Which property segments are good buying?

The media would have us all believing that the entire property market is in dire straits right now, but the truth is the median price shift nationally has not been as significant as portrayed. As shown below in this CoreLogic chart, the annualised national change year on year is less than one percent. Granted, the declines have eroded much of 2021 gains, but the market is not in free-fall.

There are, however some dwelling types that have been more negatively impacted than others.

The supply chain woes and builder/materials shortages have hampered the best laid plans for renovation. In tandem with higher interest rates and tight credit, many sites that would typically have appealed to ‘land bankers’ have experienced a drop in demand. Some builders are liquidating their sites with plans and permits, and Mum and Dad buyers with grand plans to renovate are currently hibernating.

The other contingent who are quite rattled by media hype and the possibility of price drops are first home buyers. They remain the uninitiated group when it comes to rising interest rates. For eleven years we didn’t have any upwards movement from the RBA’s rate decisions, and now each rise feels like a blow.

Typical first home buyer dwelling types include apartments, villa units and townhouses. Reopening our borders after subsequent lockdowns in Melbourne gave us a hint of demand for apartments and units as many decided to adopt a ‘city pad’ in tandem with their coastal or rural holdings. But the bounce-back has been impacted by first home buyer lack of participation.

Based on larger price falls for these two segments of the market, which are the winners?

Four words describe the winners: period, renovated, family homes.

We’ve consistently experienced tough competition for every well-located family home we’ve assisted clients with, from Melbourne’s leafy east to the trendy parts of Geelong, (and everything in between). We want more bedrooms, a stylish design, a great kitchen and no work to be done.

Buyers are thick on the ground for this particular product, and vendors are loathe to part with their renovated homes if they can’t see a clear path forward to buy their next home. We have a supply and demand issue which is favouring vendors, but only in this segment of the market.

This strange situation we find ourselves in can only be described as a multi-speed market.