Melbourne Inner North & West Winter 2022 Market Review
The property market continued its transitional flow on from the first quarter, with both buyers and sellers scrambling to adapt to the changing conditions. A great disparity developed between vendors expectations and the market’s perceived value, as many chose to hold out for last quarter’s price guides. It has remained a difficult realignment for many, after adjusting to the great fall from bull market prices of last year then saw them drop a further 5-10% from the first to second quarter.
As was the case at the start of the year, the war in Ukraine continued to strongly impact this market, with the cost of materials and services, as well as the increased timelines on delivery and execution, all influencing consumer confidence. The lack of clarity around the onset and level of interest rate rises translated to increased caution around bidding at auctions, with the feverish bidding of last year seeming very long ago. Investors began offloading their C & D grade properties, flooding a low demand market with lower quality stock, resulting in many passing in at auction. B grade properties that were compromised, whether by location, position or level of renovation required, also struggled as auction clearance rates dropped from 80-85% in the first quarter to 75-80% this quarter. Property value continued its fall. Vendors became reluctant to list A grade homes, the scarcity of which saw any quality available stock hold its value and sell well.
In a very Melbourne move, 95% of agents went back to live auctions on the street after a long hiatus through the many disruptions of Covid. In a sign of the times, offers prior to auction were negotiated via zoom, replacing boardroom auctions. As the quarter came to a close, there was a growing ground swell of buyers opting for off market.
The sales shown below compare first quarter sales with second, showing that in the first quarter agents still had multiple bidders at auction, though the results did not yield much beyond the reserve despite the A grade stock in desired pockets of the best suburbs in the area. In the second quarter of the year, results stayed within the price range or just above, as more auctions were passed in with less registered bidders.
- Inner North
- Inner North East
- Inner West
The prospect of war is one of the variables we never expect to happen. With the uncertain state of the world, and its impact on the supply and cost of goods and services here in Australia, combined with inflationary and interest rate rises affecting borrowing power and buyer sentiment, we can expect changes to be far-reaching. Prior to Christmas, buyers were borrowing the whole amount of their loans. This trend has already altered dramatically. With rates predicted to continue to rise, a 10% difference in borrowing capacity would mean that a buyer searching around $2.2m will start looking around $2m, which will decrease the volume and quality of properties available to them, and perhaps eventually move them further out by one suburb. Vendors will be looking to beat the clock on these increases, to mitigate the changes to borrowing capacity and catch those buyers before they adjust their searches.
Get in touch with Nuno to find out more about the Northcote and Inner North 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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