Over the past few years, Australia’s thriving property market has attracted investors in droves. However, home owners looking to take the next step up the property ladder have faced affordability challenges in the context of rapidly climbing house prices.
Fortunately for upsizers in today’s market, the slowing state of Melbourne’s house prices is starting to turn this around – which is exactly what Brad Teal Real Estate agent Andrew Butler has been seeing.
An upsizer’s market in Pascoe Vale South
With the price gap narrowing in response to the slowing market, clever upsizers are on the prowl.
Andrew saw buyer optimism through the sale of 50 Carrington Street in Pascoe Vale South on the second of March after a highly successful campaign.
“We had four bidders on the day,” explains Andrew, “but we were overwhelmed with the number of people who came through compared with what we’d seen around the same time last year. We had a total of 94 groups through the house in four weeks of marketing.”
The property itself is a beautiful four-bed, two-bath restored villa within walking distance of schools and the tram. While classic in style, the home is contemporary in function, offering plenty of space for a growing family and a truly social environment.
Properties like this would often have more limited buyer interest, but with the price gap closing for upsizers, clever buyers are on the prowl.
“When we compare this to last year,” says Andrew, “these sorts of homes would struggle to get anyone through. Not so much now. This home really ticked all the boxes for families, so anyone looking to upsize, who had their finger on the pulse of the market, came through.”
Making room for a growing family is a lot easier when you upsize in a softening market.
Why is a soft market great for upsizers in Melbourne?
A more achievable price point isn’t the only benefit the softer market is bringing to upsizers.
Pascoe Vale South isn’t the only area where upsizers might be drawn, explains Andrew. With greater downward pressure on house prices throughout the capital, he expects to see upsizers moving against the ripple effect and stepping one or two suburbs closer to the Melbourne CBD. We spoke to Brad Teal himself for more details about the wider market effects.
While soaring house prices were great for many homeowners as their equity rose, they did make it more difficult for anyone looking to upgrade into a larger or more central home. Brad calls this “gap creep”, which is seen when prices rise at a similar percentage across the market. For example, a home worth $750,000 might grow 10 per cent in one year to be worth $825,000. Meanwhile, if you owned that home and were looking to move up into a $1.5 million property, by the end of that same year, the larger home would have increased to $1.65 million.
So while you enjoyed growth of $75,000, the next step on the ladder moved further away with double that growth in terms of dollar value. That gap just keeps getting bigger.
In a softening market, we start to see the reverse of gap creep, as property undergoes a downward price adjustment. We often see greater falls in prices in larger properties, where the smaller homes are relatively protected. So the gap between what upsizers can sell their own homes for, and how much they’ll need to pay to reach the next rung of the ladder, narrows.
A more achievable price point isn’t the only benefit the softer market is bringing to upsizers, says Brad. Other factors that make this an upsizer’s market include:
- Less competition from investors: Across the board, there’s less competition for buyers. While many buyers may be put off by the slowing market, upsizers should take advantage of decreased competition. “If you line up five different buyers,” Brad explains, “each one has a different story – waiting for finance approval, uncertain about the market or highly buoyant and ready to buy. There’s uncertainty throughout the market that makes it easier for confident upsizers to take action.”
- More scope to negotiate: Domain reports clearance rates in Melbourne hovering around the high 40s and low 50s throughout March. With fewer auctions scheduled and many deals being done pre and post auction, buyers are in a good position to negotiate with sellers.
For anyone looking to upgrade to a bigger home, the time to make a move in the market is now. If you’re ready to start the hunt for your next family home, get in touch with the Brad Teal team to learn how to make the most of the current market conditions.