We had our busiest Q1 ever for Team Fetter/Sciola, selling 32 properties in February and March alone.
And then April hit and the market went ghostly quiet with Easter and school holidays, to the extent that we haven’t been sending out our weekly new listings email due to a lack of new listings.
Fortunately, dear buyer, the market is picking up again and we will have new auction campaigns commencing every week from now until the end of May.
I was asked to write the content for the Stonnington edition of this year’s Jellis Craig ‘The Report’.
But that’s not coming out until July, so below is a sneak peak:
Impact of supply and demand
Supply finally returned to the market in the second half of 2023, after a very subdued 12 months of limited stock following the rate rises and subsequent inaction of potential vendors, waiting to see how the dust would settle.
With rates having peaked and confidence returning to the market, the rise in listings continued into Q1 2024, with Jellis Craig recording its highest volume month on record, with over 900 sales in March across our office network.
We have continued to see investors exit the market, due in large part to land tax and other rising costs of ownership. As such, a large proportion of stock has come in the form of investment grade apartments and smaller homes.
Demand for these properties has remained resilient but with a very high level of price sensitivity, meaning that well priced homes are selling well and in a timely fashion, while compromised or overpriced properties can languish and remain unsold if vendors’ expectations don’t line up with reality.
Buyers advocates have even commented that the current crop of buyers are fussier than ever, less willing to compromise, and are happy to wait for a better (value) property around the corner.
This ‘grass is greener’ sentiment can very quickly change back to a ‘fear of missing out’ mentality if, or more accurately when, the price recovery picks up steam or supply starts to slip behind demand.
At the other end of the spectrum, quality family homes, fully renovated, architectural, ‘turnkey’, or otherwise A-grade listings have continued to remain scarce and incredibly competitive, with record prices being set for the best of the best, even eclipsing prices we were seeing in the COVID ‘peak’ of 2021.
Building Trends
Building costs have stabilized somewhat but remain high, and the uncertainty around building, from the planning and approval process, through to the availability, reliability, and solvency of builders and trades, is still weighing heavy on the minds of buyers.
‘The Block’ effect and enthusiasm of finding a home with ‘good bones’ to renovate and add value to has all but vanished in recent years with only the most steadfast of home renovators willing to take on such risk.
Since 2020, the price disparity between renovated and unrenovated homes has grown in parallel with the cost of construction.
A decade ago, an unrenovated single front in Stonnington might have sold for a 10 or 20 percent discount to a fully renovated home of the same size on the same street.
Now, that discount could be more like 50 percent.
Such is the reluctance of renovating that we are seeing some homes selling for more than replacement cost. This never used to be the case.
For example, a well executed $1,000,000 dollar renovation on a basic $2,000,000 house might yield a sale price of $3,500,000 for the finished product.
In other words, some buyers would effectively pay a $500,000 premium to not have to renovate and deal with the associated costs, delays, stress, or even the difficulty of finding a rental property to move into during the build.
If this trend continues, there may be a tipping point where we start to see buyers once again deciding to take on the work themselves rather than having to pay a substantial premium for the perfect turnkey property, which are becoming harder and harder to find.
Infrastructure and Local Area Liveability
Stonnington continues to be one of the most desirable, picturesque, safe and convenient places to live, with continued investment in infrastructure, parks, schools and activity centres.
All those parking fines do seem to be paying for something, with large projects such as the Prahran Aquatic Centre redevelopment and Toorak Park/Victory Square master plan coming to fruition this year.
The shopping precincts of High Street in Armadale, Toorak Village, Hawksburn Village and even Prahran East Village go from strength to strength, becoming a huge success story for retail and hospitality against some very strong headwinds.
While the peak hour traffic and parking inspectors may be here to stay, it is a small price to pay to be fortunate enough to call Stonnington home… One of the most desirable places to live in one of the world’s most liveable cities.
David Sciola 