Melbourne Auction Results – August 3rd, 2015
By Peter Sarmas on 2 Aug 2015
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| Melbourne Auction Results 3rd August 2015 | |||||
|---|---|---|---|---|---|
|
78% 595 |
Sold at Auction: | 380 | Auction Volumes: | $389.73m | |
| Passed in: | 128 | Last Weekend: | 785 | ||
| Sold Before: | 86 | Last Year: | 523 | ||
| Sold After: | 1 | Houses: | 84% | ||
| Units: | 71% | ||||
Lack of Due Diligence Spells Danger for Buyers
A booming real estate market has not only seen arrogance and poor service creep into the property market thanks to some real estate agents, but buyers with a very relaxed attitude towards spending their, or should I say the bank’s, hard earned money on their next property purchase. More of this story further down, firstly let’s cover off what happened in Melbourne’s auction market over the weekend.
A clearance rate of 78 per cent was recorded this weekend compared to 76 per cent last weekend and 72 per cent this weekend last year.
There were 595 auctions reported to the REIV today, with 467 selling and 128 being passed in, 61 of those on a vendor bid.
Melbourne’s outer suburbs are seeing more auctions and greater buyer interest this year. Three suburbs – Ringwood, Ferntree Gully and Rye recorded double digit median price increases in the most recent quarter.
There is no doubt the level of stock creeping into the property market for this time of the year is high and it appears to be having an impact on “B Grade” properties.
Melbourne’s property market appears to have peaked in May and many prospective vendors witnessing high prices are bringing plans forward to sell their property and cash in on the current boom. This mass exodus is already seeing stronger auction numbers than last year. The REIV reporting there are 3480 auctions scheduled for August this year, up from last year’s 3323 for the same month.
No doubt these sort of volumes will be music to the ears of buyers hoping to snap up a bargain, here’s hoping they don’t get confused between a great buy and a lemon.
Housing Affordability Deteriorates in Mid 2015 – HIA
The HIA Affordability Index fell in the June 2015 quarter, signalling a deterioration in affordability conditions, said the Housing Industry Association industry.
“The positive impact of a second interest rate cut for the year in May was overwhelmed by an increase in the CoreLogic RP Data median dwelling price and the persistence of sluggish earnings growth,” said HIA Chief Economist, Dr Harley Dale. “The net negative impact of these factors saw the national HIA Affordability Index fall by 2.9 per cent to 79.7 in the June 2015 quarter.”
“The national affordability result masks wide variations around the country, an unsurprising finding given the lack of geographical consistency to the current residential cycle,” Harley Dale said.
During the June 2015 quarter, affordability deteriorated by 3.6 per cent in capital city markets, driven by Sydney and Melbourne. This was in stark contrast to a 2.7 per cent improvement for regional Australia. Compared with the June quarter last year, capital city affordability worsened by 0.6 per cent, while in regional Australia affordability saw a 5.2 per cent improvement.
“The large differences in the results for the capital city Affordability Index and its regional counterpart, together with the variation in outcomes between capital cities, exposes the folly of sweeping generalisations which refer to an Australian housing boom,” said Harley Dale. “That is simply not what is occurring – in many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions.”
“It is against this backdrop that authorities have escalated their requirements for the rationing of credit to residential investors. The risk is that this will obstruct new housing supply, aggravating affordability conditions in markets around Australia,” concluded Harley Dale.
Street Advocate
We were out and about in various parts of Melbourne over the weekend inspecting properties and attending auctions.
Before getting into any market commentary though, I’d like to mention something that is really disturbing and surprising to me. Whether it’s the areas that I am visiting or the types of homes, there seems to be a common theme, buyers just aren’t looking at homes close enough.
Without actually naming the suburb and home that I looked at, it became apparent to me that this home had some major issues. Tell-tale signs like cracked floor tiles, mutliple cracks in the brick mortar that had been covered up all around the house and cracked wall tiles in the bathroom, all led me to believe that the property had some significant movement in its foundations.
Once I realised the issues, I spent more time looking at the property structurally and then quizzing the real estate agent to try and determine the problem. As I suspected, the property had major water issues which I was told had been rectified. There had been some underpinning done which should help the situation for now but spell trouble in the future.
No, I’m not a building inspector or structural engineer but 6 renovations under my belt tells me that this property is going to be a headache, despite the issues having been fixed. As conditions of the soil underneath the house change from being damp to being dry, I expect more cracking and major ssues to appear which will require further maintenance, like filling and painting and perhaps even packing the stumps or more underpinning. This property ain’t going to be for the faint hearted.
Why am I telling you this? Well for my client we ruled this property out but, from what I saw, not one buyer actually took the time to notice anything but how nice the house was to live in and, according to the agent I spoke with, this is a growing trend.
I recall another agent, who will remain unnamed, telling me that “of the 24 sales their office made last month, 23 would not have had a building inspection or any due diligence conducted on the property”, staggering! Now when you’re spending upwards of $700,000, I just don’t think that’s smart!
Buying a Property in Glenhuntly
Located at 1/6 Culma St, Glenhuntly this lovely 2 bedroom sizeable front unit had a lot going for it. Only two on the block, with a renovated bathroom, recently painted, new carpets and lovely front and rear courtyard, this property was always going to appeal to a downsizer, young professional or investor with its proximity only a minute’s walk to the Glenhuntly train station and shops.
In front of a crowd of about 60 onlookers, auctioneer Ruth Roberts of Woodards Glenhuntly began working the crowd like a circus ringmaster. Quoted at $560,000 – $620,000 the property made its way to $650,000 and continued on from there in spurts and starts with bids exchanging in $5,000 and then $1,000 lots, finally reaching and selling for $755,000 to a young professional couple.
Our next auction was a 2 bedroom warehouse conversion in Collingwood. Read More
TOP 5 HOUSES
1. 20 Reed Street, Albert Park $2,810,000
2. 21 Haydens Road, Beaumaris $2,800,000
3. 183 Church Street, Brighton $2,640,000
4. 44 Camperdown Street, Brighton East $2,600,000
5. 15 Fairmount Road, Hawthorn East $2,540,000
TOP 5 BARGAIN HOUSES
1. 36 Oriole Drive, Werribee $287,500
2. 26 Christie Street, Deer Park $308,000
3. 12 Leisure Way North, Rosebud $328,000
4. 2 Brampton Close, Craigieburn $341,000
5. 70 Kuringai Road, Tootgarook $350,000
TOP 5 APARTMENTS
1. 5/105 Crown Street, Richmond $2,000,000
2. 405 New Street, Brighton $1,751,000
3. 3/11 Monomeath Avenue, Toorak $1,701,000
4. 3/47 Durham Road, Surrey Hills $1,525,000
5. 29A Barnett Street, Hampton $1,448,500
TOP 5 BARGAIN APARTMENTS
1. 14/234 Warrigal Road, Camberwell $117,000
2. 11/242 Pascoe Vale Road, Essendon $237,500
3. 2/131 High Street, Thomastown $247,000
4. 2/8 Anzac Street, Carnegie $268,000
5. 3/64-66 Bent Street, St Albans $285,000
Source: REIV
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