Auctions back in favour as Balwyn spring selling season takes off: Hockingstuart

It’s been an interesting couple years in Melbourne real estate. Five years ago, would anyone have predicted the incredible peaks recorded in house values in 2010, despite the GFC and multiple interest rate rises? Or the panic that followed from the price falls in 2011? Even the best future-gazers wouldn’t have guessed we’d see three rounds of interest rate cuts this year; so that in some areas, it’s actually cheaper to buy than rent.

Nothing has been the norm this year including spring, with our activity kicking off early in the first week of September instead of post grand final – the "norm" in previous years. According to analyst group RP Data, September marked not only the largest but the fourth consecutive monthly rise in home values since 2010, with Melbourne having the largest recovery nationwide. In Balwyn we’ve certainly seen the knock-on effects; our sales are up 25% compared with the same time last year, clearance rates are sitting around 90%, days on market have decreased about 30%, listings in the last three months have increased by 50% and attendance at inspections is double what we saw earlier this year.

After a prolonged period of sellers and buyers only being interested in private sales, auctions are back in favour and buyers have started bidding again. Last weekend, we had bidders at several of our auctions around Boroondara – a tell-tale sign of improved confidence. Houses in Mont Albert are doing particularly well, with the recent auction of this family home in Dunloe Avenue drawing a crowd of 70, with three bidders. Go back just two months and we were struggling to get any opening bids. There’s no doubt the interest rate cuts have driven renewed enthusiasm in our market.

With Balwyn’s rent prices increasing, the gap’s narrowed between mortgage repayments and rent, so a lot of young couples renting in the area are now looking to buy. Balwyn is also very family-oriented, so many households are seeking to upgrade and some parents are co-buying with children so they can live close by. That’s why well-positioned family homes such as 3 Wild Life Parade and apartments like 9/3 Kireep Road, suited for first home buyers, investment or empty nesters, will always do well.

However low stock levels have always been a challenge in Balwyn because of our established demographic – our median age is 41, median household size is 2.7 and almost 80% of our houses are owner-occupied. An established demographic means mortgage pressure is typically lower, so unless people experience life circumstances out of their control, they can afford to wait. In Balwyn, no-one moves until they have to. You’ll never see the fluctuations in sale prices here that might occur in other parts of Melbourne, because supply and demand is consistent – our median house price ($1,540,000) is now close to the peak recorded in 2010.

For this reason, the next financial year will be a pretty even playing field in Balwyn – no one group will hold the upper hand. We’ll start to see house values increase in the order of 7-8%, especially if the Reserve Bank continues to cut the cash rate. Quality family homes will always prevail no matter what the market conditions.

Bear in mind, though, that property is a long-term purchase. We can get excited that house values have started increasing again, but think about this – Australians move on average every seven years (in recent times this has been closer to 10 due to housing affordability). To put things into perspective, in the last seven years  Melbourne’s median house and unit prices rose 62% and 52% respectively – definitely not a "norm" we expect to see again, at least not in the near future.

Timely information such as clearance rates, number of sales or even median prices can be useful for a pulse on market sentiment, but when it comes to selling and buying, consider the bigger picture. If the last few years are anything to go by, unless you have a crystal ball, no one really knows what’s going to happen next. So instead of focusing on the here and now, or worrying about predicting the market, do some personal future-gazing and think about where you need to be in the next 12 months and then the next five years. Then start planning accordingly.

Toby Parker has 12 years' experience in real estate and is director of hockingstuart Balwyn and Hawthorn.

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