Melbourne’s strong auction market charges through autumn despite flood of listings
Moonee Ponds auction
Buyers who expected to see softer real estate prices at the weekend were roundly disappointed as dozens of auction properties shot past their reserves.
Some buyers had high hopes that the market pendulum would swing a little in their favour because of the large volume of auctions being held on the last two weekends in May.
It wasn’t to be. The Domain Group posted a bullish clearance rate of 79.7 per cent from 854 auction results reported on Saturday, up from the 78.3 per cent clearance rate recorded on the previous weekend.
28 Kintore Street, Camberwell sold for $5,020,000 on Saturday.
Competition was particularly feisty for budget properties and for develop-and-demolish blocks above $2 million.
Suburbs such as Reservoir, Footscray and Glenroy all saw strident bidding for sub-$800,000 homes. According to the buyer advocacy operation Property Mavens, a small two-bedroom house at 24 Wimmera Avenue, Reservoir, attracted offers from nine bidders before it was sold by Hocking Stuart for $748,500.
The property was quoted at $500,000 to $550,000. At auction, it went on the market at $570,000, some $170,000 below the final sale price, with the result indicating that real estate bargains are a near-extinct species in the current market.
184 Finch Street, Glen Iris sold for $3.31 million on Saturday.
There was good demand for top-end properties, too, although some property experts say this market segment is now “steadying”.
What this means is that prices for houses and apartments in popular areas are still going up but at a more moderate pace compared to the rapid-fire growth seen in February and March.
Jellis Craig director Alastair Craig sold a large period house at 28 Kintore Street, Camberwell, for $5,020,000, the highest disclosed price paid for a Melbourne home on Saturday.
28 Hambleton Street sold for $2.95 million on Saturday.
The tuck-pointed Queen Anne-style home, in Camberwell’s posh Tara Estate, drew bids from two families before going on the market at $5 million in front of a crowd of 100 people.
Mr Craig said the house, renovated with contemporary upstairs and ground-level spaces, sold for not much more than a comparable unrenovated period home in nearby Victoria Road.
Auctioned in March, the house at 37 Victoria Road, on similar land (about 900 square metres) to the Kintore Street property, had competition from three parties and sold for $4.76 million.
9 Swan Street Footscray sold for $831,000 on Saturday.
“It goes to show you that there is actually higher demand for unrenovated period homes than there is for homes that have been all renovated,” Mr Craig noted.
Other top results included a contemporary three-bedroom/three-bathroom home at 184 Finch Street, Glen Iris. Marshall White sold this for $3.31 million, which the company said was significantly above reserve.
In Albert Park, Greg Hocking Real Estate easily disposed of a four-bedroom house at 28 Hambleton Street. Four bidders pushed the property to a sale price of $2.95 million, well ahead of the $2.3 million to $2.5 million quote range.
Meanwhile, Footscray continued to rise, with a house in need of repair at 9 Swan Street selling to a young family for $831,000. The sale price was $101,000 – or 12 per cent – above reserve. Five bidders chased after the Jas Stephens listing.
The surge in auction numbers this month has seen an easing in the number of bidders participating at auctions for homes above $1.5 million.
James Buyer Advocates’ Bidderman statistic tracks the number of bidders at auctions for homes in this price bracket. The company has recorded an average of 2.2 bidders at 66 auctions held over the past two weekends.
This participation rate is down on the bidder activity rates seen in February and March but is commensurate with the bidder rates of May last year, which was also a high-volume period.
James Buyer Advocates’ Mal James said more than 85 per cent of auctions of higher priced properties had resulted in a sale over the past fortnight, although there were signs that the rate of price growth in this segment was lessening.
“But there is no evidence that the market is going backwards,” he said. “It may not be going up at the same trajectory… or going up by 7 per cent a quarter, but it is still going up.”
Others see the same trend.
The managing director of Jas Stephens, Craig Stephens, said: “The market seems to be plateauing a bit as the banks continue to raise rates for the investor-only-type loans.
“That’s put some softness on the a market: investors are probably now paying half a per cent more in interest than they were at this time last year and that coupled with the approaching winter months and the new laws (on quoting property prices), is seeing a market that is certainly not as buoyant as it was back in February and March.”
On Saturday, agents did not report the results of 253 of the 1120 auctions scheduled for the day. The vast majority of the unreported results will be no-sale pass-ins, which suggests that well-researched buyers can engage in hard-ball negotiations on some properties.
Domain Group chief economist Andrew Wilson said Melbourne’s market remained a reliable sellers’ market and the most consistent of all the capital city real estate markets.
He said there was less capacity to push up prices because eight months had passed since the Reserve Bank last cut official interest rates. Dr Wilson said as the market moved away from rate cuts, it reduced buyer energy levels. This was evidenced by the city’s clearance rates slipping from being above 80 per cent into the high-70 per cent range.
Trudy Biggin, of Biggin & Scott, said the question most frequently asked of agents by buyers at open houses on the weekend was, “Do you think the market is softening?”
She said while the heat hadn’t gone out of the market, a greater proportion of prospective buyers were comfortable with waiting for the next property to come up. People were less gripped by a fear of missing out, which had been the big driver of buyer behaviour earlier in the year, Ms Biggin added.