An unpredictable market – it’s not just the weather

March 29, 2024 BY

Gareth Kent, Director Preston Rowe Paterson on where the property market could be heading.


Who would have thought we would be suffering a run of 40-plus degree days in March; unpredictable!

One thing the weather and the property market have in common at the moment is the inability to predict what’s going to happen next.

There is a very weird feeling out there right now and I, like many other property nerds, are having a hard time working out if it is about to boom or bust! I just think it could go either way right now.

The term “two-speed market” is probably the best way of explaining our current property climate. Over the past month we have seen a number of magnificent properties come to the market and successfully sell at or above the reserve price. These are the high enders – selling above $1.5 million.

Properties such as 2/13 Balmoral Cresent, Rippleside, a four-bedroom townhouse with absolute water views, that has sold for $1.75 million, 18 Eastern Beach Road Geelong, which sold before auction for $4.25 million, 22 Virginia Street, Newtown, which sold for $3.105 million, 80 Scotchmans Road, Bellarine, which sold for $6.5 million, 50 Bond Street, Newtown which sold for $2.165 million, a townhouse in Nicholas Street, Newtown on only 343sqm sold for $1.6 million, and a palace of a property in Rhinds Road, Wallington which sold for $3.5 million.

Our market is traditionally led by the big movers, when the market started to wobble post-interest rate rises, the volume of high end properties fell dramatically. When the market turned upwards in 2020/21 on the back of the COVID migration, it was again the high end properties that started to sell.

However, as another sign of a “two-speed market”, I note that the coastal high-end market is not moving in the same direction. The Surf Coast market has experienced a dramatic fall in sale volumes above $1.5 million, however this region has more properties on the market above $1.5 million by almost double, than those in the urban Geelong or inland locations

Interestingly, demand for rentals throughout the region appears to be holding strong, according to PropTrack’s data, vacancy rates are still near record lows and median advertised weekly rents continue to climb.

Regional Victoria recorded an average increase of $120 per week in rental over the last 12 months alone! That’s putting enormous pressure on the lower socio-economic households forced to rent, an additional $6,250 per annum.

And as discussed in our recent article, nearly 300,000 properties across Victoria will receive a land tax notice for the first time this year, as a result of the changing of the Land Tax threshold and other inclusions.

So with increased costs of living, increased taxes, why is the big end of town starting to cash in?

My explanation is that these type of purchasers are more in tune with the wider economic picture and recognise that the market is ripe for investing. These buyers are seeking to secure property at the bottom of the market, with expectations of another cycle to follow.

Optimism comes from knowing the broader economic picture, and speculating on what happens next. Retail turnover increased by just 1.1 per cent over the year to January. GDP fell by -1 per cent over the past year. Overall, the macro economy has ground to a halt and maybe going slightly backwards. This is likely to allow the Reserve Bank to adjust the cash rate in the second half of the year, and from a purely property market perspective, that will start the movement off the bottom. And those with the capacity and will to purchase at the bottom of the market will reap the growth that follows.