Melbourne real estate has boomed post-lockdown as frustrated sellers and buyers have rushed to make deals, but the market could soon have a chance to catch its breath.
In many parts of the city the demand for real estate is strong and homes are selling with hot competition and buoyant prices, but as more homes are listed for sale, signs of a less frenetic pace of growth are starting to emerge in some pockets.
There was a 32.7 per cent rise in the number of new home listings in October compared to the month before, Domain figures show. Private inspections reopened in Melbourne on September 18.
“For every listing that we are getting – and there has been a jump in listings – we are selling one,” Barry Plant chief executive Mike McCarthy said.
He said his group had just had a record month of sales, was hosting well-attended open for inspections and hot auctions, and had seen “extraordinary” prices being set well above vendors’ expectations this spring.
But after a rush of pent-up demand from buyers whose plans were delayed by lockdown, he did not expect these conditions to last.
“What we probably are just starting to see in some areas is a little bit of levelling off of the rate of increase of prices,” he said, adding he did not expect prices to fall.
“And that will flatten out that urgency among buyers to get in now before the price goes up another $10,000, $20,000, $50,000 … and we’ll see auction clearance rates move back to a more normal level.”
In the outer eastern suburbs, Fletchers Mooroolbark director Daniel Bolton is starting to see a shift.
“The market’s been as strong as I’ve ever seen it, up until about two to three weeks ago,” he said.
“There’s a lot of stock coming to the market now … it was very much tipped in the favour of sellers and now we’re seeing a more even market.”
Numbers of groups through open for inspections have dropped from 40 to 60 a few weeks ago, to 10 to 20 or 30, he said, while prices were holding at high levels but not rising further.
“It certainly still is a good time to sell, but it just is a bit more balanced,” he said.
Melbourne house prices have soared this year, up 16.8 per cent in the 12 months to September, on Domain figures. Home values rose another 1 per cent in October, CoreLogic found.
There are a bumper 1179 auctions scheduled in Melbourne this Saturday, a figure that has been over 1000 the previous two Saturdays as in-person auctions returned to the streets.
Melbourne’s monthly auction clearance rate for October was a healthy 75.3 per cent, its strongest month for 2021, although the preliminary clearance rate last weekend was a touch lower at 71.1 per cent. An auction clearance rate of 70 per cent roughly correlates with 10 per cent annual price growth.
Footscray vendors Tom Mackie and Jeminah Reidy will take their home to auction next weekend, after waiting until lockdown finished to be able to sell and look at a sea change.
Mr Mackie saw another property nearby sell for a high price right after lockdown, when there was little for sale.
“There’s probably a lot more on the market now,” he said. “I wouldn’t be surprised if prices might come down a bit.”
They have had strong early inquiries on their home and are hoping for a good result. “It’d just be interesting over the next few weeks,” Mr Mackie said.
Their agent, Ray White Seddon’s Patrick Jamroz, has seen competition at auctions continue even as the number of homes for sale has risen, with about five to six bidders registering per auction, of which two to three are active.
Prices were still meeting owners’ expectations, he said. “There have been a few apartments I’ve seen that have been passed in, but houses, townhouses, anything with a bit of land is still holding strong.”
Buyer’s agent Emma Bloom, a director of Morrell and Koren, said she wasn’t seeing the same effect for $4 million-plus homes, with demand still high and some potential sellers preferring to wait for the new year.
Some open homes were not that busy, but a small number of qualified buyers was still enough to create competition, she noted.
The only slowdown she had seen was C-grade properties, especially in the sub-$2 million range, lagging a little – cold comfort to well-heeled buyers wanting premium residences.
“There’s been no easing of prices – there are still buyers who are elbowing each other out of the way to get to the good stuff,” she said.
“There’s still a lot of demand; and for good properties, good locations, good houses, there’s competition.”
Mortgage broker Chris Foster-Ramsay said he had seen a steady stream of potential buyers wanting to get pre-approval for a mortgage, although many were open to buying either now or next year.
“What’s frustrating them is the number of people wanting to make offers,” he said. “They’re trying to buy but they’re getting pipped at the post.”
Changes to lending rules are starting to take effect, with the bank regulator trimming about 5 per cent from the maximum borrowing capacity for new borrowers.
“The temperature [of the market] is not red hot,” he said. “But it’s still quite warm.”