Boroondara Updates

A quiet December made way for an uptake early in the quarter, as a lot of money continued to circulate within the Boroondara property market, bringing in strong sales and auction results. With increased talk of interest rate rises threatening to affect the national market, Boroondara was relatively unchanged. As Peter Vigano from Jellis Craig said, “Quality properties continued to out-perform expectations with several off-market sales and good depth in interest”.

To highlight a few key sales throughout this region, Nelson Alexander Real Estate sold a relatively basic home at Hutchinson Drive, Kew, through very strong auction with 3 bidders, going under the hammer for $1.86m. Jellis Craig Real Estate auctioned 3 Renwick St, Glen Iris, high land value and in a good location, with 5 bidders for $2.7m. A well renovated house suiting downsizers and families on Brandon St, Glen Iris, sold at auction with 4 bidders for $2.7m. A renovated period home on 800 square metres in Loch St, Camberwell had 4 buyers competing to purchase off market, again through Jellis Craig Real Estate, and exceeded expectations with the sale price of $6.6m. Finally, showing that rare A grade fully renovated homes are always in demand, a property on Molesworth St, Kew, sold off market for just over $10m despite only being on 1000 square metres of land.

Closing out the quarter, seller reluctance grew as stock reduced 50% from the previous quarter. The upside of very few good quality houses flooding the market is that demand will continue to retain their high value. This trend will likely flow forward due to the disruptions between easter and the election. A-grade homes performed well, though all else flattened out, particularly stock that is based on land value. With the rise in building and material costs, people were forced to budget 30-40% on top of their budgets for building and renovations. Added to the high increases in labour times, the feasibility for developers or renovators was greatly compromised. Without clear time or cost guides for these services, this factor will continue to place pressure on the actual land acquisition prices moving forward.

Leading into next quarter, properties that are B-grade, of land value, or requiring work, will receive decreased interest. The urgency seems to have gone out of the market, and many buyers will hold out to see if prices drop over the next 6 months. With numerous interruptions, the oncoming election, long weekends and school holidays amongst them, the period ahead will be seasonally slower with less houses on the market. It will transition from a very strong sellers market to one that effectively runs on two speeds. Due to building costs and delays with builders, the market for renovated homes is expanding. Properties requiring renovation or with B and C-grade positions will ease. Increases in stock and interest rates should start to level the playing field and force a reduction in prices in some areas. Given the strong gains over the last 12 months, this reset of sorts isn’t a negative and should stabilize the market with more stock in the second half of the year.

We have certainly seen one of the most extreme market variations over the last 12-18 months.  With 2019 the year kicked off with the upcoming federal election and the banking royal commission.  The market was nervous and money was difficult to get from most lenders.  This reduced prices in some parts of the market up to 20-25% very quickly.   It was also affected by overseas demand and more specifically the Chinese market.  There were several land value properties in Kew for example that dropped from $2.7 6-months earlier to be selling as little as $2mill.

We then had the Federal Election, which once the Liberals remained in power the market started to turn back almost overnight.  However there was very little stock available so it was difficult to get a good read on it until listings increased through August 2019-Oct 2019.  It was clear with low interest rates and low stock, buyer confidence had returned and we recorded some very strong prices and price growth through to Christmas. 

Most of the good agencies were recording over the calendar year, their worst 6 months for many years, followed by their best 6 months.  The strongest market in Boroondara was the family home $2-$4mill range near Glenferrie Road and out through Canterbury and Camberwell, where we had strong bidding at auctions and significant growth.  Up to between 15-30% in 3-4 months in some cases.

As the market closed for Christmas there was real energy in the market and several buyers still left waiting for stock.  February 2020 opened as expected with a “bang”.  We were aware of COVID-19 but it was back of mind and the market had no idea what was ahead.  As it became more evident, March was interesting. Vendors started to sell with urgency and many agents recorded a very strong month of sales.  However, prices had started to soften.

Since then the market has been operating largely in Stage 3 and has adapted very well.  It’s amazing how quickly everyone has created new more efficient ways of selling and buying real estate.  Amazingly, the market in some sectors has seen price growth, for example in the better areas of Malvern, Hawthorn, Armadale and South Yarra; certainly for homes up to $3mill that are very well done.  This has been largely due to a real lack of choice and cheap credit. Just prior to us being locked into Stage 4, Zoom auctions were working very well and there were some very strong results as per the below:

1. Falmouth St, Haw – 2 bed home on 300sqm sold $1.99m
2.  4 Fashoda St, Haw – 3 bed unrenovated home 325sqm sold $2.07m
3.  2 Rathmines Gve, Haw East – 4 bed 550sqm sold $2.85m
4.  2A Reid St, Balwyn – 3 bed Single level modern home $2.96m