Why Victorian property demand is exceeding supply
Victorians considering selling their properties would be well-served to act fast, with market conditions currently heavily weighted in favour of vendors.
As 2021 kicked into gear, so did buyer search volumes. On 17 January, realestate.com.au recorded a 50 percent increase in web searches for residential properties for sale in Victoria, compared to the same time last year.
Nationally, the story’s the same – buyer search volumes in the same category are up an average of 48.5 percent from January 2020.
As a buyers advocate in Victoria I can vouch for numbers – they reflect the experience of being ‘on the ground’ right now. In the final quarter of 2020, when Melbourne returned to ‘normal-ish’ the market had its biggest quarterly improvement in 21 years.
Properties took less time to sell in the December 2020 quarter than they did at the same time in 2019.
The average Victorian home is currently spending just 33 days on the market before being sold – the lowest number recorded since 2009. Nationally, the average number of days on market dropped by four days for this time.
Clearly, there are lots of buyers out there, with competition responsible for keeping prices strong and market clearance rates high.
But, even with an unusually strong start to markets in January, 2021 is still catching onto the fact that there’s an imbalance in the market – many looking to buy, and fewer looking to sell.
Let's break it down a little…
Why are there so many people looking to buy at this time?
For the most part the clients that I’m seeing at Infolio are looking to upgrade their homes. Their working conditions have changed and they’re choosing to keep a more flexible arrangement that involves working from home.
My current clients consist of both families and independents, but they have a common goal – they’re looking to purchase a larger principal place of residence, which includes a workspace that doesn’t infringe on the home’s living space.
Contributing also to the ‘why now?’ question, is the fact that people aren’t spending on travel, and interest rates are at an all-time low. In the current real estate climate it makes more sense to upgrade than deal with the hassle of renovating.
I’m also noticing a significant rise in the number of clients wanting to purchase a second regional or rural property as a holiday home, or investment.
Again, with travel restrictions likely to last a long while into the future, my clients, many of whom are ‘real-estate’ savvy, want to take advantage of low interest rates by purchasing now, or at least soon, with the knowledge that rates will remain low for a promised three years. Stock levels, however, are making things more difficult.
Contributing to the imbalance in the Victorian market is the number of buyers who found themselves caught between homes when Melbourne’s long and strict second lockdown was announced.
While I always recommend people aim to buy and sell in the same market, this was made impossible. Now, many are still trying to purchase property and are faced with not only low stock, but a rising market.
Why is there so little stock available at this time?
"The feedback we are consistently receiving from our agency partners is that they need more quality stock to satisfy buyer demand,” said Toby Balazs, CEO of realestateview.com.au.
Across the board – on every respected and credible property website I’ve read – every single expert, including myself, is predicting the property market’s continued rise. ANZ has forecast that house prices in capital cities will increase by nine percent on average in 2021 – a conservative number considering others are suggesting more than 10 percent growth, especially in Melbourne, Sydney and Perth.
While the numbers all point to the property market’s upward trajectory, I think that the shock of 2020 is still fresh in people’s minds. The spike in COVID cases in December was also a reminder that we’re not out of the woods of this pandemic.
I believe that we have a shortage of sellers because many are holding in caution. It’s understandable that sellers, especially, want to see how the year starts off before committing to getting into the market.
But, what’s different about this year is that Melbourne real estate skipped over the ‘holiday lull’ in order to catch up for lost time in lockdown. It meant that Melbourne had an 80 per cent clearance rate for auctions in December; and January – a traditionally quieter month for property activity – saw the Westpac Melbourne Institute Index of House Price Expectations rise 1.1 percent. 2021 is already off and running.
In summary, those who take the leap of selling now should by rights reap the financial rewards – there is a supply and demand issue currently at play, which, typically, never lasts.
Right now there isn’t enough property to satisfy the buying pool so those who take the plunge will have good solid competition, those who wait will likely be putting their home on the market at the same time as everyone else. The supply/demand issue, therefore, eases and larger prices will be less common.
Article by Lauren Staley