Melbourne Auction Results – August 26, 2013
By Peter Sarmas on 26 Aug 2013
No Comments yet, your thoughts are very welcome
Melbourne Market Kicks Up Another Level
The Melbourne market reached its highest clearance rate over the weekend at 82 per cent for 357 properties sold at auction.
Despite the high number of properties unreported, there appears to be a renewed confidence in the market at the moment.
This weekend last year the clearance rate was 57 per cent from 467 auctions. Many research data houses have recently published growth in median house prices for the June quarter. APM recorded a substantial 5 per cent rise.
While pundits at the beginning of the year scoffed at the prospect of substantial growth in Australian property prices, this looks more likely as we head into peak selling season.
Areas of the Market Performing Well
It’s worth noting that the top end of the property market continues to march on. Inner city agents reported multiple bidders for properties over the $1 million mark and into the $5 million price range.
Gerald Delany, the chairman of Kay and Burton, even described the current top end of the property market to that of “the halcyon days of the 80s with the depth and great strength being demonstrated at auctions the past two weeks.”
The lower end of the market is currently being driven by investors, who are propelling the more expensive end as second homebuyers achieve a successful sale and upgrade to higher priced properties.
What’s the Data Saying?
Interestingly, the Australian Bureau of Statistics Biannual Wealth and Income survey released last week showed that the average wealth of Australian households in 2011-12 was $728,000, 9 per cent higher than it was in 2005-06, and 24 per cent higher than in 2003-04.
“The ACT had the highest level of wealth at $930,000 which was around 28 per cent higher than the Australian average. Western Australia, New South Wales, Victoria and the Northern Territory all had levels of wealth close to the Australian average,” said the survey.
Looking Forward
So where to next? As auctions rise in popularity in the inner city property market and potential vendors who have held back on selling their property see the current successes, I anticipate increases in stock levels.
I also see auctions becoming the preferred method of sale for those suburbs already achieving outstanding results.
Economist Andrew Wilson from Fairfax pointed out in one of his talks over the weekend that the headwinds for property prices and the Victorian economy was the unemployment rate reaching levels around 6.5 per cent. This, in his view, is the key indicator that could put the brakes on the current buyer frenzy.
It may be too early and too optimistic to call, but by mid-next year I believe our investor-led market will be in full swing, supported by a revitalised and expanding Chinese economy.
Should this be the case, the Victorian businesses supporting the mining boom which have been forced to cut back on staff and spend will be revitalised again, helping to grow Victoria’s employment rate.
Perhaps I am drawing a long bow here with the predicted strengthening of the property market, but I believe fear of the GFC changed many Australian’s spending habits.
Homeowners paid down debt, discharged their mortgages and built their savings. Add in the stellar performance of the share market (and therefore superannuation funds) and there may be war chest ready to satisfy the pent-up demand of buyers who have held back from transacting over the past 2 to 3 years. Only musing…
