There were more surprisingly strong results last week, bucking the trend of the now widely reported price falls across Melbourne.
A family home in Malvern sold (with a competitor) for half a million dollars above the range.
It was a good house. It wasn’t exceptional or newly renovated, but it was attractive, well positioned, conservatively priced, and ticked the boxes for many buyers.
It was also listed in isolation – pretty much the only decent family home on the market when it started a few weeks ago.
I doubt that this property would have sold for more last year, and it may have sold for less, depending on the depth of the buyer pool and the number of competing properties at the time.
Over in South Yarra we sold a beautifully renovated townhouse two weeks before the auction for $200,000 above expectation (the vendors’ and ours). We had 100 groups inspect over the first three opens and multiple offers.
But while some segments of the market are outperforming, others are falling flat.
From our office there were properties that started last week that only saw two or three groups inspect the first open. Price adjustments (reductions) are much more common than six months ago. But things seem to be stabilising.
Meanwhile, a modest single level home in the Gascoigne Estate saw 54 groups inspect on Saturday and the price range was promptly increased.
There seems to be a great divide in the market right now. A larger than usual gap between the most desirable properties and the least.
Why? Sentiment. Consumer psyche. A lack of confidence. Inflated building costs.
Here is the thinking, whether justified or not:
In an uncertain environment with rising interest rates and an expectation or falling house prices, buyers want to be sure that they are buying the right property at the right price.
Buyers need to see social proof and competition. Busy opens and competitive auctions give buyers confidence. ‘If all these other buyers are interested and seeing value, then so am I.’
Buyers’ expectations have risen just as urgency has diminished. You’ve heard it before – FOMO (fear of missing out) has made way for FOOP (fear of overpaying).
‘If prices are falling and the cost of borrowing is rising, this property better tick all the boxes or I just won’t stretch for it. I can wait and see if something better comes up for a lower price in six months’ time.’
I would argue that this is flawed logic and not a great attitude towards buying real estate, but this is the perception of many buyers right now and it is understandable, particularly for those who still believe house price predictions from analysts and banks who are proven wrong time and again.
Finally, ‘if the house needs immediate work, then I expect a substantial discount because the cost of renovating has gone up 40 percent in two years and it’s going to be hard to find an architect, builder and trades.’
These attitudes may be contributing to a ‘two speed’ market, where we are seeing reasonably priced, move-in ready homes in a desirable street/location selling just as well as they were in 2021, with prices largely unchanged.
Then there are other homes, either requiring work or otherwise compromised, that are selling for a discount to 2021, but certainly not at the ‘bargain’ level that some wishful buyers are hoping for.
If you’re sitting on a desirable piece of the Gascogine Estate or South Yarra – fear not! The market is very good right now and there are plenty of buyers on the prowl.
Feature Property: 53 Wrights Terrace, Prahran