Why is it hard to value a property?

Valuing property in today's market is extremely challenging, even for real estate agents, who are sometimes accused of underquoting. So, is it underquoting? We would argue it isn't. Rather, it results from undersupply and high demand in certain market pockets. For instance, last week in Surrey Hills, a property with a quoted range of $2,000,000 to $2,200,000 saw a heated auction with over 20 bids, ultimately selling for $2,737,000. While the property sold well above the quoted range, the real estate agent wasn’t intentionally underquoting; they underestimated how fiercely contested it would be at auction. Examples like this underscore the importance of seeking professional advice before buying property in today’s market. It’s often the biggest financial decision of your life, and it's crucial to make it wisely.

However, hot auctions like this are not the norm across the Melbourne market. It's well known that Melbourne’s house prices have lagged in growth over the past couple of years. Median prices are now nearly on par with Brisbane's, and the gap between Melbourne and Sydney is the widest in decades. Many of our clients have asked where the market is headed in the coming years...

As I always say, there are markets within markets, and this property in Surrey Hills is an excellent example. Specialising in Melbourne’s inner blue-chip suburbs, we find that the properties we buy are largely insulated from price declines. The limited supply of A-grade properties in these desirable areas and restricted construction activity make new properties increasingly challenging to secure. This month, we conducted a deep dive into the luxury home market and its unique characteristics, which have helped insulate it from the broader market dynamics affecting Melbourne's property market over the past two years. You can read the detailed market insight article here.

The forecast for Melbourne isn't all doom and gloom. New PropTrack estimates predict that the city's home values will grow by three to six per cent next year, driven by Melbourne’s relative affordability and strong job prospects, which are expected to be significant drivers of migration. Melbourne’s median house price is $921,000, and this growth translates to an increase of $27,630 to $55,260. We anticipate that the upper end of the market will lead this growth.

My parting piece of advice.

Don’t believe everything you read in the papers or on a property’s Statement of Information. If you want to buy in the next 6 to 12 months, seek professional advice to understand the property's true value to ensure you buy once and buy well. If you’d like to contact Lauren Staley and her Infolio Property Advisors Team and arrange a complimentary 15-minute phone call, click the link below.

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