Victorian market still below its best: RP Data

Two useful statistics for measuring the health of the local market, particularly the private sale one, are the number of days a dwelling is on the market for and the amount the vendor discounts the property over the course of the advertising campaign.

A review of those metrics for the Melbourne private sale market for houses shows that time on market is approaching the lows of 2010 and 2007 but that vendors expectations are less likely to be matched by the market.

In July the time on market was 44 days compared to 62 days a year ago and above the 36 days in September 2009. It’s worth noting that 36 days was the lowest recorded since the series begun in 2005.

If the market continues to strengthen as suggested by recent consumer confidence data then this will also fall, as long as vendors’ price expectations remain in line with the market.

A similar pattern is evident when looking at the level of discounting. It is commonly understood that unlike an auction, homes that sell through private sale do so for less than their advertised price, but the lower the difference the stronger the market.

In July the average vendor discount was -6.5% compared to -7.5% a year ago and above the -4.7% in January 2008.

The improving trend is backed up by more recent preliminary data but does not change the underlying message that the current market is better than a year ago but still below its strongest.

Buyers between now and Christmas will face more competition but still have negotiating power.