26 Canberra Rd, Toorak

Stonnington - Winter 2024 Market Update

26 Canberra Rd, Toorak
Jun 18, 2024

The word that best describes the Stonnington property market currently is RESILIENT. Despite interest rate rises, costs of living expenses, huge increases in construction costs, and massive land tax increases on investment properties, buoyancy was retained as the mountain of potential issues were largely absorbed. “The start of 2024 was extraordinary; it’s evident there was renewed confidence back in the marketplace,” Kay & Burton Executive Director Scott Patterson said. “People had been sitting idle, concerned about interest rates but since they have stabilised, both buyers and sellers came back to the market and were a lot more decisive. We saw some incredible homes come to market which were held back last year due to the uncertain economic climate.”

Nationally, home values continued their ascent for the 14th consecutive month, with a 0.6% increase in March. The prediction of a further interest rate cut in 2024 or early 2025 injected energy to a market already defying higher borrowing costs. Reminiscent of pre-COVID times, demand surpassed supply, which created burgeoning interest from both local and international buyers, with strong interest from China, the US, Europe and the UK.

Within Stonnington, this overseas attention came predominantly from China, as accessibility to funds continued to be no barrier for this luxury sector that is so rarely affected by the economic conditions that govern most demographics. The premium market outperformed this quarter, significantly more dynamic than the last three months of last year, as properties sold faster and clearance rates were high.

A strong sale at 26 Canberra Rd in Toorak was on the market for just 11 days and had 90 groups through and 12 requests for the contract of sale. This property, with 5 bedroom 4 bathroom 4 car garage, sold in 2 weeks for $8.75m, $250k over the reserve price. Demonstrating the high level of demand, a 1930’s updated executive home with 5 bedrooms 3 bathrooms and 5 car garage, located within the heart of Toorak at 16 Grange Road, sold via the “coming to market” board in 3 days for an undisclosed price. Sarah Case, whose agency RT Edgar transacted these three sales, shared, “Stock levels were robust, with a range of high-value properties. Sales volumes surged, with RT Edgar achieving $80m in sales this quarter and $33m from off-market transactions this week alone. Personally, I have had an incredible start to the year, achieving 11 sales totaling nearly $70m”.

A tangible focal shift in many investment portfolios towards the principal place of residence was observed. Those with greater financial capacity were able to take advantage of the softening market, with intergenerational money playing a strong role this quarter as wealthy parents gifted funds for their children to upsize, boosting the family-sized and new larger homes sectors. The rightsizing trend also persisted, with strong demand for house-sized apartments, reflecting a preference for low-maintenance lifestyles. While turnkey homes were still in demand over land or renovation projects due to elevated building costs and uncertainty surrounding builders’ completion capabilities. Additionally, there was growing confidence among buyers in purchasing homes that only required cosmetic updates, such as kitchens or bathrooms. One such property, at 14 Myrnong Crescent in Toorak, attracted significant interest. Over 100 groups viewed the home in four weeks, with five offers received by the close.

There was a resurgence of usually tightly held generational estates changing hands, adding new life to a market that has been defined by an undersupply of housing options. With property volume up 30% from last year, it felt like a post-pandemic return to what was historically typical for this market, as both consumers and the market itself adjusted and found their footing. While the influx of available premium properties was a positive for buyers, was the noticeable shift toward relinquishing generational estates a sign of something deeper? Perhaps so.

This quarter, it seemed, had two very different faces, and as it came to a close the tide had turned. There was a significant increase in investment properties being sold by owners who found it increasingly difficult to keep up with the new legislative requirements, land tax charges, and high mortgage repayments, while returning minimal capital growth. Under these conditions, there was little incentive to stay. With this investor stock yet to be replaced, the rental market tightened.

As many as two in five property investors in inner-city Melbourne were now selling at a loss, in the red by tens of thousands of dollars. Stonnington was one of the worst-hit areas, as investors who made a loss sold for a median $60k less than they paid, while 36.8% of investment properties sold for less than their last trade.

Looking ahead to the second half of 2024

While many buyers had adopted an understandable wait-and-see, highly cautious stance at the close of quarter, the outlook moving forward appears positive. Amid a growing expectation that interest rates will start to fall later this year or early next, a boost to borrowing capacity and sentiment will follow. Sarah Case from RT Edgar offered this, “I always advise my clients to avoid selling in Spring if possible, as this season typically has the highest inventory levels, leading to more competition and allowing buyers to be more selective. Instead, selling before Spring allows sellers to capitalise on less competition and be prepared to buy in Spring when a wider selection of properties are available for upsizing or downsizing”. Well-presented and correctly priced properties will attract good interest, while buyers will have the opportunity to negotiate and find homes that meet their needs without facing overwhelming competition. This balance should allow for fair transactions and a steady market pace, providing a sense of confidence in the market’s stability. The feeling is that people will take their finger off the pause button, with a renewed vigour resulting in strong enquiry across the majority of price sectors.

Boroondara & Stonnington Area Specialist
Tim Picken & Andrew Smith

Get in touch with Tim & Andrew to find out more about the Stonnington 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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