Debunking the ‘bad market’ myth

From an investment perspective, there are many similarities between the real estate sector and stock market. Both can be used as powerful investment tools, thanks to their ability to grow significant value in fluctuating market conditions. However, when times get tough, there is one very important difference that separates the two – you don’t need stocks to survive but you do need shelter.

And that makes current market conditions all the more pertinent – not for some 18-24 months has the opportunity to put a new roof over your head coincided so perfectly with a great time to buy. Recent price adjustments across the board, particularly here in Melbourne, have made getting into the real estate market a particularly attractive proposition for a range of homebuyers, from first home buyers to up-graders.

With three decades of experience, our team has seen pretty much everything real estate has to offer – both the peaks and the troughs. Like any industry, there are going to be ups and downs, but ultimately, it is these changing conditions that give way to opportunity and the ability to do better business.

There is no doubt that Melbourne’s current real estate climate presents some interesting challenges for all sides of the property sector – and recent pessimistic media headlines certainly aren’t helping!

However, as the old saying goes, ‘with challenge comes opportunity’ – and there’s plenty of opportunity out there for buyers who are motivated, well-informed and ready to move on the well-priced property that we’re seeing come onto the market.

Until recently, the typical Melbourne property market breakdown had been heavily skewed in favour of investors, who were estimated to have held somewhere in the midst of 70% of local residential property assets, while owner-occupiers and first home buyers battled to make up the remaining 30%.

Fast forward to today, and some notable shifts have occurred, with the split of housing ownership now estimated to be somewhere closer to 45% investor, 40% owner-operator and 15% first home buyer.

Tips for first home buyers

As Melburnians, we are incredibly fortunate to have so many great suburbs at our fingertips and in close proximity to the CBD.

Now is an exciting time for families and first home buyers on the hunt in the property market. Make sure you are dealing with an experienced professional who has seen it all in a property sense, but still has their finger on the pulse of what’s happening the industry.

This will give you the confidence needed to go out and capitalise on today’s buying conditions, without losing sight of what is sustainable according to your current financial position – for example, ensuring there are funds set aside for a ‘rainy day’.

Tips for developers

It is crucial that developers also realise what is prudent when it comes to planning and delivering a new project. Keep new developments around the 50-60 apartment quota for residential areas, giving yourself the best chance to strike the perfect balance between supply and demand.

Developers should be stocking their shelves with land acquisitions in key areas of growth that have sound infrastructure (existing or planned) and amenities nearby like public transport services, educational institutions and everyday retail shopping.

And, always ask yourself “are we delivering the right kind of product for the end user?” Here again the counsel of a seasoned real estate agent and project marketer can be invaluable in helping you to weigh up the opportunities presented by the current market and consumer demand, with your long-term investment and development strategy.

Michael Lang is a Director at Castran GIlbert and brings over 20 year’s real estate experience to this role, specialising in residential established properties, selling development sites together with off the plan properties. Ranging from boutique developments of 10 apartments to larger scale developments of over 200, Michael has worked on developments all over Melbourne – as Building Council of Australia as Boronia, as far North as Bundoora, South as Mount Martha, and as far West as Williamstown.

Look our for Urban.com.au's follow up Podcast with Michael and fellow Director David Howard in coming weeks.