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House prices down but demand still strong
Despite house prices dropping in the past year, Camberwell remains a strong suburb with demand expected to increase in the months ahead.
Dynamic economic and residential property market conditions are keeping both local buyers and sellers on their toes.
While median rent and sale prices in Camberwell are still well above metro Melbourne averages, there was a significant drop in the number of property listings last quarter.
“In terms of the total number of properties being on the market, we’ve seen a huge drop of 30 per cent, and in some areas 50 per cent, in terms of the total amount of listings,” said Janssen Xiang, director and auctioneer at First National Real Estate Camberwell.
“Given the number of listings are down dramatically, we’ve seen a lot of buyers out there with the intention of buying something that is not overly priced.”
In the June quarter, Camberwell’s clearance rate of 74.6 per cent was below the metro average of 78.1 per cent, according to REIV.
“I do think it’s a good time to buy, but I do see a lot of pass-ins too… but why some of the auctions are not selling is hard to gauge,” Mr Xiang said.
“Nice homes are selling really well. Anything that needs a rebuild or subdivision as an investment seems to be pretty slow.
“Cost of living and labour costs have gone through the roof. A lot of people are scared about renovating homes or rebuilding because the cost has gone up since COVID. Banks are not lending on these modifications, so you may as well borrow from the bank and buy something someone has already done up.”
Mike McNamara, director of Strategic Buyers Agents and Strategic Vendor Advocates, points out that house prices in Camberwell have still seen modest but continuing growth since March and on average, houses spend just 26 days on market.
He said buyers primarily invest in Camberwell for long-term capital growth, rather than rental income.
“With Camberwell being just 5.8 square kilometres, including land devoted to its 24 parks, there is only so much land available for non-strata housing,” he said.
“This limited area puts upward pressure on land values, which is the larger component in Camberwell home values.”
Unit prices haven’t fared as well, dropping 6.8 per cent in the June quarter with a medium sale price of $755,000. According to realestate.com.au, unit prices in Camberwell are down 8.2 per cent on last year.
This may be due, in part, to a decline in housing demand driven by pandemic lockdowns and border closures. According to ABS data, Boroondara’s population shrank by 9200 people from late 2019 to late 2022.
However, as locals and international residents return, the demand for housing is expected to increase.
According to CoreLogic, each of the major banks is now forecasting a decline in the cash rate in 2024. That could increase demand from housing investors, which would add to rental supply.
“That would give a bit of confidence to the market in terms of buying or selling, considering housing affordability has dropped to a new low nationwide,” Mr Xiang said.
While the worst of the interest rates hikes may be over for mortgage holders, cost-of-living pressures are still impacting most household budgets.
“The financial market is still too dynamic for us to predict what’s going to be happening in the next month,” Mr Xiang said.
“It’s been a rollercoaster since COVID, whereas previous years were more predictable.”
Mr McNamara believes lending conditions should improve for borrowers, which would put upwards pressure on property prices.
“Following the stabilisation of mortgage rates, and the 500,000-plus ‘catch up’ increase of Australia’s population this year, the prospect of modest reductions in loan rates in early 2024 should continue to drive house price growth,” he said.
