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Melbourne’s property market is turning in favour of buyers, who have the best chance of purchasing a house for less than $1 million now than at any time since last spring.
Meanwhile, the number of sales of $2 million-plus houses has edged lower as buyers look for bargains, although some may not find the deals they dreamed of in a downturn.
Melbourne’s property market has turned in buyers’ favour.Credit:Simon Schluter
In the three months to July, 58.4 per cent of house sales in Melbourne were struck for less than $1 million, CoreLogic data shows, the highest share since September.
The share of sub-seven figure deals has ticked up from a low point of 52.4 per cent in the December quarter, but remains well below pre-pandemic levels when more than seven in 10 sales were struck under $1 million.
Likewise, 8.9 per cent of sales were for $2 million or above in July, down slightly from the peak of 12.2 per cent in December last year.
CoreLogic research director Tim Lawless said the downturn is being led by the upper quartile of the market.
House values among the most expensive quarter of homes fell by 5.2 per cent over the three months to August in Melbourne, while those in the lower quartile dropped by just 1.9 per cent.
The data also showed the enormous growth in home values over the pandemic, he said.
“In Melbourne [overall], values rose by 17.3 per cent, trough to peak,” Lawless said. “That’s obviously the reason why we’ve seen a lot more $1 million sales and bracket creeping through price ranges.”
As interest rates rise and reduce the amount of money that buyers can borrow, economists expect Melbourne property prices could fall 15 to 20 per cent from peak to trough.
Kay & Burton auctioneer Monique Depierre at the auction of an apartment in Collingwood in April which passed in but sold in May.Credit:Luis Enrique Ascui
For a $1 million budget, buyers looking for a family home might turn to Melbourne’s middle-ring suburbs.
A three-bedroom two-bathroom renovated house in Glenroy set on 659 square metres sold for $1 million recently.
The home at 21 Moss Court came with space to park five cars.
Or in the inner west, the same price fetched a modern three-bedroom townhouse at 1/30 Charlotte Street, Newport.
1/30 Charlotte Street, Newport sold for $1 million.Credit:RT Edgar Williamstown
RT Edgar Williamstown agent and auctioneer Reece Pearson sold the townhouse, and said properties in the inner west priced below $1 million were struggling to sell, while those in the seven figure-plus bracket were attracting more buyers.
“Above $1 million, you’re dealing with experienced buyers and sellers that have done it before, and have cash behind them … so they’re less impacted by interest rate rises,” he said.
Even so, he felt price falls were slowing because there are few homes for sale.
With the spring selling season underway, some buyers are looking for bargains, but only finding them if the property needs a significant renovation.
Miles Real Estate Ivanhoe agent and auctioneer Mark Britt said potential buyers were offering lowball prices for fixer-uppers.
“People are coming in quite low and giving cheeky lowball offers too, to try and do a deal. Some have even succeeded in their endeavours,” Britt said.
“What we’re seeing is that good, renovated property is just as strong – the knockdowns or those that need a complete reno have come off,” he said. “But properties that require work have come off the most – around 10 per cent or 12 per cent in this area.”
He sold a smart four-bedroom family home set on 673 square metres, at 38 Salisbury Avenue, Ivanhoe for $2 million in August.
This home at 38 Salisbury Avenue sold after passing in at auction for $2 million.Credit:Miles Real Estate Ivanhoe
The sale came after the home had passed in at auction a few weeks before, when no bids were made, but the price was more than the vendor and agents had expected, he said.
“We feel it’s bounced a little bit now … there are people out and about making decisions, and they’re not talking about interest rate rises anymore,” he said.
Elsewhere, $2 million in Essendon bought a four-bedroom, two-bathroom period family home at 77 Napier Crescent.
Buyer’s advocate Cate Bakos said while buyers were looking for bargains, buying a fixer-upper can be risky.
Buyers could face big costs and delays trying to renovate a property in current conditions, thanks to builder shortages and higher costs of building materials, and could struggle to sell for a good price afterwards.
“They’re buying bargains, but they’re buying a bad bargain,” Bakos said. “It’s like buying a bag of rotten apples for a bargain price.”
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