Dear Property Investor,
Did you know that the Melbourne property market has moved in the decline phase of the property cycle?
Melbourne’s median house price fell 0.9 per cent in the June quarter, Domain’s latest house price report showed, to $1,074,369.
That followed a similar 0.9 per cent drop in the March quarter.
And as such, here are the suburbs that have declined the most over the last quarter;
The biggest fall in house prices was in exclusive Toorak, where the median fell 16.9 per cent over the year to June, to $4.57 million.
In Lower Plenty, where people fled during Melbourne’s COVID-19 lockdowns for more space, house prices fell to $1.2 million – an 11.5 per cent fall over the year.
There were falls in a range of affluent inner suburbs from Armadale (down 8.9 per cent) to Brighton (down 4.5 per cent) and Hawthorn (down 3.7 per cent).
But here is the key distinction; these falls are just a decline in the median price of each suburb.
The median price (which is simply the price comparison of the middle-priced property sold in one market, compared to the middle-priced property sold in another market, or date), is perhaps one of the most misleading ways to measure the property market short to medium term.
And the median price movement is the main aspect that is more publicised by the largely uninformed media and so-called, academic experts, than virtually any other market indicator.
The main reason being, is that during a declining market, where auction clearance rates are low and consumer sentiment is negative, vendors of the best A-Grade properties in the best sought after suburbs simply take their properties off the market.
Mainly because they cannot get the price they want for the property, and more importantly they have no mortgage secured against the property and hence, no real pressure to sell.
When this happens the volume of available stock in these top desirable suburbs shrinks, in some instances by up to 20 and even 30 per cent, and as a result the median price moves to the left, in other words, declines.
But here is the main point; during the same time as these above-mentioned suburbs experienced a decline in their respective median price, other suburbs BOOMED at the same time!
That doesn’t make sense, right?
The media and novice uneducated investors would like to believe that the entire Melbourne property act as one homogenous property market, with uniform median price movements across every sector and market…
Not so, Grasshopper!
There are, in fact, 8 distinctive property markets that make up the entire Melbourne property market, each operating very independently of each other…
Do you know what these markets are?
And there are also individual markets within markets, which, in a lot of cases act counter-cyclically to the main general median price movement of Melbourne.
For example, did you know that in Aspendale, a waterfront property recently sold for $13 million dollars? Compare that to a similar size home, less than a kilometre away for two million dollars in the same suburb. There’s a vast difference.
So, permit me to ask you a question…do you know why TOORAK declined by 16.9 per cent over the year to June, to $4.57 million?
And why Bonbeach increased by 35.5 per cent over the same time period to $1.17 million?
And more importantly, do you know what data you need to source and understand in order to get this answer?
If you cannot answer these above questions honestly to yourself, then ask yourself, how much money is currently being left by you on the table due to your inability to conduct effective market due-diligence and research?
You must remember that Wealth is ALWAYS transferred from the Uneducated to the Educated…especially at the bottom of the market.
So, let me ask you a very serious question…
When is a good time to get educated?
Yours in Success,