21wakanui

Melbourne Inner North / East - Autumn 2024 Market Update

21wakanui
May 29, 2024

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

Further confirming the shift back towards renovators in Darebin and the wider area of Inner North, Nigel Harry from Jellis Craig said, “With the settling of building costs and contractor availability, we’re seeing a return of buyers looking to renovate and add value to homes who have previously been absent off the back of the pandemic, further adding to some strong results”.

Properties priced under $1.5m remained strong due to a high demand from buyers seeking house upgrades from smaller units. A small but compelling two bedroom period home at 5 Henry Street in Northcote with high ceilings, polished floorboards, and open fireplaces, sold for $1.3m. A very competitive sale with 6 bidders, indicative of a robust market for appropriately priced homes in this pocket.

A double fronted, freestanding, three bedroom melding of Edwardian and modern stylings, 9 Yann Street in Preston received an early offer which triggered a boardroom auction. Sold for $1.52m.

Set in a highly desirable Thornbury neighbourhood at16 Kelvin Grove, this 2 bedroom classic was re-imagined into a sophisticated turnkey family residence. Picture perfect homes such as this attract a high demand, and a hotly contested auction saw this particular property sell for $1.64m.

An Edwardian style 3 bedroom 2 bathroom home with an impressive architect-designed extension and high end renovations failed to reach vendors expectations. 158 Mansfield Street in Thornbury had the initial price goal of $2m, though the market clearly spoke and stated that the property was only worth $1.8m.

A tightly held classic 1920’s style two level property owned by the same family for decades, 2 St Bernards was initially priced over $2.5 million. This 5 bedroom (or 4 plus study) on an expansive 736sqm sold at auction for slightly over $2.4m. Despite a slight discount from the initial asking price, the sale highlighted the need for realistic pricing in the Alphington neighbourhood, and further reflected the demand for well-priced properties in the area.
A 1920’s solid brick home sympathetically renovated and extended for modern day living, 20 Queen Street in Reservoir is a 4 bedroom 3 bathroom 4 car garage property placed on 990sqm of land. Situated within the highly sought after pocket known as Oakhill Estate, it was no surprise that the large parcel of land and home sold for $2.515m.

A brand new architecturally designed four bedroom three bathroom plus study residence in Northcote, 21 Wakanui Street did not go as expected. With only 2 bidders at the auction, it was passed in at $3.6m, though later negotiations saw it sell for a whooping $500k more!

The first quarter in Banyule proved fruitful for some, and lacking for others, as Mark Britt from Miles Real Estate explained, “In 2024, the Banyule Real Estate market has maintained its robustness, particularly in the sector of turnkey homes. However, a noticeable trend has emerged recently, wherein there’s been a degree of buyer hesitation, primarily focused on properties located in B-grade locations or those requiring significant renovations. This hesitancy stems from concerns surrounding potential interest rate hikes, which have cast a shadow of uncertainty over the market”.

Views are one thing but so is the current cost of renovations. This classic 3 bedroom family home at 16 Dalvey Street in Heidelberg overlooks the Dandenong Ranges and the Banyule Flats Wetlands. But it required work. With an initial asking price for $1.57m – $1.65m, it sold for $1.41m. Buyers would not overpay on land when the cost of renovations was sky high.

Having undergone a comprehensive transformation, this wow factor 4 bedroom family home at 24 Bond Street in Ivanhoe failed to wow at market. Last June it was passed in at auction for $2.74m, vendor bid, where it then sat on market for months, slowing dropping from its asking price. In February this year the property sold for $2.6m.

With a striking 1930’s art deco façade, and substantial 929sqm parcel of land, a 4 bedroom at 26 Hillside Road in Rosanna was quoted for up to $2.5m. A dream family home, beautifully updated and offering great accommodation and swimming pool, unsurprisingly sold prior to auction for $2.625m.

An overview of sales of the area gave many market insights. Despite offering ample accommodation and being move in ready, a massive 5 bedroom 3 bathroom 3 car garage, luxuriously renovated mid-century style home on 801sqm, sat on the market for longer than usual. Initially asking for offers over $3m, 18 Russel Street in Ivanhoe finally sold for $2.861m. Showing that in this current climate, if the home isn’t a 10/10 for buyers and they have to compromise, then so too does the vendor on their price expectations.

The Skipper House (1928), a tightly held icon lovingly enhanced for modern day living by famed architects such as French designer Philippe Starck, is a piece of architectural history. Initially quoted up to $3.25m, in this tentative market this standout property at 45 Outlook Drive in Eaglemont only managed $2.95m after 52 days on market.

The first quarter in the City of Yarra showed a strength not seen since the start of 2021, before the onset of a long period of bouncing in and out of lockdowns. Steve Harris from BigginScott gave a brief overview of the quarter, “Turn key properties did very well Q1, while those requiring significant works began to struggle. Moving forward, if a buyer is willing to roll up their sleeves, there can be very good value to be found out there”.

Focusing in on the City of Yarra sales, a semi-detached 2 bedroom period home sitting on 238sqm at 26 Caroline Street in Clifton Hill triggered a boardroom auction, going for just over $1.7m. This strong result was likely due to its initial pricing and potential value post-renovation, highlighting the importance of presenting properties competitively in sought-after areas.

An example of pricing competitively to attract buyers that are open to renovation, 8 Horne Street in Clifton Hill was Initially listed for sale at $1.9-2.07m. This 4 bedroom property didn’t have much value and had lost a lot of its character and appeal over the years, but when you have 530sqm of good land in Clifton Hill you know it’s worth more. Selling to a young family for $2.405m was a great result for the vendor.

Demonstrating how properties that did not tick all the boxes failed to achieve sales expectations, 34 Type Street in Richmond, a 4 bedroom 3 bathroom home, initially listed for circa mid $2’s. After a long sales campaign, it eventually sold for $2.18m.

A recently completed high end renovation saw a sophisticated family residence at 166 McKean Street in Fitzroy North sell for $5.9m. Initially asking $6.1m, the 4 bed 3 bath property on 427sqm was on the market for 41 days. The home was last purchased in 2021 for $2.9m.

A historic balcony terrace (circa 1865), 4 bedroom 4 bathroom 4 car underground garage at 179 Drummond Street, underwent an extensive renovation and extension to transform it into one of the finest homes in its prestigious Carlton location. Sold for a remarkable $6.5m despite having only one buyer, it perfectly showcased the appeal of certain locations within Yarra. Such premium sales yet again showed the consistent demand for unique properties regardless of challenging market conditions.

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”.

Inner North / East Area Specialists
Suzana Hristovski & Nuno Raimundo

Get in touch with Nuno & Suzana 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.

Read more about Suzana Hristovski & Nuno Raimundo
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