Melbourne’s real estate downturn could reward those willing to take a risk this year.
But the market could bite those who don’t do their homework.
We asked the experts how to best negotiate 2019.
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IS IT A GOOD TIME TO BUY?
It’s the year of the buyer. Low interest rates, falling prices and low auction clearance rates have forced many sellers to negotiate in recent months.
“You are potentially buying at 2016 prices,” CoreLogic Australian head of real estate Geoff White says.
Further predicted falls in property prices would only be good news for first-home buyers.
“The problem that first-home buyers have had in recent years has been an escalation of prices,” Mr White says.
“But out of all sectors of the market they are certainly up there at the head of the queue in terms of what they could do in 2019. What’s happened the last six to eight months is definitely going to benefit them.”
With interest rates tipped to rise in coming years, it may be time for those with big mortgages to up stumps.
“You don’t want to be up to your neck on the current interest rates, over the next five years they should start to go up,” Mr White says.
SHOULD I BUY A HOUSE OR UNIT?
While house values are tipped to fall further this year, unit prices in many parts of Melbourne are expected to continue growing.
Townhouses, units and even apartments are becoming increasingly attractive to a range of buyers as traffic woes grow across the city.
Mr White says: “Due to infrastructure issues and traffic and congestion, people are prepared to compromise to a townhouse or a unit or an apartment.”
While units prices are likely to outperform houses this year, it may be the reverse in the long term.
“The housing market has had the most growth over the last few years,’’ he says.
SHOULD I SELL?
Homeowners who bought at least two years ago can take advantage of the market if they sell, realestate.com.au chief economist Nerida Conisbee says.
“We are roughly back at where we were in September 2017,” she says.
“But if you have owned for five years, you are up 35 per cent still. Ten years, you would be looking at 71 per cent growth.”
Advantage Property Consulting boss and buyer’s advocate Frank Valentic says families who brave a sale to buy a bigger home could be winners.
“There’s never been a better time to upsize,” he says.
While you might sell your home for less than you would have 18 months ago, you will wind up “well ahead” in the changeover, he adds.
Sitting tight was a good option for some, with prices holding firm in some parts of Melbourne.
“We are continuing to see very high views for listings in the west and we are still seeing price growth in the west of Melbourne,” Ms Conisbee says.
Homeowners who had paid down their mortgage could consider a better postcode.
AUCTION OR PRIVATE SALE?
With auction clearance rates likely to start the year in the mid 40s, Mr White says as few as one in five Melbourne homes are likely to be sold via auction in 2019.
The figure was closer to one in three at the peak of the market.
Mr Valentic says sellers should give private sale serious consideration.
“As a seller, in a private treaty sale you are less likely to have a situation where the buyer thinks they have the upper hand — and they won’t know how many other interested parties there are,” he says.
SHOULD I ENTER THE MARKET NOW OR HOLD OFF?
Sellers have a window of opportunity this autumn, with prices tipped to fall further this year.
The final report from the financial services royal commission and upcoming federal election — which will likely decide the future of negative gearing and capital gains tax — could also spook the market.
“If you are selling, you sell as quickly as you can,” Mr Valentic says.
There’s no rush for buyers, but he warns they shouldn’t let good opportunities pass them by.
WHAT ABOUT THE REGIONAL MARKET?
While Melbourne’s property market struggled through 2018, Victoria’s regional cities boomed.
And there’s more to come this year, according to the experts.
“If you bought in Geelong even 12 months ago, you are going to be up 10 per cent,” Ms Conisbee says.
“It’s highly likely prices in regional Victoria will outperform the Melbourne market.”
Realestate.com.au has tracked increasing numbers of would-be buyers searching homes for sale in regional cities — and they’re not all locals.
“We know Melbourne homeowners are looking to buy in regional areas, so the fact that they are seeing such enormous interest is showing it’s far beyond local interest,” Ms Conisbee says.
First-home buyers and young families from the big smoke were driving the trend.
Ms Conisbee warns first-home buyers already living and working in regional areas should look at cheaper new estates and the fringes as they competed with cashed-up buyers from Melbourne.
WHY WE’RE UPSIZING
Zeljka and Andrew Charles, along with Ella, 1, and Ed their brittany spaniel, are taking 2019 as an opportunity to upsize their home.
The Charles family bought their three-bedroom house at 12 Scales Lane, Burnside Heights, as their forever home six years ago, but have decided a slower market is their chance to step up to a bigger home before their family gets any bigger.
“We don’t think the market is that terrible around Burnside Heights, and as we are staying in the area it won’t matter if prices have dropped a little, but not a huge amount,” Ms Charles said.
The house is a short walk from Kororoit Creek Primary School and Burnside Heights Recreation Reserve, and features an open-plan living zone.
A sale in the $600,000-$660,000 expected price range would be a substantive lift on what they paid for the home in 2012.
YPA Caroline Springs’ Andrew Migliorisi said a correction had only slightly affected Melbourne’s affordable western suburbs, with signs buyers convinced they could buy a bargain would soon be competing and driving prices back up.