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Buyers to make quick decisions as the market reopens

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Property buyers across Melbourne are gearing up to make strong offers far more quickly than they have in the past.

The city’s post-lockdown sales campaigns – especially for A-grade homes that tick multiple boxes – are also set to become shorter as would-be purchasers compete for a limited supply-line.

Nelson Alexander Sales Director Arch Staver says one of the significant outcomes of the COVID-19 restrictions is that the buying process is occurring in a shorter time-frame.

He says as the market comes out of lockdown property transactions will occur faster than usual because of pent-up demand and limited supply.

Another spinoff-effect of the coronavirus shock is likely to be shorter auction campaigns – three weeks instead of four, in many cases.

The Melbourne market is also seeing a spike in virtual boardroom or private auctions, and an upsurge in off-market sales.

Nelson Alexander agents have been working closely with prospective buyers during the lockdown period. The aim is to “prequalify” buyers to ensure they have every opportunity to purchase in their price range or desired area when the market fully re-opens.

“We want to ensure that buyers can move quickly and are well-prepared to make unconditional offers,” Mr Staver says.

“We have assisted dozens of buyers with speaking to mortgage brokers about their particular financial situation and getting them some comparisons on the loans that are available.”

Mr Staver says that usually when agents work with a buyer, an agent might spend two or three weeks showing a buyer various properties. The buyer might also attend several auctions during that time to see how the market is performing. The buying brief typically tends to narrow during that period.

“But because of COVID, we have taken it upon ourselves to ask questions of buyers that might normally be asked of a buyer in their second week of searching after they have looked at three or four houses,” Mr Staver says.

“We are trying to pre-empt the process that usually occurs and give prospective buyers a Plan-B and a Plan-C.

“All of us go into the buying process with a Plan-A: to find the ideal house that ticks all the boxes. But unless you have unlimited funds, the buying process over time means having a willingness to compromise on a few details.”

Mr Staver says Nelson Alexander agents are having conversations with buyers about their budgets and intentions early in the piece.

“It is not so much to deter them from buying that A-grade property but to prepare them for Plan-B or C,” he says. “That’s because once the market is fully opened, transactions will be happening quickly.”

The national housing market has weathered the negative impacts of the coronavirus pandemic surprisingly well so far. The scenario of crashing prices in the largest cities has been steadfastly avoided, with real estate analyst groups recording relatively modest falls in house prices.

Sydney’s real estate market is the most comparable national city market to Melbourne’s in terms of median prices and turnover of properties.

Sydney’s weekend auction clearance rates are currently hovering at around 73 per cent, according to CoreLogic data, on auction counts of 600 to 700 auctions.

Agents say there is no shortage of buyers in the Sydney market, especially for properties within 15 kilometres of the city centre. The main drivers in the market are families upsizing or upgrading.

Property prices within 15 kilometres of the Sydney CBD are certainly not in decline, with agents each week reporting prices higher than in previously recorded years.

Buyers are also prepared to pay a premium price when they see competition in Sydney.

Mr Staver says the normal drivers that propel property transactions – such as a need to move for more space, to downsize or because of financial considerations – continue to underpin the Melbourne market.

“Our pipeline of the new stock looks reasonable, but it is not overflowing,” Mr Staver notes.

“That means the fear that all of a sudden, the light switch will be flicked in Victoria, and there will be too many properties to satisfy buyers is a very unlikely scenario.

“It is not going to tip that way. We think it is going to be a controlled release. We feel that those vendors who do move to put their property on the market will benefit from the pent-up demand.”

CoreLogic data shows Melbourne house prices for the year to August are down by 2.5 per cent. It’s a different story in Sydney where prices are still up by 1.7 per cent, and that’s primarily because public auctions and inspections can be held in Sydney.

If you would like to discuss your property needs in detail, please contact any Nelson Alexander office.

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