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With clearance rates having dropped it’s a common question I’m being asked now – ‘is it a good time to buy in Melbourne’?
I put the question to Cate Bakos yesterday (2018 National Buyer’s Agent of the Year). We recorded a 40 minute podcast and Cate’s key message was that the ‘Spring glut’ of properties combined with tighter lending has created very favourable buying conditions… for those who have finance.
The question is whether the favourable conditions will carry into next year, and what strategies buyers can implement now, to take advantage of them.
Cate knows Melbourne real estate as well as anyone and this is definitely up there with one of my favourite Long Property Show recordings.
p.s. our sound quality is 10x better now with new equipment! And in other exciting news the Long Property Show becomes a weekly podcast next week! If you like what you hear here’s our subscribe page on iTunes (you can listen from wherever you get podcasts). Feedback is welcome and if you like the show we’d love you to share it with a friend, this way we can continue delivering the best content possible. Thank you!
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[2:21] Shift in investor versus owner occupied activity
[3:22] Supply side observations, we’re in a busy auction period now, volume of listings are up
[5:07] Description of the typical auction last year, versus the typical auction today
[6:05] Agents don’t know which buyers are genuinely ‘on’ properties at the moment, a lot of buyers express interest but then can’t get their finances sorted
[10:10] Clearance rates are falling, tips on using clearance rates to gauge sentiment
[11:54] Good properties which get passed in are still tending to sell within 1 week after auction
[12:30] How price quoting works, people last year were adding c 10% to be realistic, now houses have tended to sell within their quote range
[14:04] With the softer market how do you assess value, how can buyers go in to auctions or negotiations well informed?
[15:15] How to gauge vendor motivation, how to determine how many buyers will be competing on auction day?
[16:05] Determining the number of competing properties currently available, and what represents over-representation
[17:35] Houses are more difficult to measure than apartments at the moment, mainly because the banks have made it more difficult to secure higher loan sizes
[18:05] There’s still strong demand for apartments, mainly driven by first home buyers, apartments have had a better run lately
[18:59] Cate believes long term capital growth is still likely to be higher in homes rather than apartments, particularly for well located period homes
[20:05] Determine your mindset, you have to determine whether you believe the market will continue to decline, or whether we could be at or nearing a bottom
[21:05] Vendors who are serious about selling are selling right now, we won’t have the same volume of listings in the early part of 2019, we’re likely to see an increase in clearance rates
[22:15] Case study (investor client) – the types of bargains available in the current market (just bought for 860k, last year 1m+)
[26:20] Case study (home buyer client) – Buying period home in Northcote for $850,000 off-market, unrealistic 9-12 mths ago, would have previously been Thornbury or Preston
[27:45] Be careful about pre-auction offers, they are not always the best strategy in the current market
[28:35] The right questions to ask, to determine whether pre-auction offers may help you
[32:15] Three reasons you would consider buying pre-auction in the current market
[33:02] Opportunities to negotiate pass-ins, power of being properly pre-approved, gives buyers a major upper hand
[36:40] What to do when you’re in the living room and negotiating a pass-in
[39:33] We can’t bank on having the same buying conditions and opportunities next year, so if you’re buying a great property, and the current conditions are favourable, and you’re playing the long game, you have to ask yourself could this be the best time?
