The first question to ask is; “Has this happened before”?
Of course it has.
The second question is; “Should I be worried?”
The answer is ‘No.’
Property prices in Melbourne have unquestionably soared over the past few years as it has done in the past and property prices will probably continue to fall over the next 18 months, as it has done before.
I am not sure what all the fuss is about as Melbourne property prices have a cycle that they go through. In fact this market slowdown is well overdue.
Let me prove my point.
In the mid 70’s I was selling a house and land in the region of $15,000. Yes, you are seeing right. $15,000 for a house and land in the City of Knox.
Fast forward to today. The median price in the City of Knox is around $700,000.
Do the maths. How many times has it doubled in 40 years?
The median price of a home has doubled over 5 times in around 40 years.
Morgan Stanley also believes that the housing market will continue to weaken. They have reached this conclusion by using their Australian housing model (MSAHM), which clearly shows the housing market weakening. The basis of their findings takes into account a number of factors including the delicate balance of supply and demand, mortgage serviceability (this is affected by interest rates and employment), credit supply, house price expectations and rental market conditions.
While Morgan Stanley and CBA believe prices will continue to fall, they don’t believe the property market will crash. After several years of continuous growth, the market is typically going through a consolidation phase. Their expectation is a fall of about 10% in Sydney and a little less in Melbourne.
This correction in house prices should not come as a surprise. Prices cannot rise indefinitely without a breather. What we are experiencing is the start of the mid-cycle slowdown in the 18-year real estate cycle.
If you are thinking of selling and buying in the current market, it really doesn’t matter what the market is doing because it’s all relative. You may sell for less but you will also be buying for less.
If you are currently selling and you are not realistic about your price, you should consider taking your property off the market and hold off selling for a few years. However, my advice is that if the price you get in today’s market allows you to make the move to a better lifestyle, don’t put your life on hold for a price that the market is not willing to pay you. That price you want obviously doesn’t exist; otherwise, your property would have sold.
The Melbourne market is solid as a rock and predictable.
If you are considering selling and want to be sure of a good result, make sure that you email Bertram@propertyadvocacymelbourne.com.au and I will be happy to send you a complimentary copy of my eBook.
“How to get the best result, when selling your property”
A quick and easy read that will ensure the best result.