How to ease your way in

Herald Sun - Property - - OPINION - ROBERT LAROCCA

THERE are many dif­fer­ent ways of look­ing at the mar­ket and mak­ing judg­ments about its per­for­mance.

You can look at sale prices, days on mar­ket or even turn up at auc­tions and count the num­ber of ac­tive bid­ders.

Th­ese met­rics will in­vari­ably tell you how the mar­ket is per­form­ing, whether it’s trend­ing up, down, flat and by how much. How­ever, met­rics do not and can­not tell you about the fu­ture per­for­mance. They also don’t tell you about the ease of buy­ing.

The fact is that some sub­urbs are eas­ier to buy into than oth­ers be­cause own­ers are less in­clined to sell. This can be for many rea­sons; some­times it is cyclic, for in­stance in the first few years af­ter prop­erty is pur­chased the own­ers are less likely to sell.

We mea­sure the ease of pur­chas­ing by com­par­ing the num­ber of homes ad­ver­tised for sale in a given pe­riod with the num­ber of prop­er­ties in the sub­urbs.

Th­ese sub­urbs are of­ten de­scribed as “tightly held”.

In the year end­ing Novem­ber 30, 2014 across Mel­bourne, 5.3 per cent of all houses had been ad­ver­tised for sale. Those houses sold over the same time had been owned for an av­er­age of 11.8 years.

Drilling down to a sub­urb level, the hard­est place to buy a house was in Brunswick East.

In Brunswick East, a mere 2.1 per cent of houses had been ad­ver­tised for sale in the past year. Those houses that did sell had been owned for well over the metropoli­tan av­er­age at 14.2 years and in a sign of the lengths buy­ers were will­ing to go, the me­dian sale price rose 26.6 per cent in a year.

With some ex­cep­tions, there is a cor­re­la­tion be­tween the pe­riod of own­er­ship, the re­cent cap­i­tal growth and like­li­hood to list for sale.

At a sim­ple level it is de­mand and sup­ply in ac­tion, which won’t sur­prise any­body cur­rently ac­tive in the mar­ket. It also helps ex­plain why real es­tate agents of­ten let­ter­box sub­urbs or streets look­ing for an owner to sell. An anal­y­sis of the top 10 most dif­fi­cult places to buy a house shows a high rep­re­sen­ta­tion of sub­urbs in the in­ner north.

Carl­ton is sec­ond on the list and it is fol­lowed by Fair­field, Carl­ton North and Fitzroy North. In each case the pro­por­tion of houses on the mar­ket is be­low 3 per cent. With the ex­cep­tion of Carl­ton the in­crease in me­dian sale price is above the metropoli­tan wide num­ber for the same time.

The in­ner north of Mel­bourne has been in strong de­mand from buy­ers but the own­ers have not been as will­ing to sell.

The in­ner north­ern sub­urbs are not the only places this oc­curs in Mel­bourne. The top 10 is rounded out by Clay­ton South, Mul­grave, Wat­so­nia, Hughesdale and Carnegie. With the ex­cep­tion of Wat­so­nia, th­ese are all in a sim­i­lar part of Mel­bourne.

But what hap­pens if you want to buy into a sub­urb where the own­ers don’t want to sell?

Th­ese are called “off mar­ket” trans­ac­tions and they won’t be cov­ered in this data be­cause the homes are not listed for sale.

A small num­ber of those will be the homes sold di­rect by the own­ers but the ma­jor­ity are those trans­acted with the as­sis­tance of a buy­ers’ agent.

As­tute buy­ers’ agents are able to build their own seller net­works.

This hap­pens be­cause some­times an owner wants to sell with­out ad­ver­tis­ing or they find that be­cause the buy­ers’ agent has a good net­work of buy­ers there is sim­ply no need to buy the ad­ver­tis­ing to sup­port the sale.

So if you want to buy into a tightly held sub­urb, it pays to ap­proach lo­cal real es­tate agents and let them know you are in­ter­ested and con­sider hir­ing a buy­ers’ agent.

Robert Larocca is CoreLogic RP Data’s Vic­to­ria hous­ing mar­ket spe­cial­ist

The me­dian sale price in Brunswick East rose 26.6 per cent over the past year.

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