Why? I think there are a number of reasons, but one that is now clearly most evident ... the amount of government stimulus that was on offer during COVID.
What has since been revealed is that not everyone was equally affected. Some folks were able to ride out the pandemic and keep their jobs. With businesses forced to close their doors, people stayed at home. As a result of reduced opportunities to travel, pursue favourite past times or eat out, many folks were able to save and pay down debt. Some now find themselves in a better cash position than they were 12 months ago.
Cash is cheap right now
Interest rates are at historical lows. After months cooped up in a home that they’ve quickly realised did not suit their needs, buyers are cashed up and out and about, hunting for a new home.
Renters too have realised that for some, buying a home and the associated mortgage that comes with it is cheaper than paying rent to a landlord. First home buyers are also out in force right now.
Add to the mix the Victorian government offering stamp duty savings on established homes that qualify, provided you buy before 1 July, and recently introduced changes to responsible lending.
The market we are now seeing was inevitable
There is limited supply and huge demand.
Prices are being pushed up and buyers are being squeezed to stump up more cash just to get into the market.
Adding fuel to the fire
Even home sellers who also need to buy face a conundrum. They want to sell and move on, but is a suitable home they’d happily buy even available?
The limited supply of homes for sale is now being exacerbated by sellers holding off putting their homes on the market. Some sellers fear they won’t find what they want within the settlement period.
It’s quite the quandary
The property market over the past eight months has been atypical and nothing near normal.
The challenge then, for buyers and real estate agents alike is, how to accurately price a home?
By law, agents are required to quote comparable sales. But what do you do when you cannot rely on a sales result as a guideline, even one from just a few weeks ago?
In some circumstances, buyers are paying well over and above the top of a guide price just to secure a home. I saw this twice on Saturday, first with a home offered for private sale and then with another home offered off market (not advertised). Some auctions I’ve been witnessing lately have been seeing even crazier results.
Buyers are frustrated. Even agents are scratching their heads.
Where to from here?
I believe we’re going to see some very strong price growth in 2021. If buying or selling is on the horizon for you this year, now is the time to get yourself organised. It’s time to make sure you are perfectly positioned to take advantage of the opportunities in front of you.
In a market like this one, I’d want someone in my corner that I could trust, representing my best interests.
I’m here to help.