With thousands of prospective buyers on the lookout for a limited supply of residential properties in Melbourne, vendors are likely to achieve strong above-reserve sales results in the run-up to the New Year.
But there’s a catch.
Those vendors who opt to transact a sale in October or early November, perhaps using a competitive virtual auction, are on track to do significantly better than vendors who wait.
That’s because the supply and demand pendulum is sharply skewed in favour of vendors at the moment – a situation that’s bound to change as new listings rise in the weeks before Christmas.
Real estate agents across Melbourne are reporting that fewer vendors are coming to the market, even though one-on-one inspections are allowed again. Many of these would-be vendors appear to be waiting for the resumption of on-the-street auctions, expected in late October or November.
Yet at the same time demand from buyers is very pronounced. According to agents, there’s good depth in Melbourne’s residential buyer pool, and a lot of buyers in certain price brackets, especially the $1 million to $2 million range and the $2 million to $4 million bracket.
“Now is a good time to be on the market,” Mr Staver says.
“These vendors should consider the advantages of seizing the opportunity that is available now and have faith in the fact that we can conduct very successful virtual auctions at the moment.
“As much as we all look forward to auctioning on the street, part of the success of your sale comes down to the time when you are on the market.
“By auctioning now, you are competing with fewer other properties and dealing with buyers who are constantly active. The amount of email activity and requests from buyers asking us to be on the lookout for particular properties is as high as I ever recall.
“On that basis, if you’re a vendor who is thinking, ‘Maybe I’d like my auction to be on the street’, don’t be discouraged from going to market a little earlier and taking advantage of less competition.”
Nelson Alexander uses Zoom to conduct online auctions. Zoom technology is widely used for meetings in Australian workplaces and most buyers are very familiar with it.
Low-interest rates are continuing to drive buyers to spend up big on property, and house prices are likely to keep rising regardless of any negative shocks to the economy from COVID lockdowns.
The Delta variant outbreak and its ensuing hard and protracted lockdowns in Australia’s two largest capital cities have seen most economists put their previous predictions of interest rate rises on hold.
The Reserve Bank of Australia, meanwhile, has reaffirmed its intention to keep rates low until at least 2024.
Commonwealth Bank head of Australian economics Gareth Aird says as long as interest rates remained at their current levels low, property prices will keep rising, despite the large negative shock the economy is going through.
But the challenge for vendors taking their properties to the market in the next few months is to take the best advantage of a changing supply and demand situation.
Mr Staver stresses that the key driving factor governing above-market sales results is supply and demand.
“Now while we expect that the demand is going to remain high, the supply is going to creep up and change that disparity,” he says.
“Naturally great houses are still going to get great prices. But at the moment, we’re seeing a lot of properties outperform our expectations.
“Somewhat surprisingly there are routinely results of $200,000 above the reserve price in a market where everyone is reasonably well educated and all the comparable sales data is out there and available to buyers.
“But the buyers are still pushing prices $200,000 and $100,000 above the reserve.
“What might that mean later in the year when there is more supply? We still think that reasonably-set reserve prices will be beaten, but will it be by as much as $200,000? Might it come back to $100,000 or to $70,000? The results will all be related to supply and demand.”
Prospective vendors should note that Melbourne’s property market is currently awash with more cash than, arguably, at any point since the city was founded in the 1830s.
Some $64 billion was spent overseas by Australians in 2019. This is money that was not spent in 2020 and is not being spent on travel and holidays in 2021.
“Australians’ savings are up – they are unlikely to travel extensively again in the short term,” Mr Staver notes. “So the reality is that if you’re a vendor looking to sell, why wouldn’t you give yourself every chance to capture each and every buyer?”
Get in touch with the team at your local Nelson Alexander office for help standing out from the crowd and selling your Melbourne property this spring.