Property Report - December 2018
One of the key characteristics of the property market, especially in an economy such as ours, is its unpredictability. But if the last few months have taught us anything, it is that people are equally as unpredictable. That is to say, their opinions tend to give way to impulse rather than reason.
This year we have seen a Royal Commission into lending practice, a decline in the influence of the auction process, and a well-coordinated media campaign to destabilise public faith in Melbourne’s real estate market. Amidst all of these factors, the public have been cut adrift and left floating in an ocean of misunderstanding.
In my job, when I pay attention to the trends, statistics, and the results that I see everyday, I find I am much better informed than if I give way to the half-truth of headlines and the scuttlebutt on the street. With that in mind, let me give you some advice: the property market in our regional north-east is stable.
The months of September and October felt slow, but in retrospect (looking at Integrity’s record of sale results) it was statistically on par with the monthly average for 2018. Then why did it feel slow? Because transactions take a little longer to put together.
Finance takes more time, there are fewer qualified buyers in the marketplace, and in some cases purchasers are hamstrung by their own need to sell first.
That being said, at the time of this report, the last two properties that Integrity sold (in Kinglake and Kinglake West) were only on-market for 30 days. One of those properties had appreciated $138,000 in one year. That doesn’t sound like market downturn to me, does it to you?
Be aware of doom and gloom reports. Integrity Real Estate has now been operating for 11 years, and 2018 has been a record year—we have recorded our highest sale results in 11 years. Those numbers don’t lie.
We were very grateful to be awarded PropertyData Regional Sales Agency of the Year at the recent Real Estate Institute of Victoria (REIV) Awards for Excellence. One of four agents nominated across the state, this award has not only been a great encouragement for our family-run business but has shown what a vibrant and successful area we work in. This proves what a stellar year it was, our best year out of 11.
So how can we have a couple of slow months in the middle of a record year?
Not long ago you may recall media buzz surrounding over 50% growth in Kinglake West—that was a little over 12 months ago. Back then people thought things were out of control. Now people have forgotten about it in favour of more cautionary reporting. What does this prove? That people are more unpredictable than our property market. This impulse tells us more about our society than it does our real estate—we want results yesterday and take every headline for fact. That kind of thinking does not work in real estate. You have to be practical.
This is why it is a 7 day a week, specialised job. The property market is not so difficult to read, provided you have the practice. We have the experience to do this, and the proven track record of sales to back us up.
Going into 2019 the most common question I will receive will be: what is the market doing? Let me talk first about the Kinglake Ranges and second about Melbourne more broadly. This year, according to the REIV, Kinglake has seen 13.8% growth in its median price on last year. The lower quartile median sits at $570,000 while the upper quartile median sits at $760,000. From my perspective, the way forward for Kinglake is in its comparative affordability. These prices back this up. Kinglake is in serious need of properties between $500,000 and $600,000, properties on half an acre with well-refined infrastructure and not a dollar to spend. Give me five of these properties and they will be sold in a month! For the upper median, $760,000 is the average Integrity has seen for established four bedroom homes on 1.5 – 2.5 acres.
Homeowners on 2+ acres need to recognise the challenges associated with selling in excess of $800,000. These challenges include stamp duty charges, lending restrictions, and general cost of living. Remember, just because someone is selling for a million dollars in the suburbs, doesn’t mean they have a million dollars to spend.
In metropolitan Melbourne, currently there are hundreds of properties on the market in each postcode. This is damaging to their competitive point-of-difference and ultimately undermines pricing. This is not an issue that we have, as (due to limits in development) our property pool will always be a closed club. This is how we have remained so stable when other areas have slipped.
What is the upshot of steady pricing? We will not have a market slump like some other areas. Buyers are a commodity at the moment, with tight economic conditions the way they are, so it has never been more important to be Priced Right, Marketed Right, and Presented Right. Tick those three boxes, along with an award-winning agent, and you’ve got yourself a winning combination.
Our distance from Melbourne, which is sometimes a hindrance, will be our great asset in the long run. It will keep us in good stead through 2019 and ensure that properties keep selling in the Kinglake Ranges.
From all of us here at the Integrity Real Estate family, we would like to thank you for your support and wish you a safe and happy festive season.