on Thursday 22nd January 2020.
I look forward to connecting with you again in the new year. Until then, be well and enjoy.