It has been a few weeks since my last comment and for this I apologise. March was the busiest month on record since I have been a buyer’s advocate. Whilst we purchased a great many homes, we have also had record enquiry rates. It seems there are a great many people who have finally worked out buying a home is an enormous financial decision and without professional advice it is fraught with dangers.
March has also showed us that the market is not “out of control.” If you are selling and your selling agent says to you “I have no idea what your property is worth” then get another agent. However, if you are buying and the selling agent says “The property is worth what someone will pay” or “we will see what happens on auction day” but they are quoting substantially below what you eventually see the property selling for, this is still not under quoting.
Of the 50 plus properties we went after during March we had better than 60% success rate. Of the properties we missed only a few went well past our expected range. This is not to say our expected range was the same as the agent’s quote range. Our ranges are based on accurate comparable sales, our years of experience in buying properties and our attention to detail. A buying advocate is there to assist the buyer; a selling agent is there to assist the seller. It is the selling agents’ contractual obligation not to assist the buyer to save money.
Property prices are definitely going up in Melbourne. They will for at least the next 4 years. The prices will not go up at 7% – 10%pa . The rate will be much higher. I would foresee a rate of between 9% – 13%pa. on all good property, until at least the next state election. At this point I can see one of the major election issues will be that of housing. We are growing our population, which is absolutely necessary, at a rate far outstripping housing supply. This means it does not matter whether you wish to rent or buy, there are simply not enough houses to keep our average of 2.6 people per dwelling down.
The state government needs a mandate to increase the supply of housing. And hopefully not in a woefully inept way the federal government handled the stimulus packages. The insulation debacle, the school funding mess and now the federal government wants to wade into hospital funding!!!!! The state government needs to make it easier for the subdivision of blocks within the existing metropolitan boundaries. We cannot simply extend the boundaries of Melbourne. It is not as simple as kicking some cows of some land, subdividing and building houses. We cannot afford the infrastructure needed to house half a million people 30+km West of Melbourne.
We need to do what the current planning minister, Justin Madden, is trying to do. Whilst I do not like high rise developments such as the Camberwell Station proposal, I do believe we need to encourage subdivision of larger blocks into smaller townhouse allotments. Whilst most local councils do not want to see these changes and actively oppose them, I think the state government needs to step in and do something to alleviate this situation.
Over the next few years our land within 20 – 30kms of the CBD will dramatically increase in value. This will also cause angst among those who do not have any land and can no longer afford to purchase. Within 6 years I believe the median price in Melbourne will have easily exceeded $1M and the top third of suburbs will have medians above $1.5M. If you are able to, start thinking about how your children will be able to afford to purchase their first home. You may want to think about investing in a couple of properties now.
If you are in the market for a property please feel free to call us for a no obligation first meeting.
Ian James
