Changed market conditions help bring top prices for $1.5 million-plus homes

Thinking of selling a residential property that’s worth $1.5 million or more? It’s a good time to make your move because structural and demographic changes in Melbourne’s real estate market will greatly assist your sales campaign and very likely push up your selling price.

Most suburbs within 15 kilometres of the CBD are experiencing unusually high levels of market inactivity in two key buying demographic age groups. Growing families opting to stay put in order to build up or out on their existing blocks and reluctant downsizers who by also staying put are restricting the supply of larger family homes.

Both demographics are creating barriers for the orderly flow of market listings, and contributing to the escalating trend of less stock on the market in sought-after areas. Consequently, prices keep going up faster than they would in a more orderly market.

Nelson Alexander sales director Arch Staver says the company’s 16 sales offices see more prospective buyers looking for properties within the $1.5 million to the low $2 million range than people with a lower or higher budget.

He says in many instances these buyers are couples who originally purchased a two- or three-bedroom cottage or small property. They now need something larger because of a growing family.

But securing that elusive roomy property isn’t a cakewalk. Far from it: most homes in good locations in the $1.5 to the $2.3 million price bracket attract frenetic bidding at auctions. They frequently receive offers from five or six bidders.

Prospective sellers of properties in this range should take note that quality is king in the current stock-constrained market in inner and northern Melbourne.

Of course, quality means different things to different people. On the one hand, quality can be perceived as a recently renovated property that provides a “move-straight-in” turnkey solution for a buyer.

But Mr Staver points out that unrenovated homes and properties that may have been renovated 20 or 30 years ago, are also heavily sought-after, particularly when they are well-located and have sound structural “bones” that provide the basis for a fresh update.

“There is a shortage of quality stock in what is a high demand market, and that’s across the northern suburbs and much of the inner-city,” he says.

“The market is about quality stock. There might be more auction listings across the whole of Melbourne, but if there is not the quality stock, it becomes irrelevant. The market is driven by what people want to buy, not by what people want to sell.”

House prices continue to soar across the city, according to figures from real estate data analyst groups.

There are now 115 suburbs with a $1 million median house price, compared to 82 a year and a half ago, Domain Group data shows.

Domain’s latest quarterly State of the Market report, released in April, shows that the north and the north-west of Melbourne are very high-growth corridors that offer excellent prospects to sellers.

In the inner north, Brunswick and Brunswick East are now on the property rich list, with medians above $1 million. Brunswick West’s median house price is just below $1 million, while Thornbury now has a median of $1,135,000.

House prices are also moving higher in the north-west, with Essendon North hitting a $1 million median for the first time and Niddrie following close behind with a median of $991,000.

Melbourne house prices have risen every quarter for four-and-a-half years, with the latest $32,000 jump pushing the city-wide median to a record $843,674, the State of the Market report shows.

The median is more than $110,000 higher than at this time last year, and has more than doubled in a decade. In 2007, it was $386,411.

Australian Bureau of Statistics data recorded for the last quarter of 2016 confirm this upward trajectory. ABS data shows that Sydney and Melbourne property prices rose by 5.2 per cent and 5.3 per cent respectively over the three months to December.

In recent years, the two east coast capitals have morphed into true global cities, with house prices growing at double the rate or more compared to most other Australian capitals.

If you are interested in knowing how much your property is worth in the current market, contact your local Nelson Alexander agent today.