Our Market Eco System is Re-emerging

For the last two months we have been in a deep freeze in Melbourne Real Estate.

Suddenly the weather patterns changed with the announcement that we could return to one on one inspections. However first week back we were all seemingly caught on the hop –things were pretty flat.

This week we have begun to see an unthawing, as more of our market eco system begins to re-emerge. It felt a lot better – buyers were around, sellers are going to market and simply put, the phones began to ring more.

But for whom are they ringing?

Let’s look at our market eco system.

It has many layers in position and property type and price. With price, 3 such layers are $1m to $2m, $3m to $6m and the rest above that eg $7m+. It’s very much like a forest.

The ground cover – the vegie gardens – the $1m to $2m segment always has some life, as there are always more buyers than sellers for entry level houses in Inner Melbourne. True to form this market is already sprouting again – with some agents recording 2, 3 even 4 sales in the $1m to $2m this week just gone. This segment is currently feeding the positive news stories and no it’s not all fertiliser.

To the TOP now, the forest canopy. The big trees @ $8m, $12m and $15 million.

When this level is firing, the market can be like a bushfire. However right now it is still in somewhat of a slumber, due to closed borders heavily restricting expat and international buyers, as well as some locals. This all dampens demand and reduces buyer urgency, which in turn gives a gloomier tone to market news.

So we have positives coming from the bottom and not so positives from the top. This is a generalization and of course A graders, well priced and with a good agent will prove this blanket statement has some holes in it.

The market giants have one eye open – they are looking around – watching below for signs of life – and there will be. The cost of money is so low that some will still want to reach for these stars – A grade, well priced stars that is.

And that brings us to the all-important eco system understory – the middle if you like – the $3m to $5m segment. This segment is where we like to take the temperature of the market, to see if we are warming or cooling.

This price segment is one of many interconnections. Banks, Buyers and Sellers going up and down and those moving sideways such as Renovators. This is the market segment of real choice – where many don’t have to if they don’t want to. This is where many have the resources of the big trees but only choose to go there if it feels right.

Experienced market watchers monitor the understory – the $3m to $6m segment, for clues on how things are really going. So it feels potentially positive, however like a new dawn, in a new era, it will take some time for the truth to arrive.