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 Stonnington was the family home $2-$5mill range near High Street, Armadale and Prahran where we had strong bidding at auction and significant growth. Up to 15-20% 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:
- 68 Motherwell St, Sth Yarra – $2.55 Brick unrenovated Victorian
- Avoca St, Sth Yarra – $3.6 Townhouse in great street
- 7 Royal Cres, Armadale – $4.6 Renovated Edwardian
- MacArthur St, Malvern $2.25 Renovated Timber home
Moving forward, over the next 3-4 months will be interesting. Obviously in Stage 4 we can’t inspect properties or prepare them for sale. Talking to several agents and knowing the build up of engaged buyers we are working with, l expect there to be very strong demand once we are able to transact again. The low stock, need to move and cheap credit will out weigh the overall economic conditions certainly in the period up to Christmas.