Melbourne Auction Results – April 28, 2014

Will a Claytons style interest rate rise affect our moderating property market?

The Anzac long weekend produced the lowest clearance rate for the year from a relatively low volume of reported properties.

Last week, house price data released by the Australian Property Monitors (APM) sahowed the median house price in Melbourne rose by 2.8 per cent in the March quarter to $604,110 – the first time Melbourne’s median has exceeded $600,000.

“We’ve seen price values rise and that has drawn into the market a far greater number of vendors.”

Despite this, APM’s senior economist Dr Andrew Wilson believes with a trend of slowing growth –from  3.9 per cent in the December quarter to 2.8 per cent for March –house  prices will continue to wane throughout the year. Wilson also mentioned that the quarterly data released on Thursday by APM confirmed that median unit prices growth in Melbourne was relatively flat, rising only 0.2 per cent in the quarter to $419,702.

In comparison, Dr Wilson revealed that prestige suburbs in the inner east and inner south recorded the highest growth in the March quarter and according to Wilson were, ‘holding up the market’.

“So really, we’ve seen around about an 8 per cent rise in house prices over the last four years in Melbourne,” Dr Wilson said.

A More Buoyant View

However RP Data’s view on the Melbourne property market was more buoyant. Their analysis of Melbourne median house prices showed a growth of 5.8 per cent to $555,000 in the March quarter rather than levelling off.

There’s no denying the main players in Melbourne’s market are the investors and upgraders. The challenge with this is that upgraders will only move if they see stock available on the market to upgrade to. Thus, the expected increase of supply in May and June should help stimulate the Melbourne property market and property prices should reach a more stable level.

“Certain suburbs are outstripping supply and experiencing an incredible demand for certain types of property…”

In what could be seen as a forward indicator of stock levels, real estate network Jellis Craig are expecting a strong sales month in May based on early indications and the higher than usual number of auction commitments by vendors.

 RP Data’s Robert LaRocca confirmed what we are seeing on the ground with figures. He also established that we are expecting higher transaction volumes in the June quarter.

”We’ve seen price values rise and that has drawn into the market a far greater number of vendors,” Mr Larocca said.

As reported by The Age over the weekend, medium-to-large family residences and some entry-level properties could face reduced demand over winter while small single-level houses in good residential areas are hot commodities.

The Budget is Closing in

First term Treasurer Joe Hockey is due to have his day in the limelight on May 13^th when the Coalition government announce their much anticipated budget. Based on all the commentary and PR releases we expect that the budget will hurt a number of sectors including the elderly, health and education.

Credit: Donaldytong

So, we have to ask, whether the budget will destabilise our fragile economy and property market. According to the latest Westpac Institute Index, recent figures showed a marginal increase in sentiment after consecutive falls. Evidence that current consumer confidence is fragile.

Enormous Inequalities in the Market

I read with interest over the weekend that the severity in cuts expected in this budget is expected to have the same effect as a couple of interest rate rises,  the Claytons interest rate rise I call it (Claytons, was/is a substitute alcoholic beverage). This indicates that for the time being it is unlikely we will see further interest rates rises by the end of this year, as previously expected.

“Entry-level properties could face reduced demand over winter while small single-level houses in good residential areas are hot commodities.”

I also spent some time over the weekend analysing over 20 Melbourne suburbs where I noticed enormous disparities in the market. Certain suburbs are outstripping supply and experiencing an incredible demand for certain types of property, while other suburbs have moderate, little or no demand at all.

My feeling is that we will see more of what we have already experienced this year. Higher demand in certain suburbs and property types will mean higher prices until the demand is met, while poor or lower demand suburbs will begin to see supply problems and therefore significant price corrections.  

Next weekend the REIV expects about 830 auctions in Melbourne.

APM Melbourne Weekend Auction Results – Week Ending April 28, 2014
(please see attached)

Top 5 Houses

1. 14 Hannaslea Street, Box Hill $1,360,000
2. 1 George Street, Caulfield North $1,301,000
3. 10 Outlook Drive, Camberwell $1,282,000
4. 11 Tally Ho Court, Burwood East $1,265,000
5. 1 & 3 Princess Street, Pascoe Vale $1,200,000

Top 5 Bargain Houses

1. 26 Dunstan Parade, Campbellfield $242,500
2. 7 Coleman Crescent, Rosebud West $295,000
3. 2A Carroll Crescent, Mill Park $319,000
4. 45 Regal Avenue, Thomastown $320,000
5. 223 Widford Street, Broadmeadows $340,500

Top Apartment

1. 1/2 Stephens Street, Caulfield $1,535,000
2. 176 Williams Road, Toorak $1,254,000
3. 2/20 Rockley Road, South Yarra $1,045,000
4. 34A Sapphire Street, Niddrie $990,000
5. 13 St James Avenue, Bentleigh $960,000

Top Bargain Apartment

1. 2A Maiden Court, Epping $270,000
2. 3/516 Pascoe Vale Road, Pascoe Vale $315,000
3. 23/157 Epsom Road, Ascot Vale $325,000
4. 3/25 Finchley Avenue, Glenroy $327,500
5. 3/125 Victoria Street, Brunswick $340,000

Source: REIV

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