If I had a bitcoin for every time I’ve heard this from a local home owner I’d be flying private and definitely not working Saturdays.
“But, David, prices never really go down in Armadale”, they say.
Unless you take a 10 year time period, then maybe, yes, in 10 year blocks prices have never really gone down in Armadale.
But on a yearly or quarterly basis, prices definitely do go down in Armadale/Prahran/Malvern East (enter your suburb here).
In fact, prices are more volatile in affluent suburbs. The higher the median value and lower the volume of sales, the more volatile.
Armadale, Toorak, Brighton, Canterbury, Albert Park… all these suburbs ride the property cycle highs higher and lows lower than more modestly priced suburbs.
In 2018/2019 when median prices went down in Melbourne close to 10%, the change in prices we experienced in Armadale was closer to 20%.
The REIV data from that period actually shows the median price in Armadale peaked in Q1 2018 at $2,230,000 and bottomed out in Q1 2019 at $1,750,000 (a 27% fall)
Over the same period, the median house price in Melbourne only fell from $841,000 to $795,000 (a 6% fall).
As an aside, we need to be very sceptical of median house price data when looking at a single suburb over a short timeframe, as just a few extra or a few less sales at the ultra premium end can significantly skew the median price, when you consider that there may only be 20 sales in a quarter or 80 sales in an entire year.
The point is, premium suburbs, while they may always be highly sought after for their charming homes, leafy streets and proximity to amenity, are not insulated from house price movements. If anything they are more impacted by market swings.
Blue chip real estate is typically the first to be impacted in a slow down, and the first to recover in a rising market.
This may also explain why Sydney, historically, outstrips Melbourne in terms of price growth in a bull market and price falls in a bear market.
Fortunately the market has started very well in 2022 so we are not expecting 20% price swings anytime soon.
Team Fetter/Sciola are at 100% clearance so far this year with four out of four selling at Auction with an average of three bidders.
We have five Auctions scheduled this week and five the following, the outcomes of which should be a very good indication as to whether this initial buyer energy can sustain prices and clearance rates if stock levels continue to rise. Time will tell.