Melbourne Auction Results – September 29, 2014
By Peter Sarmas on 29 Sep 2014
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| Melbourne Auction Results 22nd-28th September 2014 | |||||
|---|---|---|---|---|---|
|
N/A 22 |
Sold at Auction: | 12 | Auction Volumes: | $14.53m | |
| Passed in: | 4 | Weekend Last Month: | 1051 | ||
| Sold Before: | 6 | Weekend Last Year: | 64 | ||
| Sold After: | 1 | Houses: | 82% | ||
| Unreported: | 35 | Units: | 71% | ||
Reserve Bank Sounds Warning To Investors
Though most of Victoria was glued to the football this week, instead of concerned with Melbourne’s auctions or the results of our property market, true property lovers were still talking about how the Reserve Bank will work with the Australian Prudential Regulating Authority (APRA) to limit the apparent bubble.
Before we get to that, let’s look at the weekend property market, and very briefly discuss the non-event that was the Hawks v Swans AFL Grand Final.
For those of you who went shopping or had better things to do, you didn’t miss much. I know many Hawthorn supporters would beg to differ, but there wasn’t much of a spectacle – only one team showed up and pummelled Sydney to the tune of 63 points.
Photo: Tom Reynolds
On the property front, it was a quiet day. Only 38 auctions were reported by APM and an 84 per cent clearance rate was achieved.
Of course the small sample of auctions means that these results are unreliable, but next week the Melbourne market will be in full swing again. The REIV expects 840 auctions to go ahead.
Early indications suggest that auction numbers will rise between now and mid-December, which should be a welcome reprieve for real estate agents and buyers who have been struggling for stock.
On The Economic Front
If you have been following my commentary, you would be aware of the concerns the Reserve Bank has had recently about property price rises in the Melbourne and Sydney markets.
It has been particularly focused on the investor market, which has been growing disproportionally.
Last week the Reserve Bank sounded a warning to all property investors: “The bank is discussing with APRA, and other members of the Council of Financial Regulators, additional steps that might be taken to reinforce sound lending practices, particularly for lending to investors.”
“Glenn Stevens (the RBA Governor) would be brave to tinker with a fragile economy at the moment.”
Any decision the RBA makes to enforce and regulate loans to one segment of the market – investors – may backfire. Do we see a stampede of investors between now and when the new macroprudential ruling is applied to buy new property, further exacerbating the already inflamed property market?
I feel that common sense needs to prevail here, rather than knee-jerk reactions.
On the one hand, the RBA has managed to stimulate the Australian economy through property, as another sector of the market – mining investment – wound down.
On the other hand, Glenn Stevens (the RBA Governor) would be brave to tinker with a fragile economy at the moment.
Photo: Wikicommons
The Issue With The RBA’s Macroprudential Move
Commentator Adam Carr said it well in his article ‘Why The RBA’s Macroprudential Move Will Fail’ when he discussed exactly why these tools won’t work if they are implemented.
He pointed out that property investment is a long-term play in Australia, not short-term speculation.
Property investors are savvy and account for only 38 per cent of total loans. The RBA suggests that investors often seek to avoid mortgage insurance, so they typically have lower LVR ratios than owner-occupiers and are therefore exposed to a lower risk. Generally speaking they also have higher incomes and much more wealth.
“Any decision the RBA makes to enforce and regulate loans to one segment of the market – investors – may backfire.”
Investors are in a stronger financial position. Data shows that they are typically cashed up and well placed to service their mortgage, paying only one third of their income to service the debt.
Seventy percent of investors are over 40 years of age, and 80 per cent are in the top income brackets.
What sceptics need to understand is that many investors have seen substantial increases in equity through property investment.
Considering after tax and after inflation returns on cash and bonds are effectively at zero, Adam Carr’s argument is that households will continue to seek greater returns. The only real options for such cash growth in our economy are property and equities (shares).
Careful selection of the right property asset, which will stand the test of time, is what’s important in this market.
Top 5 Houses
1. 1 Levien Street, Essendon $1,142,000
2. 394 Ross Street, Port Melbourne $870,000
3. 45 Carinya Road, Vermont $856,000
4. 3 Glengarry Avenue, Burwood $808,000
5. 87 Alexander Street, Seddon $725,000
Top 5 Bargain Houses
1. 31 Woodward Street, Springvale $481,000
2. 99 Springvale Road, Nunawading $481,000
3. 547 Mitcham Road, Vermont $655,000
4. 87 Alexander Street, Seddon $725,000
5. 3 Glengarry Avenue, Burwood $808,000
Top 5 Apartments
1. 1/16 Churchill Avenue, Chadstone $851,000
2. 2/26 Burton Crescent, Ivanhoe East $710,000
3. 24A Bennett Avenue, Mount Waverley $700,000
4. 4/7 Harpur Court, Oakleigh East $600,000
Top 5 Bargain Apartments
1. 4/7 Harpur Court, Oakleigh East $600,000
2. 24A Bennett Avenue, Mount Waverley $700,000
3. 2/26 Burton Crescent, Ivanhoe East $710,000
4. 1/16 Churchill Avenue, Chadstone $851,000
Source: REIV
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