Last year was unusual. Last year was extraordinary. Last year was a one-off.
There was a Thursday in October when I called six Zoom auctions in a row and all of them sold with multiple bidders, above the range, in less than 18 days on market.
Clearance rates were above 90 percent, and I can’t recall a single property that was withdrawn from sale due to lack of interest.
It was a great time to be a seller or a real estate agent! But we knew it wouldn’t last. It couldn’t last.
10 months on and we find ourselves in a very different market.
Of my last six auctions, only one sold under the hammer, three passed in and two were withdrawn and converted to private sale. Our average days on market is back to 27.
It’s a stark contrast.
But let’s not forget that we are comparing a once in a lifetime bull market to a more normal, if not subdued market. We are slowly coming down to earth from stratospheric highs fuelled by unsustainably low interest rates and a pandemic-induced buying frenzy.
If you remove the noise and look at the numbers, this is actually a normal market.
Clearance rates in the 60s is normal. Passing properties in is normal. 27 days on market is normal. Home loan rates between 3.0% and 6.0% are normal.
One would be excused for thinking that the property market is diabolic right now. In free fall. The “fastest decline in house prices in 40 years” is what the media is saying about Sydney. Prices were down two percent in July. Shock horror!
How quickly we forget that prices were going up two percent per month in 2021. Over 20 percent growth in a year, Sydney had.
Median prices across Australia shot up 35 percent during the course of the pandemic, according to CoreLogic. And sure, there were pockets of regional Australia and coastal areas that dragged up the average.
Stonnington also saw a 2019 trough to 2021 peak of at least 30 percent in capital growth. I can provide many examples of the same property purchased in 2019 or 2020 that was resold in 2021 for between 30 and 50 percent more.
Prices have eased since then, there is no denying. The latest stats suggest a modest two or three percent decline in Melbourne so far.
In reality, many sub-segments of the market have already declined by more than that.
My observation, purely anecdotal, is that some land, unrenovated houses and your typical B and C grade properties have potentially come off by as much as 10 – 15 percent compared to last year’s peak.
But then you have your premium, fully renovated or move-in ready A grade properties that haven’t really declined at all. These sought-after homes are still as competitive as ever due to a severe shortage of quality stock.
For example, there is a very attractive family home in Malvern that started (with a competitor) last week that saw close to 50 groups inspect on Saturday.
The buyers are out there. They are just more picky and more cautious than last year.
So where does this leave us?
If you have a quality property to sell and are realistic on your price expectations, then the buyers will show up in droves and you will be rewarded with a premium result.
If you are buyer looking for value, then you can pick up a B or C grader for a substantial discount compared to last year.
But if you want to buy quality real estate, be prepared to line up and compete for it… It’s slim pickings out there!