East Melbourne Market Update

16/12/2019

We have often boasted that while property markets across the country surge and decline on the back of economic, domestic and geopolitical tumult, our exclusive East Melbourne enclave remains impervious to these external privations. The recent property market downturn, however, proved us wrong on that account. The scarcity, even during peak years, of supply (properties for sale) in East Melbourne, makes tracking a “true median” price notoriously unreliable, particularly when assessing houses. Data from realestate.com.au suggests the median house price in East Melbourne dipped as much as 22% between October 2018 and May 2019 - some $650,000. These figures are calculated from a historically low volume of house sales results in the suburb. Small sample sizes, obviously, frequently produce anomalous results; the 22% figure, however, correlates with our internal estimates of the decline, which was calculated by contrasting originally appraised prices with actual sales results.

Supply remains tight, but as you are no doubt aware, the tide has turned. Market sentiment pivoted to positive immediately following the surprise re-election of the Morrison Government, as other significant factors converged to help restore confidence in the property market (APRA assessment rate, interest rates, negative gearing/CGT). As the Reserve Bank of Australia signals its intentions, additional rate cuts continue to occupy the lions share of the media’s property coverage. The conversation has now shifted to “fears of a bubble”... I don’t know about you, but I find this relentless sensationalism imprudent.

Over the past quarter, just shy of 30 properties have exchanged hands in East Melbourne. Those results have demonstrated that confidence is returning. While not consistently at the levels witnessed during the 2017 peak, they have been indicative of a measured climb back up towards that summit. A stunning Powlett Street auction result at the weekend (12/10/19) brought a smile to our faces, and should to all East Melbournians. More than 80 groups through an open house on Grey St (yes, a lot of neighbours, but also a lot of buyers), with the promise of auction fireworks, should be seen as a sign that the sun has risen, the smell of cut grass fills the air, the horses are racing - and East Melbourne property is back at the head of the pack.