Welcome to our Spring Great Ocean Report. There is a lot happening in the property markets at present with plenty of mixed messages in the commentary so as is our usual mission with our Great Ocean Reports, let’s try and uncover what’s really happening.

One of the simplest ways to understand a property market is to look at the current psychology of the market and potential market participants. As interest rates have risen it is fair to say that the mood has been one of caution. There are many property owners and also future buyers that are not directly affected by interest rates but all are affected by the sentiment around interest rate changes.

What these potential sellers and buyers are looking for is a stable environment for them to be able to make a decision to sell or buy and therefore the last three months of interest rate pauses have been psychologically important. With three out of the four major banks now publicly predicting that interest rates have peaked, this will only add to the confidence levels of those wanting to proceed.

In many ways this time can be seen as the start of a new property cycle. The first part of any new property cycle is the recovery phase. These signs always start in the capital cities and we have seen modest price rises in most Australian metropolitan markets in recent months signalling the worst is likely to be behind us and importantly that the dire predictions of some commentators did not eventuate.

Auction clearance rates have been high on the back of low stock levels. As we enter Spring these clearance rates are likely to moderate as more property owners decide that the market is active enough to sell and stock levels increase. We feel that there is significant pent up demand as many property owners held off selling while interest rates were rising and were waiting for stability in the market.

Our coastal property market is affected in two ways by the performance of the Melbourne metropolitan market. Firstly in sentiment as many coastal buyers come from Melbourne and secondly these buyers or potential buyers, are generally asset swapping to fund their coastal purchase. This may come in the form of a downsize, investment property sale or inheritance etc. What these buyers need to know is that there is enough activity in the metropolitan market to be able to sell if they find a coastal property that they like.

What has not changed is the emotional attachment or love of the coastal lifestyle that we enjoy. For those who want to pursue this it really just comes down to how to fund it. Given the price points we are at and the common age of the demographic that we see, it is rare that these purchasers are totally funded by debt. They are mostly asset swapping in some form.

For coastal property owners who are wanting to sell successfully in the warmer months this ‘selling season’ it will be important not to be flippant in their approach. The pricing, presentation and marketing will all need to be considered to attract quality buyers as they will have choice with the pent up demand from sellers expressed.

From a buying perspective, enquiry levels are definitely improving as confidence around interest rates is increasing. The timing of this is excellent for the coastal markets as we enter our warmer months and the foot traffic on the coast increases in the lifestyle towns. We know that many of our buying demographic are a bit older and just want to get on with pursuing their lifestyle plan. They don’t have the luxury of waiting for every aspect of the economy to be correct, they are more focused on their personal circumstances.

The most common question we get asked is ‘what are prices doing’ or ‘what’s going to happen with prices?’ If we look back at our end of financial year report we see that despite lower volumes and increasing interest rates in the past financial year, the median house price in each of the coastal towns held quite well. The most probable outcome is that we will see prices move sideways for a period while interest rates are at current levels. Engagement levels are certainly likely to increase as confidence returns and the next likely impetus for across the board price growth is likely to be when it becomes absolutely accepted by buyers that the next interest rate movement is down and that is imminent.

We hope you found this Great Ocean Report informative. If we can be of assistance in any real estate matter please do not hesitate to call.