Melbourne's market recovery continues as homes are 'snapped up quick'

The meteoric rise of Australia's property market in 2021 has been talked about all over the country, but the story is a little different in Victoria. 

The extended lockdowns last year set the state's economic recovery a fair way back compared to its neighbours, and the lingering uncertainty also stifled consumer confidence for months after the stay-at-home orders were lifted in October. 

According to CoreLogic, Melbourne's median dwelling price rose only +2.2 per cent in the year leading up to May, a substantially smaller rise than all other capitals.

Fortunes look to be changing this year, though, as the city's home values have surged up +6.3 per cent so far in 2021 and sellers are finding a wide range of buyers at their doorsteps. 

From central Melbourne to the outer edges of the city, big sales are returning and competition is hot. 

We checked in with a couple of agents who are seeing the upturn in full swing. 

Carlton North terrace in need of 'a lot of work' zooms past reserve

John Costanzo, agent and auctioneer at Woodards Carlton North, has been seeing some unexpectedly strong results just north of Melbourne's CBD. 

597 Lygon St in Princess Hill, tucked between Fitzroy and Carlton North, was one such success story lately. 

"It was a two-bedroom Victorian terrace on a reasonable block of land but totally unrenovated, it just needed everything done," he said. "Rewiring, reflooring, replumbing, you name it. It was pretty much to demolish from the front facade and start again."

Despite the upside of having a decently sized backyard and a desirable postcode, the house, which Mr Costanzo said sat on a busy intersection with a buildup of traffic at peak hour, wasn't one he thought would be a big hit. 

"It had a little lounge which wasn't full width, then you go through to a little kitchen with barely enough space for a table."

Ultimately, his price expectations sat around $1.3 or $1.4 million, still a sizeable number for a two-bedder thanks to this year's market growth. 

"In the city, for period homes, the market's had a bit of a resurgence after Covid. There was a shortage of stock, people weren't putting their properties on the market last year, and a few have come on board this year and the prices have been going quite well."

Mr Costanzo said the road to auction didn't tip off the upcoming success, noting that 10 groups came through the first open home and only a handful of buyers—"a wide demographic"—attended each weekend after that. 

Ahead of the auction, he said most interested parties were looking around the $1.2 to $1.3 million range, but the weeks of preparation had been key.

"I think if you put the right sort of work in and you negotiate well with—even though it's an auction, you've got to people thinking the right way and getting them to the auction."

On the day there were three bidders in the mix, and despite the muted response throughout the campaign, competition was hot in the moment and the hammer ended up coming down after a winning bid of $1.592 million. 

"An investor ended up buying it, which surprised me," Mr Costanzo said. "That kind of thing usually goes to young professionals, either singles or couples who want to move into the area long term.

"Very rarely do you get investors competing with them because they're normally buying with their head, not their heart, and a home buyer can always pay that bit more because, in the long run, it'll all work out."

The sale could be a sign that investors are beginning to have a greater presence in the marketplace again. 

It's also an indicator that the Melbourne house market finds itself in a strong place in general. 

"At the moment it's going quite well, there are plenty of buyers," Mr Costanzo said. "Interest rates are down, so that helps, and people have access to more money so they can push themselves a bit harder to secure that property."

Homes on Melbourne's fringe draw a mixed bag of buyers

"It's a seller's market in Caroline Springs" exclaimed Nathan Hunt, senior sales executive at the Sweeney Estate Agents outpost that services the outer western suburb of Melbourne. 

"It's great at the moment, there tend to be a lot more buyers than properties on the market."

The suburb presents a more affordable option than many locales closer to the CBD, and by attracting plenty of first and second home buyers, Mr Hunt said it's turned in some very pleasing sale results. 

One of those was 5 Dartmouth Court, an American-style four-bedroom, two-bathroom, double garage house with green surrounds and close proximity to the newly developed Sprinklake Shopping Centre. 

The property featured a formal lounge room, extensive decking and pergola including spa, and a generous back yard with a workshed and room for a pool. 

Originally seeking upwards of $850,000 for the sale, the first Wednesday night open home attracted 19 groups, with another 10 coming through that Saturday. 

"We received three or four offers, people were competing on it and putting in higher offers, then it came down to a couple of buyers in the end," Mr Hunt said. 

The combination of the tightly held location and the property's appeal ended up driving the final price up to $910,000, with a young couple upsizing to their second home making the winning offer. 

"Caroline Springs is a bit more affordable compared to the pricing over in the Eastern Suburbs," he explained. "You get a bit more bang for your buck, getting a large home on a good-sized block and having some change in their pocket."

Another sale up in the northern end of the suburb at 14 Cullen Terrace ended up fetching an unexpectedly good outcome for Mr Hunt. 

The vendors were hoping for "anything up in the high 500s" for their stylish three-bed, two-bath, single-garage home sitting within easy reach of parks, schools and shops. 

The house drew a wide cross-section of buyers including first home buyers, investors and downsizers, netting 40 groups at inspections in less than two weeks. 

"It was a smaller, low-maintenance block," he said. "Those types of properties are very desirable for young couples and first home buyers, investors—because they're always good to lease out—and for an older person or couple who don't need that large family home on a big block anymore."

As it turned out, the broad appeal made for a strong sale. Against the agency's quoted price of $560,000 to $590,000, the final offer came in heavy at $623,000. 

Mr Hunt pointed out that these are still attractive numbers to those coming from inner-city suburbs.

"Anything that's priced well, that's presented well, is certainly being snapped up pretty quick," he said.

The months ahead look promising

So what do the agents see happening as things get colder? Mr Costanzo thinks the market will be keeping warm. 

"I think the next few months especially over winter it will continue to be strong, because traditionally people sell in autumn and spring, and in winter we don't have a lot of new stock coming on," he said. 

"So the lower stock levels will keep prices humming along and the market pretty strong, very competitive. 

"At some point, like in any strong market it does level off, but the areas that I work in—fortunately for me and for vendors—they're not the sort of areas where you have massive fluctuations."

He pointed out that, for a range of professionals—"lawyers, doctors, university professors, that sort of thing"—many incomes likely weren't hit that hard during Covid, in part thanks to broad government assistance and savings being forced by the period of lockdowns and border closures. 

When combined with record-low interest rates, Mr Costanzo thinks there will continue to be more buyers than stock for some time. 

Mr Hunt also foresees a solid few months ahead. 

"I think it's going to be quite steady, he said. "With the demand at the moment, there'll probably be a few more properties coming to the market I'd say in the next 3 to 4 months, which may lead to a little bit less competition and prices plateauing a little bit.

"But the demand is still strong right now, so—no crystal ball, but I think it's going to stay fairly firm because of the amount of buyers that are interested."

Particularly in spots like Caroline Springs, a lot of the recently developed property has already been snatched up.

"There's not a great deal of land left around these areas. A lot of people don't want to buy their block of land and build and go through that process, so they're looking to buy an established home in an established area. So if you wanted to get into those areas where they're established, you normally have to pay a bit more of a high price."