When the apartment market turns…

If the apartment market turns this year, what should you do and when should you act?

Reading the property press over the summer break caused a lot of disheartened sighs and groans from property owners. Lots of stories about the fall in property values over the last 12 months. Good news for buyers. Owners quickly turned the page and looked for better news.

Headlines like these peppered the papers in January.

• Where are prices falling most
• The good news for renters and bad news for mortgagors
• House values slide amid fears Trump trade war will hit interest rates
• Where Melbourne home owners are selling up
• How housing went from being a sellers’ market to a buyers’ market

Some of these stories are based on research looking back at 2024.

After moving from the beach to the desk in mid-January (😢 – had to get back to work sometime) we have noticed a slight uptick in buyer activity. Even investment buyers are sniffing the air and starting to emerge from hibernation. Especially interstate investors.

This activity might be summer love that will fade, but with interest rates tipped to fall soon (RBA meet on 18th Feb) it might also be the green shoots of a turning market.

We know Albo will be preying hard for an interest rate fall to help keep his job. A change of federal government can sometimes also be the impetus for a market shift.

Navigating a changing market: From buyers’ to sellers’
It’s unclear when the market will turn, but when it does buyers and sellers often need to feel their way in the dark.

Each property type and suburb turn at different times and at different speeds. There is a fear of missing out, selling too soon too cheap, paying too much. You don’t want to run too far ahead or be left behind.

Right now, it’s still clearly a buyers’ market. But as the market improves, more sellers will enter the market which adds to supply and buyer choice and tempers it’s rise.

You can tell if it is a buyers’ or sellers’ market by who holds the power in the negotiation. Who has time and choice. Does a buyer have several properties to choose from or is a seller getting multiple offers?

Research is too slow and retrospective to pick the change. It’s agents on the ground that see it first. If you’re looking to buy or sell, understanding this shift will help you make better decisions.

The softer market has helped buyers
Over the past year, Melbourne’s median dwelling prices have only softened slightly. They have however fallen 6.4% since their peak in March 2022. (Source: CoreLogic).

This has created an opportunity for both investor and owner occupier buyers. Rising rents combined with falling values has made investment returns more favourable. Unfortunately, sellers are bearing the cost of higher interest rates and increased government charges in the form of lower sale prices.

With interest rates expected to ease in 2025, conditions may start shifting in favour of sellers again. While the impact of an interest rate fall on the cost of debt may be minimal, it will be an important directional shift and confidence boost for the market. for now, it’s still a great time for buyers to act while they have choice and time.

Investors are starting to see Melbourne as undervalued compared to other capital cities. This growing interest will contribute to future price movements.

Sellers can overshoot the market.
When a market turns it is tempting for sellers to assert control and jump up their pricing. However vendors should apply a measured approach to pricing.

Markets move slowly and take time to turn. Even as the market turns buyers will still have financial limits and often choice.

A common mistake sellers make is setting their asking price too high, expecting that prices will continue to climb through the selling period. If your property is overpriced, it will sit on the market while other, more competitively priced properties will sell.

Even if the market does rise through the selling period the competitive process of negotiation or auction will maximise the selling price which may be above your agreed reserve selling price.

More listings mean more choice for buyers
As the market improves, more properties will be put up for sale. This gives buyers increased choice and tempers the rise. If you’re selling, make sure you remain realistic on price.

Find the right balance
If you’re thinking of buying or selling, it’s important to:

• Get current and specific advice on recent market activity. This can be anecdotally about activity or more specific recent comparable sales.
• Work with an experienced agent who understands the pace of the market shift for your property type.
• Be realistic about your pricing and don’t run too far ahead of the market or a rise that hasn’t yet happened.

If you’re a buyer, now is a good time to take advantage of current conditions before competition intensifies.

The key to navigating this shift successfully is staying informed and making well-timed decisions. If you’re looking for guidance on buying, selling, or investing, feel free to reach out—we’d be happy to help.