Will it be a buyer’s market or a sellers market? We interview a Melbourne buyer’s agent on where he sees the next 12 months of real estate prices going. Mark Ribarsky, is the founder of Wise Real Estate Advice and Property Managers Melb
How did you see the 2018 market?
‘The year that was seen as one of Melbourne’s longest running real estate booms, has now come to a screeching halt.’
‘Prices for good real estate remained steady while property that wasn’t an ideal listing, in the eyes of the buying public, experienced minor price reductions to achieve a sale.’
‘The way real estate agents sell a property switched from an auction to private sale. Melbourne auction clearance rates, at the start of the year, was hovering above 70%, it now at around 50%.’
‘This was very similar to drops experienced in 2011 – 2012 real-estate market where auction rates were hovering between 40% and 50%. Property prices declined between 10% & 15% depending on where you where buying.’
Does this mean prices will drop further next year?
‘It’s important to recognise that the market can’t always go up. A market that doesn’t flatten out or go down creates real estate bubbles and market price volatility. This is something we have never seen in Melbourne or Sydney over the last five decades.’
‘Over the last two years, the Australian government and the major banks have tightened up lending, naturally slowing down the market. All the banks have also increased interest rates once over the year. These efforts have cooled a hot market.’
‘Importantly, a flat market doesn’t mean prices are dropping. Over the last 12 months a number of suburbs still increased in price meaning buyers out-numbered sellers, enough to push prices up.’
‘It creates a fair market for buyers and sellers. Buyers have the opportunity to choose a good property and pay a fair market value. A few years ago many buyers were desperately buying anything, paying well over market price for property that didn’t necessary merit it.’
What is your 2019 Forecast?
‘Next year we have a federal election looming with big threats to end negative gearing if a new government takes the reins.’
‘What will happen to real estate if we get rid of negative gearing? The truth is, nobody knows. There are major concerns that rental prices will go though the roof! It is speculated that investors would stop buying real estate hence creating a rental shortage and decreasing real estate prices.’
‘If the government doesn’t change, I would expect a repeat of 2018 with a slight decline in property prices.’
‘These market conditions will favor property buyers slightly but over-all, create a healthy buying and selling real estate market. ‘
Why won’t the market drop further?
‘Without going into too much macro economic detail, this year Melbourne tipped Sydney and all of Australia as the fastest growing city by population. More people are viewing Melbourne as the place to go for employment and lifestyle. A booming population creates a strong demand for renting and buying real estate, as people always need somewhere to live.’
‘Victoria has one of the lowest unemployment rates and one of the strongest preforming economies.’
‘In addition to the above, the reserve bank is tipped to leave interest rates unchanged over 2019.’
Is it a good time to get into the real estate market?
‘As always, an election year causes a market to tighten because of the uncertainty around a new government. Melbourne’s economic credentials are strong and should be able to weather the storm. A flat market means fewer buyers to compete with and better vale real estate. Hence a savvy buyer would be wise to act rather than waiting for the market to pick up again.’