The real estate and construction markets in Melbourne and Geelong have always been dynamic and sought-after. These markets continue to evolve in response to changing economic conditions, inflation, government policies, and buyer preferences. In this article, we will explore the current landscape of auctions, private sales, and new constructions in these two vibrant Australian cities.
Auctions – Melbourne’s Thriving Tradition
Auctions have long been a favoured method for buying and selling properties in Melbourne. In recent years, the auction scene has remained strong, albeit with some fluctuations. The COVID-19 pandemic brought about temporary restrictions on in-person auctions, but the market has since shown signs of rebounding.
Melbourne’s auction market is displaying signs of resilience and vigour, with media reporting a record start to spring auctions. Buyers and sellers are back in force, drawn by the excitement of the auction process. The city’s diverse neighbourhoods offer something for everyone, from the trendy inner suburbs to the leafy outskirts.
One notable trend is the strong demand for family homes with outdoor spaces. The desire for more spacious homes and a connection to nature has driven up the prices of properties. Additionally, auctions for well-maintained, character-filled homes in established suburbs are fiercely competitive, often resulting in successful sales well above reserve prices.
Geelong: A Rising Star in Auctions
Geelong has seen a notable surge in its real estate market, particularly in auctions. This coastal city has grown in popularity due to its affordable housing options, vibrant lifestyle, and close proximity to Melbourne. The pandemic lockdowns in Melbourne saw an influx of city dwellers to the Geelong region seeking a sea change.
Auctions are increasingly becoming the preferred method of selling homes in Geelong. With its picturesque waterfront, historical charm, and proximity to the Great Ocean Road and Bellarine Peninsula, Geelong offers a unique blend of city conveniences and a relaxed coastal atmosphere. Buyers are eager to secure their own piece of this idyllic region, making auctions a competitive arena.
Private Sales: A Steady Alternative
While auctions dominate the Melbourne and Geelong real estate scenes, private sales continue to be a steady and reliable option for buyers and sellers alike. Private sales offer a more personalised experience, allowing for negotiations and a less time-driven approach.
In Melbourne, private sales are often favoured for high-end properties and off-market transactions. Sellers of luxury homes value discretion, so private sales offer a level of confidentiality that auctions may not. Moreover, private sales are conducive to negotiating favourable terms, such as longer settlement periods or special conditions.
New Constructions: A Growing Trend
Both Melbourne and Geelong are witnessing a surge in new construction projects. Developers are responding to the demand for modern, energy-efficient homes, and this trend shows no signs of slowing down.
Melbourne’s skyline is continually evolving, with new apartment buildings and townhouse developments changing the cityscape. Buyers are attracted to these properties for their contemporary designs and proximity to amenities. Furthermore, state government influences on sustainable building practices has spurred the growth of eco-friendly construction projects in the city.
In Geelong, the development landscape is also evolving. New housing estates are popping up on the outskirts, catering to families and first-time buyers. The city’s waterfront precinct is seeing significant investment, with high-quality apartment complexes and mixed-use developments reshaping the urban environment.
Whether you’re a prospective buyer or seller, staying informed about the market trends is crucial. Melbourne and Geelong offer diverse opportunities for those looking to enter the real estate market, making them dynamic and exciting places to call home.
Current property market influences by post-pandemic trends
The COVID-19 pandemic has already brought significant changes to the real estate market in Australia, including Melbourne, Geelong, Bendigo, Ballarat and the regions. The pandemic accelerated trends like remote work, influenced buyer preferences, and impacted market dynamics. However, the property market’s behaviour continues to evolve after the COVID-19 pandemic. There are general trends and behaviours exhibited by buyers and sellers in the post-pandemic period:
· Continued Interest in Regional Areas: The pandemic highlighted the appeal of regional and suburban areas as more people sought larger homes with outdoor spaces. Even after the pandemic and due to cost of living pressures, some buyers may continue to prioritise suburban and regional properties over inner city locations.
· Flexibility in Work Arrangements: With work-from-home (WFH) and remote work becoming more accepted, some buyers may prioritise homes that accommodate home offices and flexible living spaces. This will impact property preferences, with a focus on larger or more adaptable homes.
· Competitive Market: Pent-up demand during high interest-rate periods may contribute to a competitive market when interest rates ease. First-time buyers and investors, may continue to compete for well-priced and well-located properties.
· Focus on Property Features: Buyers may place greater importance on property features, such as outdoor spaces, home gyms, and energy efficiency, based on experiences during the pandemic.
· Seller’s Market Potential: If demand remains strong and housing supply is limited, it could continue to be a seller’s market, with sellers able to command favourable terms and prices.
· Price Growth: While it’s difficult to predict, if demand outpaces supply, property prices may continue to rise, particularly in areas with strong fundamentals.
· Confidence in the Market: A sense of stability and economic recovery can boost confidence among both buyers and sellers. This confidence can drive increased activity in the real estate market.
· Diverse Buyer and Seller Motivations: Not all buyers and sellers are motivated by the same factors. Some may be looking for a family home, while others may be investors seeking rental income. Understanding the diverse motivations in the market is essential.
It’s important to note that the behaviour of property buyers and sellers can vary by region and property type. Additionally, government policies, economic conditions, and interest rates can influence market dynamics. Changes in these factors impact the real estate market trends.
The trend towards work-from-home (WFH)
The move towards remote work and the increased acceptance of flexible work arrangements have had a noticeable impact on the demand for office space in Melbourne and Geelong’s real estate markets.
Reduced Demand for CBD Office Space: Many businesses have embraced remote work as a permanent or semi-permanent option for their employees. As a result, there has been a decrease in the demand for traditional office space, particularly in the central business districts of Melbourne and Geelong. Companies are downsizing their office footprints or exploring flexible office solutions to accommodate a more distributed workforce.
· Shift in Office Space Usage: Some companies are re-evaluating their office space needs and are considering flexible, collaborative, and activity-based workspaces. This shift has led to office redesigns and renovations to make spaces more conducive to team collaboration and employee well-being.
· Impact on Commercial Real Estate Prices: The decreased demand for office space in CBD areas has put downward pressure on commercial real estate prices. Landlords and property owners are facing challenges in finding tenants, and some are offering rent concessions or incentives to leases to attract businesses.
· Rise of Mixed-Use Developments: To adapt to changing market dynamics, developers are increasingly focusing on mixed-use developments. These projects combine office spaces with residential, retail, and leisure components, creating vibrant and versatile urban environments that cater for work and lifestyle.
· Suburban Office Space and Co-Working: Suburban office spaces have gained popularity. Companies are setting up satellite offices in suburban areas to provide employees with more convenient and flexible work options. Additionally, co-working spaces are thriving as they offer a flexible and cost-effective solution for businesses and remote workers.
· Residential Market Impact: The shift to remote work has influenced residential real estate preferences. Homebuyers and renters are increasingly prioritising properties with dedicated work-from-home office spaces, further emphasising the need for adaptable housing designs catering to remote work needs.
· Transportation and Infrastructure: Developers and urban planners are also considering changes in transportation and infrastructure needs. With fewer commuters heading to CBDs daily, there may be an increased focus on improving suburban transportation networks and reducing traffic congestion.
In summary, the work-from-home trend has impacted the demand for office space in Melbourne, Geelong and many of Australia’s major cities and regions. While it has led to challenges in the traditional office real estate sector, it has also created opportunities for innovative property developers and investors to adapt to changing market dynamics and cater to the evolving needs of businesses and individuals. The future of office space in these cities will continue to evolve as remote work arrangements are a more common part of the work culture.
Current market outlook
To accurately understand the current attitudes and behaviours of property buyers and sellers, it’s crucial to consult local real estate experts, review the latest market reports, and consider up-to-date statistics and trends from reliable sources. Real estate markets can vary widely even within the same city, so understanding the specific factors at play in your desired area is crucial for making informed decisions. Market conditions evolve, and staying informed is vital to making real estate decisions. Some general factors that often influence the spring real estate market are:
· Seasonal Patterns: Spring tends to be a busy season for real estate in Australia. Warmer weather and longer daylight hours encourage more people to buy and sell homes. The higher demand can put upward pressure on prices.
· Economic Conditions: The overall state of the economy, including factors like employment rates, interest rates, inflation and consumer confidence, can influence the housing market. A robust economy typically supports healthy real estate markets.
· Government Policies: Changes in government policies, such as incentives for first-time homebuyers or adjustments to property taxes, can impact housing affordability and demand.
· Supply and Demand: The balance between housing supply and demand plays a significant role in price trends. If there is an oversupply of homes or a significant influx of new listings, it can moderate price growth.
· Migration and Population Growth: Population trends, including internal and international migration, can affect housing demand. Cities experiencing population growth usually see increased demand for housing, potentially driving up prices.
· Interest Rates: The Reserve Bank of Australia’s decisions on interest rates can impact the cost of borrowing and, consequently, housing affordability. Low-interest rates can stimulate demand.
· Local Factors: Neighbourhood-specific factors, such as proximity to amenities, schools, transportation, and employment centres, can influence house prices. Some areas may experience more significant price growth due to these factors.
Knowing your market
Consulting reputable sources like the Real Estate Institute of Victoria (REIV) is a wise approach to gaining insights into the real estate markets. The REIV is a respected industry association that provides valuable data and analysis about the Victorian property market that can aid in your research. Here’s how you can leverage their resources:
· Market Reports: The REIV typically releases regular market reports providing an overview of key trends, including median house prices, rental data, auction clearance rates, and more. These reports often include breakdowns by suburb or region, allowing you to assess local market conditions.
· Statistics and Data: Explore their database of statistics and historical data, providing valuable context for understanding how the market has evolved over time. You can also access information on price trends, sales volumes, and other relevant metrics.
· Market Insights: REIV often publishes articles and commentary on market insights and trends. These insights can help you understand the factors driving the market and what to expect in the near future.
· Local Real Estate Professionals: Real estate agents and professionals in Melbourne and Geelong often rely on the REIV’s data and reports. When working with a local agent, they may reference REIV data to inform their recommendations and pricing strategies.
· Auction Results: REIV tracks auction results, including clearance rates and details of properties sold at auction. This information can be valuable if you’re interested in buying or selling via auction.
When using the REIV’s resources, it’s essential to keep in mind that real estate markets are subject to change, and the most current data and reports will provide the most accurate picture of market conditions. Additionally, consider seeking advice from local real estate agents about the market in specific neighbourhoods or suburbs you are interested in. There are some key types of reports and statistics that you may find useful to help understand real estate markets:
· Median House Prices: The median house price is a critical indicator of the health and direction of the housing market. It can help you understand whether prices are rising, stabilising, or falling.
· Auction Clearance Rates: Auction clearance rates provide insights into the competitiveness of the market and the level of demand. High clearance rates often indicate strong buyer interest.
· Days on Market: This statistic tells you how long, on average, it takes for a property to sell. A decrease in days on market may signal a competitive market.
· Sales Volume: Understanding the number of properties sold in a specific period can give you a sense of market activity. A rising sales volume may indicate a busy market.
· Rental Yields: For investors, rental yields are crucial. They reveal the potential return on investment from rental income.
· Suburb-Specific Data: Look for data broken down by suburbs or regions within Melbourne and Geelong. Real estate markets can vary widely even within a single city.
· Market Trends and Insights: REIV often provides reports and articles that analyse market trends and provide insights into what is driving the market.
· Supply and Demand Metrics: Information about the number of new listings versus the number of buyers in the market can help you assess supply and demand dynamics.
· Property Types: Consider the type of properties you’re interested in, such as houses, apartments, or commercial properties. Different property types may have different market conditions.
· Local Market Commentary: REIV and other organisations often provide expert commentary on the current state of the market, including factors influencing prices and trends.
To access the most up-to-date and specific information from REIV or other sources, visit their official websites to find the latest reports and statistics. Additionally, consider contacting local real estate agents and experts who can provide insights into the current market conditions in the specific areas you are interested in. By combining insights from organisations like the REIV with information from local experts and market observations, you can make more informed decisions in the dynamic real estate market.
Getting the ‘knowledge’
There are several other reputable sources of information that provide valuable insights and advice on the Australian real estate market. Here are some you may want to consider:
· Domain: Domain is a well-known Australian property and real estate platform offering comprehensive property listings, market reports, and insights on housing trends across various regions. Domain regularly publishes research reports and articles on market conditions.
· CoreLogic: CoreLogic is a global property data and analytics company that provides extensive property information, including property values, market trends, and research reports. Their data is widely used by real estate professionals and investors.
· Property Council of Australia: This industry association represents the property sector in Australia and provides research, policy insights, and reports on various property markets, including commercial and residential real estate.
· Realestate.com.au provides the latest news about real estate, finance, property market trends and housing information and insights.
· Local Real Estate Agencies: Local real estate agencies often have valuable insights into their specific markets. They can provide up-to-date information on property listings, recent sales, and local trends.
· Economic Research Institutes: Organisations like the Australian Bureau of Statistics (ABS) and various economic research institutes regularly release data and reports that provide insights into broader economic conditions that impact the real estate market.
· Mortgage Brokers and Financial Advisers: Mortgage brokers and financial advisers who specialise in real estate can offer guidance on property market conditions, financing options, and investment strategies.
· Online Real Estate Forums and Communities: Online forums and communities, such as Whirlpool, provide a platform for individuals to share their experiences, ask questions, and discuss real estate market trends in various regions.
When seeking information from these sources, it’s important to verify the accuracy and relevance of the data and analysis to your specific needs. Real estate markets can vary significantly by location and property type, so consider focusing on sources that provide insights into the areas and property types you are interested in. Ultimately, a combination of local market expertise, data from reliable organisations, and your own research will help you make informed decisions in the real estate market.
Finally, once you’ve identified a potential property in the ideal location, doing a building inspection is generally a very good idea. A pre-purchase building inspection, conducted by a Victorian Building Authority-licensed builder such as at Houspect Victoria, is a crucial step in the property buying process.
No property is perfect, and minor issues found during an inspection are common, but it is important to uncover any major or costly problems that might affect your decision to proceed with the property purchase. An inspection report gives you a better idea of the extent of repairs needed and associated costs, to then negotiate a lower purchase price or request that the seller make necessary repairs before the sale is finalised. It is an investment in making an informed and confident real estate decision, giving you peace of mind when purchasing.
Buying or building a new property is a complex process, and it’s essential you take your time, conduct thorough research, and seek guidance from professionals, such as real estate agents, reputable building inspectors, and legal advisors, to make an informed decision. Each of the factors to consider may have different levels of importance depending on your unique circumstances, so prioritise what matters most to you in your property search to ensure you make a sound investment and choose a home that aligns with your needs and goals.