How to navigate Melbourne’s hot property market

With never-before-seen crowds at open homes and bumper sales amid a stock drought, the 2021 market is off to a red-hot start.

And while the market may have come to a temporary halt with Premier Daniel Andrews’s circuit breaker lockdown announcement on February 12, agents are tipping the fiery conditions will continue.

McGrath St Kilda agent Jesse Jones said it had been normal to see more than 100 groups through an open for inspection.

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“Buyers have done all their research in 2020 and know what they want,” Mr Jones said. “They’re particularly aggressive this year and a lot of properties are being sold prior to auction because of buyers putting their best foot forward.”

Statewide Property Advocates director Brian Capp agreed a fear of missing out was spurring on the competition.

“It’s driven by low interest rates, government grants, stamp duty discounts and very little supply,” Mr Capp said.

“Just about every auction has five or six bidders and you can see there were actually more people in the crowd who didn’t get to put their hand up.”

These conditions could make sealing a deal tricky for budding buyers.

So we have asked Victoria’s top property experts to spill the beans on how to land your dream home in a frenzied market.

LOCATION MATTERS

O’Brien Oakleigh director Max Martinucci said buyers must be realistic about what their money could buy as housing affordability worsened across Melbourne.

“Any comparable sales that are four weeks ago or longer are probably not comparable any more,” Mr Martinucci said.

He suggested those on a budget set their sights a suburb or two slightly further out.

“There’s going to be an overflow of buyers from more expensive suburbs, like Hughesdale, Bentleigh and Ashburton, out into the suburbs,” he said.

BUYERS BEWARE

Phillip Webb chief executive Anthony Webb said buyers should have “their ducks in a row” before pouncing on a property.

“Do a building and pest inspection before you put your offer in,” Mr Webb said.

“Terms and conditions are really important in a time like this, so a vendor is more likely to choose a buyer with an unconditional offer.”

Mr Martinucci warned househunters to “stay away from high-density” investments and “try to buy as much land as you can” for future capital growth.

And to avoid being swept up in the FOMO to the point where they overspent, he suggested they “consider getting advice from a professional, like a buyer’s advocate, when stretching the budget”. “They know what they’re talking about more than just friends, or mum and dad,” he said.

MAKE THE FIRST MOVE

However, Mr Capp said an “aggressive” early offer that stretched the budget slightly could convince a seller to strike a deal before sending their home under the hammer.

“Vendors have got up to six buyers interested at the moment, so it makes sense they’ll want to go to auction,” he said.

“What people also have to look at is the capital gains made in eight to 10 years’ time, rather than the extra dollars paid now.”

WHAT ABOUT VENDORS?

Mr Capp said vendors should not wait for the traditional autumn or spring selling markets to list. And those living in areas dominated by private sales should consider going to auction.

“(Some) agents are starting with a private sale campaign but getting to a situation (where they have) five or six buyers,” he said. “It leads to a private auction or an auction-type procedure over the phone or Zoom, making the vendor a lot more money.”

Sellers also needed to do their research to ensure they set a realistic reserve, Barry Plant chief executive Mike McCarthy said.

“Check your local conditions carefully and don’t get carried away by one good result in your area,” Mr McCarthy said.

Vasilis and Mari Sarafidis are among the many inner-city residents who have decided to make a move after lockdown.

They and three-year-old daughter Alexandria are packing their bags for Greece to move closer

to family.

As a result, their three-bedroom apartment at 91/108 Greville Street, Prahran, is going under

the hammer with a $900,000-$990,000 price guide.

“We’ve had a good number of groups through for inspections and a few have already asked for the contract,” Mr Sarafidis said. “It seems like the market has little supply at the moment but lots of demand, which is really good for us.”

Only steps from Prahran railway station and the suburb’s popular market, the property would deliver a solid rental return if it failed to sell, he said.

McGrath St Kilda agent Jesse Jones is confident of a sold sticker going up soon.

“It’s been a really popular choice, with more than 90 groups inspecting the home,” Mr Jones said.

“There’s a window of opportunity for buyers at the moment before prices continue on their way up.

“With interest rates so low, there’s no better time to get yourself in the market.”

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