A new peak

Australian house prices are about to hit a new record high, according to CoreLogic data as reported by the ABC.

House prices nationally are just one percent below the previous high in April 2022, and are growing steadily across the country with Melbourne up 4.3 percent since January. 

Sydney is up 10.6 percent since bottoming out in January, leading the charge as usual. 

Our market (Melbourne’s leafy Inner East) is akin to Sydney in that we tend to see larger and steeper falls in a correction and larger and steeper gains in a recovery. 

For example, Toorak recorded the steepest annual decline last year of any suburb in Melbourne, down 17.1 percent, according to Domain. 

Mind you, these median house price data for a single suburb can be misleading, as I’ve often written about – easily skewed in a low volume environment when a few less sales of trophy homes can greatly impact the median price. 

Either way, I do agree that we are getting back to peak prices in Stonnington, and in some instances, eclipsing previous records. 

Fully renovated A-grade homes are selling for more today than they were in the previous peaks of 2021 and 2017.

This is for two main reasons. Firstly, there are less available today. 

Search on REA or Domain for houses over $3,000,000 in Malvern and Malvern East and there are less than a handful of fully renovated family homes on the market right now in what should be the peak spring market for this type of product.

Secondly, construction costs have ballooned. 

Five to 10 years ago, you could do a decent extension on a double fronted period home for $1,500,000. Today the same extension is closer to $3,000,000. Buyers understand this and are willing to pay a premium to not have to renovate. 

For the same reason – construction costs – unrenovated homes have not recovered to the previous peaks of 2021 and 2017.

Buyers are having to discount the purchase price to factor in higher renovation costs. 

I believe this disparity between unrenovated and renovated homes will persist for the years to come. 

As always, buyers are driven by value. 

Good properties, reasonably priced were seeing 30, 40, even upwards of 60 groups inspect on Saturday – the busiest open inspection weekend of the year. 

And yet there were a number of opens on Saturday with between zero and five groups inspecting. 

Why? Buyers don’t inspect properties that they deem to be overpriced, and flock to properties that seem like great value. 

Jellis Craig achieved an 82 percent clearance rate again on Saturday. 82 out of 100 auctions sold at or before auction, picking right up where we left off before the Grand Final weekend. 

There is plenty of optimism and confidence in the market right now, buoyed by strong clearance, rates holding firm for four consecutive months, and more positive reporting in the media. 

New peak here we come!

Feature Property: 26 Chomley Street. Prahran