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The Melbourne property market has experienced notable challenges over the last quarter, reflecting broader economic trends and evolving buyer sentiments. A deceleration has occurred, with properties staying on the market longer, and sellers facing the reality of having to discount prices to attract buyers. Even properties in good condition, which would typically draw multiple offers, struggled to garner interest, reflecting a more cautious and discerning buyer base.
The scarcity of high-quality properties dampened buyer enthusiasm. Unlike Sydney and Brisbane, where limited supply drove up growth, Melbourne’s market lacked bullish homebuyer and investor action. The conservative approach and limited financial capacity among buyers contributed to a softening appetite, with reports indicating a continued shortage of quality listings in the upcoming months, exacerbated by the winter season.
Conversations around inflation and its impact on the cost of living were prevalent. High-income earners adjusted their financial expectations, highlighting the broader community’s sensitivity to economic pressures. Interest rates remained a significant factor, with future rate cuts contingent upon a sustained drop in inflation levels.
While the wider area of Melbourne has faced some hits, Nigel Harry from Jellis Craig reported that the Inner North had showed resilience this quarter, “Somewhat against the tide, demand for property in the inner north (particularly houses) has remained high. This is due to its proximity to the city, ongoing gentrification and excellent infrastructure, making it a desirable area for people to live. With these factors, together with low inventory levels we’re continuing to see competitive bidding at most auctions”. While this was true, different pockets exhibited varying market behaviours, necessitating tailored pricing and marketing strategies. The Darebin area presented a balanced market where properties requiring renovation had to be priced competitively to entice buyers. Agents faced heightened pressure to move properties, as buyers held firm on pricing. Increased communication from agents underscored the need for proactive engagement to access critical market information. In City of Yarra, the market reflected a mix of steady demand and balanced pricing, with notable sales demonstrating the value of well-priced, renovated properties.
The struggle to achieve asking prices was evident in Northcote, particularly for premium homes. Properties faced challenges in meeting expectations, with vendors adjusting their quotes to align with market demands. Buyers increasingly focused on value for money, hesitating to pay values that were
commonplace 18 months ago, illustrating a shift in market dynamics. Adjustments made to property quotes reflected the necessity of aligning values with buyer expectations, particularly in competitive neighbourhoods. With buyers advised to conduct thorough due diligence and monitor market trends closely, and auction attendees recommended to assess true property value based on market demand and renovation costs. Overpricing or emotional attachments lead to missed opportunities or overpayment, emphasizing the importance of informed decision-making.
- Darebin
- Banyule
- Yarra
Looking Ahead
Moving into the cooler months has traditionally also meant a cooling of the market, though the past few years have baulked at tradition. 2024 seems to be returning to some semblance of normality, and with the market poised for continued challenges, especially with limited quality stock forecast, the market’s resilience will hinge on adapting to evolving economic conditions and buyer behaviours. So it is likely a traditional cooling will occur, as Steve Harris from BigginScott says, “Interest rates have been held for a number of months on the bounce, however buyers are still cautious to jump in. Are we seeing the return of year on year trends of the market slowing down heading into the winter period? Perhaps…”.
Successful outcomes will require stakeholders to embrace pricing realism, maintain informed strategies, and adapt to dynamic market conditions for sustained resilience and growth. Agents will face heightened pressure to move properties, as buyers may hold firm on pricing. Negotiating realistic values with sellers will be essential, as vendors may be reluctant to accept below-market offers. Buyers are advised to conduct thorough due diligence and monitor market trends closely. Attendees at auctions should assess true property value based on market demand and renovation costs. Overpricing or emotional attachments can lead to missed opportunities or overpayment, emphasizing the importance of informed decision-making.
Mark Britt from Miles Real Estate articulately offers his insight for the property seasons ahead, “Despite generalized buyer sentiment apprehension, some smart buyers are identifying the opportunity in the current market. They recognize that amidst the current climate, there’s an opportunity to capitalize on properties that may have been overlooked or undervalued due to current economic concerns. This sentiment is further fuelled by the latest US inflation data, which shows that inflation has slowed faster than expected in the US which has massive influence globally. It’s widely believed within the real estate industry that this window of opportunity may not remain open for much longer. As a result, some buyers are adopting a proactive approach, seizing the moment to secure properties that align with their long-term investment goals. This proactive stance is a response to the evolving market dynamics, where hesitation in certain segments presents buying opportunity for savvy buyers to make informed decisions and potentially secure deals not thought possible 12 – 18 months ago”.
Get in touch with Nuno to find out more about the Inner North/Inner East market, or make an appointment to discuss your requirements and see how we can help you get into your ideal home sooner.
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