The Melbourne property market has certainly shifted gears, we are seeing both buyer and seller hesitancy, with record low stock levels making it hard for buyers to find the right property and a lot more real estate transacting off market. Some buyers we have spoken to have been spooked by the talk of interest rates increasing but most experienced property investors or owners seem to still feel confident about buying or selling in this climate knowing if your both buying and selling in the same market there should be no real impact to your transaction. As the famous Warren Buffet quote goes, be fearful when others are greedy and greedy when others are fearful. Now is a great time to buy while there are a lot of opportunities to secure properties without fierce competition, compared to even 6 months ago when people were paying prices for properties well above what comparable sales could substantiate.
With the cost of construction increasing and the ongoing supply chain issues we have seen a pull back in both developers and buyers willing to renovate. Construction costs have increased 9% over the past 12 months and builders always need to build in a buffer to their quotes meaning the actual cost passed onto buyers would be more than this. So far we have seen family homes continue to perform well over the past two years often with four or more bidders at auctions until recently where we have seen this decrease to often two bidders. With the increase in inflation and families becoming more conscious of spending it will be interesting to watch this segment of the market and the impacts of these factors. I would predict that renovated family homes in A or B grade locations will continue to perform well but that unrenovated or land sites wont perform as well as they had been over the past two years.