Agent predictions for property in Victoria in 2012
What exactly does 2012 hold for the property market? After a slow year in Real Estate in 2011, predictions for a better year ahead are talk of the town. We interviewed 3 key industry experts – Tim Fletcher Executive Chairman of Fletcher’s, Paul Stoner CEO of Biggin & Scott, Brad Teal Director of Brad Teal & Sean Cussell, Director of Marketing & Brand of Marshall White to get the inside view on the Victorian market for the year ahead.
Broadly speaking, what are your expectations for Real Estate in 2012?
Tim Fletcher (Fletchers): Things will not change overnight but I believe 2012 will slowly gain momentum as people are beginning to move again, particularly with the interest rate cuts and more realistic prices. Foreign investors who have little confidence in their own country’s future will continue to view Australia as a safe haven for their funds. As affordability has improved and there are lower interest rates, there is evidence that first home buyers are returning to the marketplace and I expect this to continue.
Paul Stoner (Biggin Scott): Early signs are that the market is getting on with life; people still want to move up, move down or sideways depending on their circumstances. Choice last year was the thing that was missing with sellers waiting or holding on to see how the market was being affected. Early signs are positive and we expect for there to be more homes on the market in the first quarter of the year, presenting opportunity for those buyers that have been waiting to make a purchase.
Brad Teal (Brad Teal): It is my expectation we will have a consistent market place that will build on the latter part of 2011. The volatility of any market place is what causes uncertainty and if we can have a 12 month period of relatively consistent interest rates, no wild fluctuations up or down in prices and a 60% to 65% clearance rate at auction, I believe the market place will be in good stead for years to come. People get spooked by the volatility of the share market and it’s that volatility that the property market needs to avoid.
Sean Cussell (Marshall White): The positive momentum that began in the December quarter last year looks likely to continue into 2012. Consumer sentiment has turned around and people that had adopted a “wait and see” attitude last year will be more inclined to commit this year before prices begin to rise again as predicted in the second half of the year. A resolution in the European situation and further interest rate cuts, which both look likely scenarios, will only act as a stimulus to the property market.
What are the opportunities for buyers to keep an eye out for in 2012?
Tim Fletcher: Housing prices in desirable areas are as low as they will ever be so if the recovery continues my advice is not to procrastinate but to buy now. Look for areas with new infrastructure and employment opportunities as well as older areas that are becoming recognised for one reason or another (freeway access or simply good development and proximity to the city). Think of the suburbs that used to be undesirable such as Port Melbourne and St Kilda, their ‘day’ certainly came!
In addition baby boomers will perhaps have the biggest effect on the market as they scale down and change their lifestyle so the trend for easy, low maintenance lifestyle properties will grow. The desire for units/townhouses/apartments close to facilities and transport is expressed not only by first home buyers but also by our ageing population and migrants who are used to high density living.
Paul Stoner: As they say fortune favours the brave, as we saw in the late 90’s and early 2000’s the people that take advantage of opportunities in real estate will be the winners. An area to look out for at the moment is inner city one bedroom apartments. With a drop in prices during 2011, they represent good value showing high returns against the buy price. The other area to keep track of is the top end of the market for people wanting to up-size.
Brad Teal: I have a strong belief that the market has become very architecturally specific, in that people either want an ultra-modern home, or a period influenced home. There is a whole generation of homes built in the 1960’s and 1970’s, many on good allotments of land, but because they are somewhat nondescript in their architectural styles, people are passing them by. Cream brick veneers or coach house brick homes built in quite good locations are being overlooked and there are some good opportunities to pick up sound floor plans on good allotments, but the style is out of favour.
When it comes to location – in north-west of Melbourne, most areas have seen median prices in 2010 / 11 decline by 5% and 10%. I believe most people see this as the correct adjustment relative to the market and we are seeing people now buying, based on the belief that prices have fallen as much as they will in the short term. Finally I also see the first time investors remaining in the market place as we saw in 2011, buying one and two bedroom flats between $280,000 and $500,000 to start their investment portfolios.
Sean Cussell: In the first half of the year there will be significant opportunities for people looking to upgrade, investors and first home buyers. There are many very well priced properties on the market but with prices trending upwards there is only a narrow window of opportunity for buyers to take advantage of the current conditions.
More specifically, where are the key suburbs where you predict growth in 2012?
Tim Fletcher: The key suburbs being recognised now are those with great infrastructure on the fringes of suburbs that people had aspired to but could not afford. People should investigate the previously unrecognised western suburbs (Sunshine, Braybrook, etc.) that are quite accessible to Melbourne and are finally gaining momentum. Blackburn, Box Hill, Forest Hill, and Vermont still offer opportunities for those who act quickly as once the market starts to move again prices will inevitably rise. Suburbs served by the new Eastlink such as Ringwood, Wantirna and Wantirna South with the easy access it provides to Melbourne’s CBD should also see an increase in values.
Paul Stoner: Established areas that do not rely on first home buyers should see a slight return of confidence. Keep an eye on affordable bayside areas like Aspendale, Chelsea, Mordialloc and surrounding suburbs for growth.
Brad teal: I have always been a great believer in living in a strong streetscape. Live in a strong streetscape and there is invariably a high level of home price which keeps values up. Other important ticks needed on the criteria for buying should include, close to recreation, public transport and local schools. Suburbs to keep an eye on are Oak Park (so close to the train and city link), Sunbury (new train station to be built there soon) and Moonee Ponds (very strong and stable median price, plus only 8 to 10 kilometers to the CBD).
Sean Cussell: The Boroondara, Stonnington and Bayside areas have a perennial appeal for families with their tree-lined streets, proximity to good schools and transport and safety. There is only a limited supply of property in these areas so there will always be a demand for good quality family homes in these areas. As the baby boomer demographic increases in age there will also be greater demand in inner South East and Bayside suburbs as empty nesters take the opportunity to downsize and move closer to the city.