“Less adversarial” real estate transactions a plus for buyers and sellers
Buyers and sellers in Melbourne’s inner and middle-ring suburbs are taking a “less adversarial” approach to cutting real estate deals as the city’s property market continues to deliver nation-beating sales results.
Two new studies of capital-city residential markets, by the Australian Bureau of Statistics and CoreLogic, indicate that the rate of house price growth Melbourne is significantly outpacing growth in Sydney. But the slowing of capital appreciation rates in Sydney is having a flow-on impact on other capital cities.
Since mid-year, Melbourne has experienced slight falls in the auction clearance rate and there have been fewer bidders putting their hands up at auctions compared to the participation rates in February to May. This has created a more equitable market, although vendors are continuing to profit from the relatively low levels of stock that are available in tightly held areas.
Commenting on the current state of play, Nelson Alexander Sales Director Arch Staver noted that buyers and vendors are less at odds.
“It is a good, equitable environment in which to transact in,” he says.
“There is common ground for everyone – vendors are now trying to approach transactions with fairly realistic expectations. They understand that they have enjoyed a fair bit of price growth over a very short period of time and that price growth cannot continue at that pace.
“I also think that buyers are aware that it is more of a level playing field because clearance rates have just dropped a little and there have been a few properties that have passed in.”
It’s critical to remember that particularly with properties priced above about $1.2 million, most vendors are also prospective buyers, and the vast majority of buyers have a property to sell, too. These realities work to constrain demands for over-exuberant or wildly inflated prices and tend to exert a calming influence on price expectations.
According to the latest Australian Bureau of Statistics data, real estate prices in Melbourne rose 3 per cent over the three months to June, while Sydney had an increase of 2.3 per cent.
Buyers and sellers in Melbourne’s inner and middle-ring suburbs are taking a “less adversarial” approach to cutting real estate deals
It is the third quarter in a row that Melbourne’s property price growth has outpaced Sydney. The two cities are now tied for annual price growth at 13.8 per cent. They’re followed by Hobart, where prices rose 12.4 per cent in the year to June.
Domain Group chief economist Andrew Wilson says Melbourne’s prices are still rising and Sydney’s are starting to decline.
Dr Wilson says Sydney, which has the highest level of investors, has been hardest hit by the decline in investor activity off the back of tightened lending measures.
Melbourne hasn’t slowed as much because of the very high proportion of owner-occupiers active in its market. The city’s robust rate of house price growth also reflects its stronger rate of population growth.
Backing the trends identified by the ABS, the CoreLogic September hedonic home value index recorded negative growth conditions for Sydney.
The September results confirmed that dwelling values edged 0.2 per cent higher across Australia over the month, led by a 0.3 per cent rise in capital city values and a 0.1 per cent gain across the combined regional markets. The latest figures take national dwelling values 0.5 per cent higher over the September quarter, which is the slowest rate of quarter-on-quarter growth since June 2016.
CoreLogic head of research Tim Lawless says Melbourne’s housing market is showing slower growth conditions, but growth is relatively resilient compared with Sydney.
He notes that stronger housing market conditions in Melbourne are supported by auction clearance rates that have remained consistently above 70 per cent. In addition, Mr Lawless says that private treaty sales in the city are continuing to sell rapidly.
Nelson Alexander’s Mr Staver believes any lingering animosity between buyers and sellers has corrected itself in recent months and the market has become a very good environment in which to transact in.
“Enough heat has come out of the market to instil confidence in buyers and to adjust vendor expectations,” he says. “But there remains enough strength to ensure there is good opportunity for both.
“It is not so much adversarial where one party has to win and one has to lose. I think everyone walks away from transactions feeling good about the math around these deals.”
