'Riding the bumps with a grin' - 2022 Boroondara Prestige Market Summary

To summarise ‘the year that was’ at the top end of the Hawthorn and surrounds property market, it feels very fitting to coin a phrase from the famous local football club’s theme song. Despite a bumpy journey at times this year, the market has emerged in a healthy state. Buyers have certainly become more discerning but have equally been prepared to fight hard over the quality offerings in the market.

This has been evidenced in some exceptional prices achieved for high quality real estate, but a general softening from the robust conditions of the post lockdown periods of 2020/21. Given the steep hikes in interest rates over the past 6 months the market for luxury property has demonstrated resilience and underlined the value families place on quality living, convenience and long term asset growth in this highly sought after private school corridor.

Following on from a very strong year in 2021, price growth seemed to peak in the March quarter of this year, highlighted by the sale of the iconic Victorian mansion ‘Verona’ in Shakespeare Grove, Hawthorn for just shy of $20 million. A triple ‘treat’, or rather threat, then hit the market as domestic and US inflationary data sparked talk of interest rate hikes, Russia invaded Ukraine and construction costs skyrocketed as the industry dealt with issues around supply chain, labour and the cost of raw materials. This saw an easing of demand and a general cooling of prices in the June quarter, keeping in step with Melbourne’s weather as many local high net worth families escaped for the first time in 3 years to the sunny shores of Europe. Some strong sales were still achieved during the quarter highlighted by the pair of historic mansions ‘La Verna’ and ‘Prague House’ in Sackville Street, Kew which both found new custodians in the $15m - $20m vicinity.

As we emerged from the winter market hiatus a key listing to hit the market was 42a Hawthorn Grove, Hawthorn. Positioned at the pinnacle of arguably Hawthorn’s premier address, the block of 1,230sqm was always going to attract interest from well-heeled families and developers as its red brick block of 4 older style units awaited their imminent demise. But just how popular would it be given the anxiety around the ballooning costs for a replacement build? As the auction got underway under sunny skies it quickly became evident that those skies were not about to fall in. Spirited bidding from several families drove the price more than $2.5 million past its reserve before the hammer came down on a new record per square meter ‘land’ price for Hawthorn.

The impact on the luxury sector of the interest rate hikes and resultant negative media sentiment, has not only been to stall price growth, but also to reduce the number of homeowners prepared to invest time and money in taking their homes to, what they consider to be, a suppressed market. Unlike 2021 when they were regularly outbid at auctions, the most consistent complaint from buyers in the Spring market of 2022 has been the lack of available homes for them to consider. As I write this today, according to PropertyData.com.au, there have been 40 sales of homes over $5m since 1 July across the suburbs of Hawthorn, Hawthorn East, Kew, Camberwell, Canterbury and Balwyn. During the corresponding period last year there were 60.

Whilst there was a reduction in the average number of buyers competing for each of those 40 homes, many were still sold under competition either privately or at auction. Overall, the most popular homes have been those that are newer or renovated in recent years, reflecting the move away from building and renovating. A recent example of this was ‘The Poplar’ @ 2 Daracombe Ave, Kew, a magnificent Tudor mansion with modern extension which attracted 5 offers at the end of its month long EOI campaign. The subsequent competition for the property drove the final price well beyond the $11-12m guide range.

The lack of available homes advertised on the major portals (RealEstate & Domain) has also seen an increase in agents seeking out purchasing opportunities ‘off-market’ for buyers. This has led to some exceptional ‘off market’ sales being achieved in recent months at the premium end of the market. These include a $10 million + transaction for a renovated Victorian home in Hawthorn Grove, and a record price achieved in Monomeath Avenue, Canterbury for a spectacular Edwardian home on an expansive allotment with swimming pool and tennis court.

As we fast approach Christmas and look ahead to 2023, I’m predicting an active start to the market in February and some more positive buyer sentiment. February is seasonally a strong time for sellers with the warmer weather, and buyers fighting over the new opportunities in the market after being starved of offerings during the holiday period. That's not to say it will all be smooth sailing from there. I'm sure like the mighty Hawks the market could be in for a few more bumps along the way throughout 2023.

If you are considering a move in 2023, in buying and/or selling, I would welcome your call for a confidential discussion around your options.