Invariably, most discussions about the property market result in the same two questions;
1. Are we in a boom market? and;
2. Should I purchase now, or wait for a market correction?
With interest in the Melbourne property market bolstered by National TV programs like The Block, there is no shortage of speculation and forecasting on property growth in Melbourne. Some highly ambitious (in my view) forecasters have even suggested that 2014 will realise a whopping 25% growth in property values!
The market has certainly seen a strong recovery, and there’s good evidence to show that results have exceeded the previous peak of 2010. But the growth we are seeing is driven in large part, by a scarcity of property and an abundance of buyers. The growth also tends to bias ‘premium suburbs’ where the schools, public transport and a lifestyle are desirable.
I believe the rate of market growth for the year will be just a hint over the 10% mark. There it is. You heard it here first!
This solid increase is well within familiar territory and provides no reason for anxiety. For well-located, quality properties in the inner suburbs of Melbourne, buyer demand continues to outweigh supply by at least two to one. Review of property sales over the last 20 -30 years reveal similar trends in growth.
I have just finished evaluating a fantastically appointed and well-located development in Footscray. Results show that properties here have averaged a growth of 9.46% year on year for the last 16 years. Some properties in this particular development have seen grown of 200% over 11 years.
So as we head into the healthiest spring selling season for four years, the strength of the market is offering vendors a very large carrot. This appetite for property, the affordability of money, a falling dollar, and growing numbers of overseas buyers is helping to maintain the buoyancy we’re seeing in the market.
But I would not call the current period a “boom”. I would however encourage buyers to be diligent in their research, clearly establish the worth of a property and avoid getting caught up in run-away auctions. And, if you’re fortunate enough to find your ‘dream home’ or ideal investment, be prepared to find an additional 5% in your purchase budget. This will allow you the flexibility to pay a little more (if you judge it wise) to secure the right property for you.
So if you’re wondering whether to ‘act’ or ‘sit’, the year is not out. There’s still at least two “Super Saturdays” left in the auction calendar. The last weekends of October and November will see some great property offerings for those in the market to purchase and will do little to curb the auction clearance rate of 75% throughout the inner suburbs.
So do your research, keep a little in reserve and act bravely! Happy shopping!