Melbourne Market Insight - Spring 2010

Posted on 28-Sep-2010 by Hugh Jones, Synergy BSM

Spring is upon us, and the market is poised to shake off the sluggish winter conditions and heat up with the weather. The inner- Melbourne market promises good opportunities this spring for buyers, vendors and investors who've done their homework.

Trends from the last quarter

One of the key characteristics we witnessed in the last quarter was the low level of stock across Melbourne. Several markets tightened as a result, particularly the inner-north and inner-west, but the biggest impact was felt in the upper end of the market ($2-7M). A perceived lack of buyer confidence has made vendors reluctant to release properties to the market. This has made finding quality houses at this level difficult.

By contrast, the lower to mid end of the market ($500k-$1.5M) is still moving strongly. Though we've seen a shortage in quality family stock for the first part of this year, buyers who pick well and bid with discipline at auction are being rewarded with solid results.

Another trend is the diminished vendor confidence we've seen late in the winter period, with an increasing number of vendors accepting pre-auction offers – something we haven't seen a lot of in the last twelve months. If you're thinking of selling, this doesn't mean that you won't achieve your sale price but it does mean you need to manage your sales campaign carefully – remember you can call us for advice or a second opinion at any time.

Spring forecast

As we look ahead to the next few months, I think it will be a good season for sellers post-election even though stock levels will probably remain lower than this time last year. I predict investor sentiment will remain relatively strong as real estate continues to be seen as a safe haven compared to the volatility of the share market. Investors have been targeting mid-range urban residential properties and low-range inner urban retail spaces which has spurred demand for these properties.

Residential rentals are still slightly underperforming in relation to sale prices and interest rates with rental yields remaining low. I sense this won't change dramatically but by early spring we should see the first signs of improvement.

Finally, I've witnessed a lot of new projects selling off the plan over the last quarter. As many of you already know, I'm not a fan of these types of purchases and believe the majority of these properties have been oversold and predict that this particular bubble will soon burst.

So, if you're thinking of buying or selling, give us a call first or take advantage of our free pre-purchase rental assessment to make sure you're in the best possible position this spring.