The market has been cooling for nine months already.

I picked the turning of the market on Cup Weekend 2021.

We were finally out of lockdown (for good) and expecting the property market to continue on its merry way once restrictions eased and we had freedom of movement.

The exact opposite happened.

Our inspection numbers halved almost overnight. Buyers closed their real estate apps and jumped on OpenTable (and Tinder) instead.

Melbournians were more concerned with getting their lives back – traveling, dating, wining and dining – and less concerned with upgrading their living situation now that they could spend more than an hour a day outside of prison… I mean home.

The unprecedented buyer demand and urgency of 2021 started to dissipate then and there, just like releasing a pressure valve.

I sent Carla Fetter and Andrew McCann the following text message on November 13th:

“I’m calling it… Market peaked in October 2021. Could come off 10% in the next 18 months”

So if we’re already nine months into a correction, and prices have already eased 5 – 10%, we may not have that far to go until things improve.

The downturn in Melbourne house prices during the GFC lasted just eight months.

The downturn in 2018/2019 during the royal commission lasted 18 months.

I wouldn’t be surprised if the darkest patch of this correction is already behind us and demand and confidence start to improve in the coming months.

We are already seeing some green shoots in the early spring market.

On Saturday, an unrenovated double fronted Victorian in South Yarra sold (with a competitor) for $700,000 above the range.

A renovated single front with no parking on 169sqm in Windsor sold (with a competitor) for $400,000 above the initial price guide.

And a beautifully presented townhouse that we are selling in Cromwell Road, South Yarra, saw 55 groups inspect the first open. This is by far a record turnout for the year.

“One swallow does not make a summer”. True.

But a market in free fall does not see such fierce competition, strong results and healthy inspection numbers, even if these are the outliers.

Sure, for every volcanic auction at the moment I’m sure you could find three dead ducks. But that is not unusual in a normal, “softer” market. Especially in a two-speed market with very low volume, where everyone wants the same scarce A-grade home and no one wants the plentiful unrenovated C-grader.

The market may continue to adjust, but don’t be surprised if you see clearance rates holding up, busy open inspections and more than a few strong prices as we commence our spring selling season.

Talk to anyone looking for a family home in Stonnington at the moment. Talk to those who have already sold their single front, have settlement looming and need to buy ASAP. The motivation is there. The urgency is there. The stock is not.

Stock levels should improve in spring, but it still might not be enough to quench the now growing demand.

As I said last week, it’s been slim pickings for a while and as much as we would love to open the floodgates, there is only a trickle coming down the pipeline.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s