Sellers tipped to put some heat into spring
The Age
Saturday August 22, 2009
Winter has been all about first-home buyers and the financial crisis. Kate Robertson investigates whether or not the warmer months will bring sunshine to the market. IT'S been a long, dismal winter for potential home-buyers in Melbourne, with few listings to choose from and the Government's first-home buyer grant burning a hole in many young couples' pockets and pushing up prices at the lower end of the market.Agents are divided about whether the listings drought will continue or if it is about to burst in a spectacular way, as talk of the financial crisis gives way to discussion of a revival in Melbourne's house prices.Eastern suburbsThe director of Ray White Real Estate in Box Hill, Mark Edwards, is bewildered by the lack of property on the market, he says. It is clearly a seller's market but the message isn't getting through to potential vendors, with no evidence the lack of listings is going to be filled in time for spring.Listings have been thin on the ground all year, Mr Edwards says, which has led to the auction clearance rate rising along with prices. "It's not the agents who are underquoting; it's the buyers who are pushing the prices up," he says.Mr Edwards recently sold a house on a subdivided block for $575,000, more than $100,000 more than the reserve. "We didn't expect anywhere near that but that's the market," he says. "It was a low-value property so there were people trying to get into the market. We have been getting four to eight bidders at most properties we have auctioned. In most instances, we are saying 'don't sell before auction, take it to auction', because the demand is so good."He says first-home buyers are driving demand; investors are still out there but not in large numbers.In Mr Edwards' area, the hot-spots are close to Deakin University, where investors usually buy rentals for students, and near the Box Hill Central shopping and public transport precinct. "Property in those areas is hard to find and is always [competed for] by homebuyers and investors," he says.Box Hill–Two-bedroom apartment, $310,000-$360,000–Three-bedroom house, $600,000-$700,000Bayside suburbsThe director of Century 21 On Centre, in Bentleigh, Michael Egan, is as desperate for listings for the unsuccessful buyers he sees at weekend auctions.He says the lack of stock has become a vicious cycle. "People who are wanting to sell to upgrade can't see something to buy," he says. "It filters down. I can't get enough of anything, whether it's apartments, units, houses or land. It is [all] in demand. I had seven bidders on a house at the weekend €” that's six people I can't help."Mr Egan expects it will continue to be a seller's market throughout spring. "I don't think they [listings] are going to double or triple in the next couple of months. Unless the stock levels increase markedly in spring, we will continue to see prices move upwards due to the competition."Bentleigh–Two-bedroom apartment, $380,000-$420,000–Three-bedroom house, $650,000-$750,000Western suburbsSales at Sweeney Real Estate in Altona and Point Cook have been down 30 per cent this year, which is in line with other agents in the area, but for director Paul Lindemann, that merely suggests a bumper spring."People are always thinking about selling; they have been putting it off because of all the negativity," he says. "For the past four to five months it's been quiet. Come spring, it's going to be an absolute flood."It's starting to pick up now," he says, pointing to the fact he's listed five properties in the past three days. House valuations had been down to two to three a week but have bounced back to five to seven a week."There will be a plethora on the market," he says. "It's a seller's market now, with an 82 per cent clearance rate. In spring the buyers are going to have a pick of the crop."And while he suggests that will mean a slight softening of prices, "at the end of the day we have a housing shortage"."The only way for the market is up," he says.Aided by the first-home buyer grant, Mr Lindemann says the focus of demand has been at the lower end of the market but there are definite signs of a revival at the top end, with a property in Point Cook attracting a lot of interest despite it being listed at $700,000-plus.Altona–Two-bedroom apartment, $250,000-$400,000–Three-bedroom house, $500,000-$1 millionInner cityDavid Barnes, at Harcourts Carlton, is unequivocal about what spring holds. "Bring it on," he says. After months of "hard slog" to get listings, he expects spring to be extremely busy. "It was really hard to get your foot in the door to get someone to even think about selling. Now people are contacting us rather than us contacting them," he says.Mr Barnes has no doubt buyers will have more choice in spring, with increased supply welcomed by investors, particularly, who have faced stiff competition from first-home buyers for one- and two-bedroom apartments.Properties below $700,000 have been selling strongly to first-home buyers and those priced higher than $1.2 million have been attracting strong interest, with buyers in that bracket able to secure a better quality of property and undeterred by the hefty stamp duty bill.Mr Barnes says many agents believe there will also be a dip in prices after September, when grants begin to reduce.Carlton–Two-bedroom apartment, $450,000-$500,000–Three-bedroom house, $700,000-$800,000Rental marketThe news for renters depends on where you look. Bayside agents are advertising more properites as renters take up the first-home buyer grants, although its vacancy rate is still only 1.4 per cent.The northern and eastern suburbs are reporting an increase in vacancy rates of up to 4 per cent. In the west, rentals are rare, unless they are at the more expensive end of the market at $500 a week.In the inner city, virtually nothing is available except short-term, fully furnished rentals. This shortage is being exacerbated by some purchasers including a clause in their contract that allows the letting agent to access the property two weeks before settlement, enabling investors to let the property quickly and ensuring a quick turnover.
© 2009 The Age