Is the housing market in Melbourne vulnerable to buyers?
When it comes to finding the right market to cash in on, Melbourne might just be the best option in the whole country for owner-occupiers and investors alike.
Market sentiment is currently rather weak, and that's great news for anyone with capital to spend on property. A lack of confidence in the market can lead to a fall in the median house prices, meaning buyers will get more for less. That's perfect for investors!
So, why is the current property market sentiment low, and how will savvy buyers take advantage of this information in the raging Melbourne landscape?
What market vulnerabilities mean
Two-thirds of Australians believe a period of downturn in the national dwelling market is imminent.
According to the latest CoreLogic-TEG Rewards Consumer Housing Market Sentiment Survey, two-thirds of Australians believe a significant period of downturn in the national dwelling market is imminent. That figure is the same as it was 12 months ago, but a slight decline on the 68 per cent of what it was just six months prior.
There may well have been a slight scare in the property environment last October-November that caused a small spike in consumer sentiment, but it has since calmed down again. CoreLogic states that the market in Australia is worth $6.5 trillion, and any period of decline in the near future would be less than conducive to sellers, but fantastic news for buyers.
A declining period due to market vulnerabilities on the back of consumer confidence falling slightly means properties will have a lower median house price than they currently do. At present, CoreLogic RP Data reports that the median house value in Melbourne is $821,340 – a major drop on Sydney's 'over-$1 million' market. This represents a much more affordable option for any buyers, and this is the reason why vulnerabilities should be taken advantage of while they're present. Failure to do so may well result in values skyrocketing once more, and Melbourne would be less viable for buyers than ever before.
Melbourne is inviting buyers right now
The CoreLogic-TEG Rewards survey outlined how capital gains in Melbourne have moderated slightly compared to the rest of the markets around the country, and Sydney has felt the same pinch. That means sellers might be gearing up to shift the titles of their properties onwards as they're seeing the market seemingly fall down around them.
Those in the know, specifically buyer's agents in Melbourne, are more aware of what these market shifts mean. It's typically thought that the property market goes through seven-year cycles of troughs and peaks, and this potential downturn can be seen as a trough for sellers. In that regard, could it be a peak for buyers?
Well, as the Melbourne market goes from strength to strength, the median dwelling value has been steadily increasing as well. Buyers might be required to still pay a fair amount for a Melbourne home, but as investors specifically start seeing capital gains decreasing, they'll be looking to get their real estate onto the market. Keeping that in mind, the list of available properties that your Cohen Handler buyer's agent can present to you from around Melbourne will be growing longer and longer. Something else that a buyer's agent can offer clients is the accessibility to off-market properties, or homes that aren't on the market but still suit your specifications. That's a potentially invaluable opportunity for cashed-up buyers wanting to get their hands on something a little special.
How long has Melbourne been favouring sellers?
As stated in the Commonwealth Bank-CoreLogic RP Data Home Buyers Index from October 2015, regions in the country are rated based on who each one favours more. A rating of one would show an extreme buyer's market, while a five would show an extreme seller's market. Where did Melbourne sit at this time? The cultural capital rated as a five – alongside only Sydney as the other five-rated city in Australia.
At state level, only Victoria and the Australian Capital Territory favoured sellers at all, with a four. Even New South Wales as a whole only came in at a three, or a balanced market.
Melbourne is therefore favouring sellers an extreme amount. Now, with market confidence increasing by 2 per cent, the Melburnian property landscape is still showing great strength for buyers even though less people believe the downturn in median dwelling values is imminent.
A buyer's agent from Cohen Handler is on hand to help you with the property search, and the services continue from there. Cohen Handler can help you with bidding at auction or by private sale, finding homes that match your needs, on- or off-market, and closing the deal, to name but a few ways we can assist.
Get in touch today and make the most of the current Melbourne buying environment. More and more people are seeing property as the most stable and profitable investment for their hard-earned money, so accessible buying won't remain unclaimed for long.