A year in focus: trough to now

Only ten months’ following our last credit-inspired downturn, COVID-19 struck our shores and tipped cold water on a reasonably vibrant market. Unsurprisingly, the lockdowns, immediate panic about job losses and the state of the economy, and news out of Europe rattled many a buyer.

Many of our searches were placed on hold.

One of the quickest troughs eventuated, however. Confidence was slightly renewed as Australia seemed to buck the international trend in relation to COVID-19 case numbers, and the small window of bargain buying literally lasted for weeks, not months.

Little did we know that 2021 would resume with a headiness and desperate competitiveness, but now that we are exactly one year in from the depth of that short-lived, most recent market trough, it is interesting to reflect on the past twelve, crazy months.

Fast forwarding to today, we can overlay the value growth as a result of combined discounted purchase price and recent capital growth for a handful of our March/April 2020 acquisitions and reflect on the year we have had in Melbourne.

This first COVID-19 acquisition; a Californian Bungalow in Ascot Vale was secured at auction the very day following the declaration of a pandemic.

I received many panicked calls and emails in that troubled, 24 hour period and in tune with other buyer’s sentiments, our buyers for this particular property also downgraded their budget on the eve of the auction. We had anticipated tough competition, but to reflect the mood, the property passed in to me and later sold for $1.48M. Situated on a generous 627sqm allotment of land, Last weekend, an unrenovated, single fronted cottage on less than half this land sold for a similar price.

In the same, panicky week fortnight in 2020, this stunning brick Edwardian beauty was secured in Brighton for $2.69M.

A subsequent land sale with identical orientation and 25% greater size in this favoured pocket has since sold for a price greater than this exquisitely renovated property.

It is warming to recall an exciting online auction result for a young couple who had missed out on two other Oakleigh houses in a concerted effort to buy their own home.

This well-located 1920’s dwelling sold under the hammer, and with less competition than initially feared at just the right time for this special duo. Secured for $1.125M, they have likely experienced an equity gain of some $200,000 in this short time. Comparable properties are now selling in excess of $1.3M in this locale.

Last, but not least is a home we also featured in a write up about a bold Sydney investor who decided that the opportunity to invest during COVID-19 felt right for him.

This impressive investor with a risk profile that wasn’t aligned to the majority at the time is the the investor we remember who did time the market well.

Secured for $900,000, and later repainted, this cute two bedroom plus study Victorian cottage with a north facing rear in Yarraville village proved indeed to be a good purchase for our client.

Some eleven months later, a property opposite, on slightly less land and offering a south facing rear orientation sold for $70,000 more – and could arguably be described as a serious renovation project.

There is no doubt that the window of opportunity last year was seized by only a few brave buyers, but the opportunity following this, in a market fuelled by low interest rates, high consumer confidence and government incentives has been the real reason for the stark gains over the last twelve months.

Particular economists’ and media claims of colossal price falls have been incorrect at best, and misleading at worst.

Until macro-prudential changes are employed, we can anticipate this market heat remaining.