Real Estate Market Update: Green Shoots Appearing and Opportunities Arise
7 months ago
Real Estate Market Update: Green Shoots Appearing and Opportunities Arise

After a challenging 12-18 months in land sales and building activity, we are starting to see green shoots as confidence begins to return and the market adjusts to a new normal. We are seeing an increase in land sales, however many developers are still holding off on constructing new stages as they focus on selling the titled land they already possess. The introduction of new 7 Star and Livable Building Standards has helped lead to a surge in new home builders signing construction contracts prior to May 1 to avoid the increased costs associated with these initiatives. The changes are seen from amongst the industry to have a positive effect on the market, particularly for downsizers looking to enhance accessibility and reduce energy costs for their next home.

Discussions with local builders support the spike in activity and suggest more individuals are starting the process of buying or building a new home. However, they are typically taking their time and conducting thorough market research, taking a cautious approach to make sure all elements (land, building costs and finance) are lined up. This reflects the current market dynamics and the greater reliance on rusted professionals to provide guidance and advice throughout the process.

The byproduct of slower building activity and undersupply in the last year or two has meant the values of established home sales remain steady. Buyers are generally taking a more considered approach when deciding to purchase and are somewhat price-sensitive, which reflects a cautious but optimistic market sentiment.

"For first-time buyers feeling priced out of the market, alternative strategies like the Rent Invest initiative can provide a viable entry point." - Robert Ketterer

Winter typically sees a reduction in the supply of homes coming to market. This seasonal trend creates a unique opportunity for sellers willing to list their properties during the colder months, as the lower level of choice for buyers can increase the chances of a stronger sale result. People still need to purchase homes during this time, making it a strategic period for motivated sellers.

Interest rates continue to be a key factor in decision-making and have been a hot topic in the media, with widespread debate about their future direction. There are mixed opinions, however, there is a growing confidence that rates may drop towards the end of 2024 or early 2025. This potential decrease could further boost market activity as borrowing costs become more attractive.

Broadly across Victoria, we are seeing a significant challenge in the short term in the investor market. Investor numbers remain low, yet there are compelling reasons to consider property investment. The upside potential for capital growth, combined with low supply and record-low vacancy rates, offers strong rental returns. Population growth and housing shortages will continue to sustain rent values, reducing the risk associated with property investment. Engaging a professional property manager can further aid investors in selecting properties and locations with broad market appeal.

For first-time buyers feeling priced out of the market, alternative strategies like the Rent Invest initiative can provide a viable entry point. By purchasing an affordable property to rent out while continuing to rent or live at home, individuals can establish a foothold in the market and build towards their ultimate real estate goals. Additionally, co-investing with siblings or parents using property equity can be a strategic way to start a real estate journey. It is important to discuss such arrangements with an accountant and solicitor to ensure they are suitable for your individual circumstances.

In summary, the current real estate market presents both challenges and opportunities. As confidence returns and market conditions evolve, informed and strategic decisions will be key to capitalising on the potential for growth and success in this dynamic environment.

Similar Articles