Melbourne property market: Units trump houses at auction for first time in 5 years
12 Jun 2018
For the first time in five years, units are selling better under the hammer than houses.
Though clearance rates have declined across the city, new data shows apartments have recorded consistently higher clearance rates than freestanding dwellings since December.
Last month, 63 per cent of units sold at auction, compared to just 55 per cent of houses, according to Domain Group data.
Up for sale: 8/27 Dickens Street in Elwood is expected to fetch above $850,000.
“The monthly result for houses is the lowest result since July in 2012,” said Domain Group chief data scientist Nicola Powell, adding that the performance of houses was pulling down the citywide clearance rate.
Real estate experts say affordability is the key driver of the change, with hordes of first-home buyers willing to sacrifice a backyard in order to get a foot on the property ladder.
“We’re finding that anything in that $600,000 to $800,000 bracket in particular is very keenly sought both by downsizers and first-home buyers,” said auctioneer Jason Salan, of Fletchers Manningham.
For sale: 20/187 Reynolds Road in Doncaster East Photo: Fletchers
“I think it’s very much due to the first-home buyer concessions that are available.”
The introduction of stamp duty cuts for first-home buyers has enticed hopeful homeowners into the property market, but has also been blamed for an uptick in prices for entry-level properties.
Melbourne’s median apartment price rose to $506,000 in the March quarter, recording stronger growth than houses.
Meanwhile the number of apartments in the pipeline has shrunk. There are 6550 units expected to be completed this year, compared to 10,400 last year, according to real estate research firm JLL.
In a recent report, JLL researcher Leigh Warner said investor demand for apartments had remained subdued due to tightened lending controls but a booming population has bolstered demand among owner-occupiers.
“Developers that pursue residential development will largely be targeting owner-occupiers in smaller scale projects located in the fringe suburbs,” he said, adding that more inner city highrises were expected to convert into hotels or student accommodation.
Apartments in older, boutique-style blocks have proven the most popular with buyers, said Hocking Stuart St Kilda director Sam Inan.
“Anything that is pre-1980s is flying out the door,” he said. “They’re well built, spacious, tend to have an outdoor area and tend to be strata titled.”
Mr Inan said buyers had become more discerning at auctions. “They’re not feeling as pressured because they’ve got four or five other places to go on the same day.
“The market has gone from fear of missing out, to fear of over paying.”