Melbourne suburbs see more buyer activity as prices jump in blue chip areas: Mal James

Is this a price spike or a stepping stone to a new price level?

There is little doubt that Melbourne's $1 million-plus market has been seeing increased activity either side of Easter, and that its strength is filtering into the $3 million-plus top end in noticeable ways.

The clearance rate for Inner Melbourne and Bayside’s $1 million-plus property was 74% on the 38 auctions we covered. Bidderman, our bidders per auction measurement, was back up at 1.8.

Is this a price spike, after which we go back to “more-normal” market? Or is this a stepping stone on the way to another more sustained “new level” of price?

Interest rates and the dropping dollar certainly appear to be accentuating the increased demand at the top end. We have had minor but noticeable increases in enquiry from overseas clients.

In Malvern, an expat is believed to have bought 4A Mayfield Avenue via an expression of interest. This property was on the market quietly late last year and had a nibble at $5 million but was not bought. It has now sold for close to $5.5 million. As the dollar drops further we are likely to see more cases of expats buying back in to the Australian top end market, pushing prices up still further.

Other evidence of a strengthening market is the increase in $1 million-plus sales in the "B" suburbs of BALWYN NORTH, Box Hill, Beaumaris and Bentleigh that fringe the more-traditional blue chip suburbs.

When you see sales improving in these suburbs you know the top end market generally is improving because buyers start moving there when they can no longer afford the blue chip suburbs. The reverse happens when a market is falling, as fringe buyers move back from these fringe suburbs into the blue chip suburbs.

We're also seeing buyers becoming more anxious about missing out on a home, and sometimes insisting on buying anything - even if it is not really suitable for their needs. We believe these kinds of panicky purchases can lead to poor long term financial and/or emotional outcomes. Over the long term, any market fluctuations that might happen while you're waiting for the right home, will be more than evened out by the better outcomes - financially and emotionally.

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.

Mal James

Mal James

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million.

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