Asking prices are the guide to the residential market

WITH GARETH KENT, DIRECTOR PRESTON ROWE PATERSON

I want to dedicate this article this week to my mate, Bob, who passed away on Monday afternoon.

It is ironic that a beautiful animal that can provide so much love dies of a swollen heart. Mine is broken.

Spring is here, and as expected the volume of listings on the market has increased across the entire region. It’s quite exciting, as an observer, to witness all these wonderful properties coming on the market and I am sure I am not the only one flicking through listing photos like it’s Tinder!

A market cycle is a tricky thing to understand, there are five stages – peak, decline, stabilisation, upturn, boom, and back to peak. And there are markets within markets, so you need to be very careful with comparisons. In a broad sense, I believe that across the region we are at the bottom, late in the stabilisation phase. Now is the opportunity!

Residentially, across our Geelong, Bellarine and Surf coast regions, we have 52.5 per cent more active listings since the winter months of May, June and July. And to add a bit of positive news, auction clearance rates in Geelong throughout October 2024 have moved up to 66 per cent. However, price growth so far has remained stagnant, as expected. These clearance rates are lower than Melbourne (75 per cent) and indicate that demand is still not matching the increase in supply.

One of the indicators for tracking the housing market is asking prices, and due to the number of new properties on the market, it is the asking prices, in contrast to the transaction prices, that is providing me with the data for a telling picture. Trends in asking prices can be predictive of where the actual property prices are headed. For example, a consistent rise in asking prices over a period can signal a coming rise in transaction prices.

Economic factors such as interest rates, employment rates, and broader economic health influence asking prices. For instance, changes in the RBA’s policies or shifts in the job market can quickly reflect in the asking prices, which are also a response to the balance of supply and demand in the market. In areas with limited supply and high demand, asking prices tend to be higher and vice versa.

What I am witnessing across the region is a real trend toward lower asking prices, particularly in comparison to what the average asking prices where in those areas only one or two years ago. I cannot say it’s rare to see outliers or incorrectly priced property from over-zealous agents, but there is a clear trend to price houses to sell.

This indicates we are still in the stabilisation period and that economic impacts are having a large impact on the decision to sell. And the urgency to get a sale is coming from the vendors, rather than demand from purchasers.

For example, in Geelong West, the average asking price for a dwelling in October 2024 is $880,000 whilst in October 2023 it was $897,000. That’s a decrease of about 1.9 per cent. In Newtown, in October 2023 it was only $1.06 million, which has increased to $1.2 million in October 2024, up 13 per cent. Interestingly, the median house sale price in Newtown in October so far is $1.3 million. Indicating that properties in the Newtown are being quoted below the eventual sale price. In other words, properties are being priced low. In Bell Park, where the average asking price in the suburb is $610,000 this mostly conforms with the median sale price of $618,000. Hence vendors are matching the market price, rather than seeking higher valuer or pushing price growth. Many agents are passing over, or not accepting listings from vendors which are not reasonably priced. In a market where they have experienced a hard slog, they cannot afford to waste time or advertising money on non-starters.

All that aside, there are some terrific properties on the market for sale and some real opportunities for upscaling, downsizing, or investing, if you can deal with the Land Tax. There are some amazing properties on the waterfront for sale and many in the river precinct in Highton. We even have one property listed at $11 million in Curlewis, will be interesting to see if it sells!

With an interest rate drop not likely until February at the earliest, economists are starting to predict multiple drops through the first half of next year. Macquarie Bank is betting on it, recently dropping their fixed 2-year interest rate to 5.39 per cent. They must be convinced rates will go lower, maybe 5 per cent? And they will make their money when they drop below the fixed rate. It’s my opinion that we will continue to see a stagnant, opportunistic market until the first rate rises, so if you want to get in on the action, don’t wait till the music stops! The good takeaway is that with interest rates predicted to drop and prices stagnant, housing affordability will be better than it has been for years.

Lastly, with our demand for action on Market Square gaining momentum I urge you to join me in voting on the online petition at change.org, enter this link into your browser: chng.it/SPr5pnZRHx