Northcote home sold

Melbourne Inner North / East - Summer 2024 Market Review

Northcote home sold
Mar 14, 2024

Several factors influenced the Melbourne real estate market this quarter as economic indicators, such as employment rates and consumer confidence, played a significant role in shaping buyer behaviour and market sentiment. Rising living expenses, mortgage commitments, and reduced borrowing capabilities prompted many to pause and re-evaluate. Additionally, changes in government policies, particularly housing affordability measures and tax incentives, impacted demand patterns and investment decisions.

This understandably tentative but surprisingly resilient market has come off the back of a highly complex and irregular period, following the 24.5% surge in home values witnessed in 2021. 2022 brought with it a course correction with a national decline of 4.9%, before increasing by 8.1% this year, despite a threefold increase in interest rates over the past 18 months.

In line with the November rate hikes, the market was noticeably impacted with monthly and quarterly declines of -0.3% and -0.2% respectively. Both buyers and sellers closely monitored these developments, anticipating continued unpredictability and volatility.

Capital growth tapered off gradually the second half of the year, and the average final clearance rate was down from 62.5% to 58.9%, though still up from the 55.1% average recorded in the same period of 2022.

The inner north east Melbourne real estate market, while showing pockets of growth, was overall a reflection of this larger market. Clearance rates at auction averaged around 65%, kept down by agents aiming to auction all their stock to shorten days on market. This proved a flawed option, as properties were passed in, extending time on market and ultimately achieving lower prices for vendors. As it became clear that interest rates would calm, cautious optimism grew, prompting promise for the season ahead. As Julia Murphy from McDonald Upton Real Estate said, “Competitive auctions have come back, and interestingly, good results were gained in apartments due to tenants buying. Some open homes saw numbers in excess of 35 groups. Buyer confidence is building.”

  • Darebin
  • Banyule
  • Yarra

Top end properties in Darebin struggled to sell based on buyer borrowing affordability. An example of this was 9 Glandfield Street in Northcote, which failed to sell twice at auction. With an initial asking price at $4.5m, it was then lowered to $4.25m, and is only recently under offer. Quoting mid $3m, 8 Boothby Street in Northcote failed to sell at auction with zero bids, now relaunched with a lower asking range. While 140B Bastings Street in Northcote did not sell at auction after quoting top end of $3.6m. All three of these homes would has sold for the initial asking price 12 months ago, as it would have been seen as market value. However, given the current conditions, vendors are having to adjust to buyers ability to spend, albeit selling at a large loss to the vendor.

Properties in the early to mid $2m bracket were highly competitive due to the lack of stock. Achieving the highest sale per square meter in the suburb, 119 Hutton Street in Thornbury was passed in at auction but later sold for $2.245m. 19 Rennie Street, also in Thornbury, sold for $2.13m when an early auction was called. In a solid result for a home with an unconventional floor plan, 195 Arthur Street in Fairfield sold for $2.6m. Again exceeding expectations, 47 Austin Street in Alphington was initially listed for $1.87m, selling 13 days later for $2.111m.

Surprising results in Banyule, with some turnkey properties not selling for the initial quote range. Larger homes asking $4m+ struggled to sell and sat on the market longer, having to adjust their price expectations. 88 The Eyrie in Eaglemont was seeking $3.98m but sold post auction for $3.75m. Initially asking over $5.5m, 16 Hardy Terrace in Ivanhoe has failed to sell and is now asking for $5.15m. An example of overpricing in the current market, 20 Rockbeare Grove in Ivanhoe initially sought close to $6m but ended up selling for mid $4m. A lovely home, but the investment needed to update affected the end sale price significantly. While the largest sale in Banyule this quarter, recording one of the highest price tags for the suburb at $5.95m, 50 The Eyrie in Eaglemont came in vastly below the expected result for the vendor who was chasing $7m. All proving that the market could not and would not commit to high costs. This premium asking price would easily have been achieved 12 months ago, but fast forward to this quarter with its cost of borrowing, and buyers have a more limited financial capacity.

Some sales that exceeded price guides, 5 Clifton Grove in Ivanhoe had a top quote range of $1.25m, and sold at auction for $1.621m. This home was semi-detached and garnered an unexpectedly high result, but when there are few good homes on the market some unlikely properties will be sought after. It did tick many boxes, with land, location, and orientation all A+, so no surprised it was hotly contested. Reaching a big result, a 4 bedroom 3 bathroom with double lock up garage at 5 Cleve Grove in Heidelberg sold for $2.4m. A 4 bed 2 bath home with 3 car off street parking at 20 Fairy Street in Ivanhoe attracted huge interest at its first open house. A sizeable block of 862m2 on a beautiful tree lined street, it was quoted with a top range of $2.9m. Though buyers saw the value in this property and knew they would have to bid much higher to secure the sale, reflected in the final price of $3.47m.

Several new built townhouses and apartments in Banyule hit the market late last year and are still unsold with an asking price well above market feedback. The vendors are needing to make their money back on these developments, therefore are forced to sit firm on the asking price. Question is, how long before they listen to the market and adjust their expectations?

As previously mentioned, if a home offers a scarcity factor (ie location, type of dwelling, views) then it generally has a higher market value. These homes sell well even in a down/soft market, as buyers recognize these key elements, with more bidders attracted to auctions. Selling prior to auction due to keen interest, 2 John Street in Fitzroy was initially quoted for sale at $1.85m, and ended up selling for $2.059m. Despite needing work, 277 Coppin Street in Richmond had three active bidders at auction due to its prime location, selling under the hammer for $1.655m. When previously up for sale in 2014, 8 Erin Street in Richmond failed to generate interest and sold for $250k under the asking price. This time round when it returned to the market it achieved a very different result well over the quoted range of $3m, going under the hammer for $3.175m. Again proving that rare homes sell well, an old bakery and stables conversion at 145A Pigdon Street in Carlton North sold for low $6m.

Looking Ahead

This quarter, the inner north east Melbourne real estate market was a clear reflection of many complex and uncontrollable factors, including supply-demand dynamics, economic instability, and government policies. As a result, potential buyers are likely to carry forward a hesitancy to commit to higher expenses to secure a property. With the rise in the cost of living and mortgage repayments dampening the urgency to relocate, buyers are more selective, moving only for properties that meet their criteria at the right price point. This cautious approach is expected to deepen, especially considering the possibility of a decline in interest rates by mid-2024.

The demand for properties looks to be shifting towards units, with expectations of higher growth in this sector. Buyers are becoming less inclined to move away from their established areas, preferring to downsize to units or townhouses in order to remain within their desired location.

While challenges around interest rates and fears of financial volatility persist, it is key that those wanting to succeed in this market stay informed, adapt to trends, and do their due diligence so they are ready and able to leverage opportunities.

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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