How Each Price Point Is Performing Right Now
In This Week’s How's The Market | Edition 141
How Each Price Point Is Performing Right Now
The Renovation Cost Crisis Reshaping Buyer Behavior
How Each Price Point Is Performing Right Now
Melbourne recorded exactly 1,500 auctions last weekend with a clearance rate of 51.9%.
The top end above $1.5 million cleared at 56.16% across 73 auctions.
The numbers look straightforward, but they hide a fragmented reality.
There Isn't One Market
Think of Melbourne's property market as a triangle.
The base is widest. That's the sub-$1 million market where most buyers operate.
Move up and you hit $1-1.5 million, then $1.5-2 million, then $2-3 million, then $3-5 million, and finally $5 million plus.
Each segment operates in complete isolation from the others.
The Sub-$1 Million Market Is Running Hot
Frankston has seen approximately 20% growth this year.
Bendigo experienced 22% growth in the last 12 months.
Ballarat experienced 11.8% growth, while some Geelong pockets hit 14.5%.
A $600,000 property in Frankston is now closer to $750,000.
Houses have crushed it and units have underperformed in comparison.
The $1-1.5m Sweet Spot
This range has performed strongly across Melbourne.
Hawthorn did 10.4% in the last 12 months.
Prahran did 13.5%.
Properties in Prahran were getting 30-40 groups through in the first week earlier this year which is when we purchased a property off market for a client (big advantage).
The $1.5m - $2.5m Market: Where Everything Changes
One theme dominates every market from $1.5 million upward.
Renovated versus unrenovated.
So many buyers have purchased properties that they planned to knockdown and rebuild on or extend or even just complete a major cosmetic renovation.
Perhaps they thought they may wait a few years to help them save a bit more before completing this renovation/build, though now they have gone and actually gotten quotes for the works and they have come in significantly above expectations.
I have heard this time and time again.
Now a lot of vendors are considering if it’s even worth it to try to go ahead with the process…
Or…
Do you just try to sell the current property as is and then find something that has been fully renovated or a recently built property and just buy that.
I can tell you that many of these vendors have decided to do exactly that and just look for a finish product.
This has meant that there is a real 2 speed market happening at the moment where well-done properties that are renovated, in a good position and a great block size are performing VERY well.
Even achieving some record breaking results with multiple bidders and strong competition.
The unrenovated properties, however, are passing in left, right and centre.
$2.5m - $5m Market
In this market, whilst we are still seeing the large disparity in number of buyers between the renovated and unrenovated stock, we are seeing a slightly weaker market overall.
This market has cooled off particularly over the last 4 weeks.
As more properties are passing in at auction there is starting to form a build up of stock left on the market as we get closer to Christmas.
We are repeatedly hearing from agents that vendors are comparing their property to some of the larger sale in previous years and better markets.
$5m+ Market
Interestingly there have been some great sales in the upper end of the market.
Huge amounts of off markets are available as many vendors are preferring to test the market and sell their properties privately.
We have been sent 20+ off markets in this price point in the last week.
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What The Agents Are Saying
The market moves faster than you think.
Speak to an agent on Monday and there's nothing coming up.
Come Thursday, they've got three properties that meet the brief.
Agents are doing more vendor education than ever before.
Vendors who've lived in their homes for 10-15 years see a renovated property sell for $3.2 million and think knocking $100,000 off makes them competitive.
It's not $100,000. It's $600,000-800,000 for the same result.
They just don't believe it.
The renovated versus unrenovated divide is brutal above $1.5 million.
Multiple agents have said any property that isn't picture perfect is struggling.
Properties with compromise factors like no master ensuite, lack of car accommodation, or south-facing blocks are passing in.
One agent told me he was selling all of his stock at the bottom of the quoted range, not the top.
Buyers are cautious and not willing to pay top dollar.
The Wow Factor!
4B Kinane Street, Brighton, Vic 3186
Brighton’s Neo-Classical Coastal Masterpiece
Why it WOWs:
Five-bedroom luxury home on 766 sqm of landscaped Paul Bangay gardens
Rooftop terrace with Bay & city skyline views
Gold-class cinema and bespoke bar
Self-contained guest wing with private garden
Luxe master suite with walk-through robe & marble spa ensuite
Price guide : $9,500,000 - $10,450,000
Final Thoughts
Melbourne's property market isn't one market, it's five different markets operating in isolation.
The renovation cost crisis has fundamentally changed buyer behavior above $1.5 million, with buyers choosing turnkey over $600,000-800,000 renovation bills that vendors still don't believe exist.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
