Now is the time to buy in Melbourne: What the experts say

Now is the time to buy in Melbourne: What the experts say
Now is the time to buy in Melbourne: What the experts say

The Melbourne residential market has experienced years of unprecedented growth that saw prices peak in November 2017.

Now, after decades of rapid price hikes, the market is starting to self-correct to a level more traditionally akin to a ‘normal’ market, with organic ebbs and flows.

David Kobritz, executive chairman of Dealcorp, said the housing market in Melbourne has always come back stronger after downturns.

“Melbourne’s property market has experienced four significant downturns in the past 30 years and they have all been as a result of tightened credit conditions, whether at the instigation of banks themselves or through government/regulator intervention," Kobritz said.

"Every time the housing market comes back stronger due to the release of pent up demand and ongoing population growth; What is happening now is part of the natural property cycle in Australia, every eight – 10 years we go through a downturn, but we always recover quickly when common sense prevails.”

Kobritz suggested the fundamentals in the market remain strong, particularly around low vacancy rates, population growth, increasing cost of construction and foreign buyers with a strong appetite to purchase.

"I think we are at or close to the bottom of this downturn/cycle and we should return to strong growth in the medium term, especially as the supply side will reduce significantly over the next few years.”

He said the heat has been taken out of the market and will return to more normalised conditions.

“The economy relies on a strong property and construction market and I would expect that some of the restrictions and disincentives imposed by governments and regulators will begin to ease in 2019.”

Luke Hartman, managing director of Metro Property, said it won't take long for markets to recover, and believes those that are brave enough to buy property when there is weakness in the market are those that will prosper the most.

“We’ve seen this happen all before; any time there is uncertainty about the property sector, particularly around an election, buyers will sit on their hands and wait to see what happens next," he said.

"It causes the market to stagnate and drives prices down, the irony of which is that it makes it the perfect time to buy.”

“Markets do recover, and I don’t think it will take long.

"Next year we will have much more certainty on the direction the market is going following the results of the Royal Banking Commission and the federal election.

"Once that happens, I think the market will bounce right back up. There is currently a very small window of opportunity that exists for buyers in the market before that happens.”

"There’s less buyers to compete with, properties are better value and when the market inevitably picks back up again they will see their investment pay off with significant capital gain.”

Elias Jreissati, group chairman at Bensons Property Group, said the extent of the current softening is highly exaggerated and sensationalised.

"The Melbourne housing sector had very strong growth for nearly 10 years, it is natural that there will be a slowdown for a while," he advised.

The fundamental driver of housing is population growth and it continues unabated. Overseas immigration is still strong, people are still growing up and wanting to move out of home, downsizers are still wanting to downsize and people wanting to own their own home still aspire to do so. These facts never change.

"With the mad heat having dissipated from the market, there should be more quality stock available for the discerning purchasers. The thing with property is that if you own it for the long term, it always forgives you and profits you.

Leonard Teplin, director of Marshall White Projects, said there will always be demand for well-designed apartment developments. He said the office average sale price of an off-the-plan apartment rose to $963,000 over 2018.

“The apartment market for off-the-plan remains consistent, with enquiry meeting demand through most of 2018 within strong areas of Melbourne," he said.

"Given the relative affordability of finance for couples, these buyers are happy to invest more, move to stronger areas or purchase bigger apartments.

“There will always be demand for well-designed and appointed projects within good locations, close to amenities and infrastructure offering carefully considered floorplans that cater to the end buyer’s needs.

"These basic fundamentals have buoyed Melbourne’s property market and continue to get stronger.” 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

Tags: 
Melbourne 2019 Property Price Forecast

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