Good-buying opportunities on the rise in Melbourne
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Every property owner knows the driving factor that fuels real estate prices is supply and demand. But within this economically fundamental matrix lie many opportunities to purchase at reasonable cost, even at below-market prices – especially for would-be buyers who are flexible and nimble-footed.
With the supply of properties in Melbourne on a powerful growth trajectory for the spring market, prospective buyers are better positioned to have the winning edge. Yet the core purchasers who consistently fare the best are those who take a researched and adaptable approach to the market.
“What happens during September will provide people with a real insight into the underlying strength to the market,” he said.
“A greater number of new listings would assist the market and point to its likely direction for the rest of the year because we are still guessing off low stock levels at the moment.”
It’s a basic economic principle that when supply is high, unless the market is in equilibrium, prices will fall because demand will not be able to keep up. One of the differences between supply and demand is that it is often possible to forecast supply and nearly impossible to accurately predict demand.
For example, a prospective buyer might identify an up-and-coming area that is attracting a growing demographic. But, behind the scenes, a big jump in planning proposals may cause supply in the area to expand considerably. Demand is so problematic to accurately predict that even the world’s biggest trans-national companies are often wrong in forecasting the likely uptake for their products and services. The oil and gas industry and the educational services sector frequently see their projected demand calculations fall short.
Mr Staver points out that the simple logistical challenges created by having many properties on the market at the same time, can generate good-buying opportunities. He says Nelson Alexander is seeing high rates of inquiry for listed properties. Some are attracting strong pre-auction offers and selling before scheduled auctions.
“However, everyone seems to be focusing on the same houses,” Mr Staver said.
“That means some of these heavily targeted properties are achieving runaway price results. But if buyers had been at another auction half an hour later, or one hour earlier, they would have seen a similar property go up for sale with nothing like the same momentum.
“The best message for buyers is that there is opportunity if you have the willingness to compromise on a couple of little things.
“If you are going for a house that everybody wants, you have to compete with everybody.”
He advises buyers to be meticulous in monitoring what goes on at open for inspections: “Do your homework at the opens. What are the numbers going through the property? Are they people who are coming back for repeat inspections?
“If you choose to target a property that is a bit less popular than others, you can buy very competitively. It often comes down to being in the right place at right time.”
Mr Staver said while renovated “move straight in” properties were attracting a premium in many suburbs, other properties, which had faults but potential, were not faring so well.
“Buyers should be doing a little more homework than perhaps they have been doing,” Mr Staver said.
“B- and C-grade sales are all value related and price driven.”
The head of property and real estate studies at Deakin University, Professor Richard Reed, says it is vital for would-be buyers to be aware of growth and demographic trends on a suburb-by-suburb basis.
Professor Reed said at any point in time most suburbs were experiencing their own property cycle phase, and buyers needed to identify this to buy well.
“The cycle phase may be a growth phase for a new suburb or a gentrification phase for an existing suburb,” he said. “Other external influences – such as the impact of an increase in the oil price on a particular suburb’s market – should not be ignored, either.”