Melbourne Auction Results – December 2, 2013

Melbourne Property Market Unconvincing

Now I need to fess up.

I am the first to spout optimism about the Melbourne property market, but results from the last two weekends and the general consensus from agents and advocates on the ground has been unconvincing in my mind.

There are definite signs that the market is softening. You just have to look closer to see why.

Auction results over the weekend don’t appear to tell the full story.

Although the REIV reported a solid 70 per cent clearance rate over the weekend on 1251 properties, 243 have yet to be reported. That’s 20 per cent of results yet to be accounted for. When you factor these numbers into the above clearance rate, the Melbourne property market looks somewhat vulnerable.

Rather than rely on what I’m seeing myself, I thought I would contact my network of agents to ask what they are observing on the ground.

What Property Experts Experienced on the Ground

Biggin Scott Richmond agent: Edward Hobbs

Edward Hobbs of Biggin Scott Richmond said his office is only seeing a marginal change in the market, one that is obviously stock related.

“Anything A-Grade is still being well inspected, and come auction time, well bid,” he said.

Hocking Stuart Doncaster agent: Tony Tuccitto

However, Tony Tuccitto of Hocking Stuart Doncaster has noticed the difference. “Not all areas and properties are performing the same way,” he said. “We had an excellent result for a property sold in Mitcham with multiple bidders, but this is not uniform throughout Manningham.”

Buyer Advocate: Cate Bakos

When I put this question to buyer advocate Cate Bakos, she had another opinion.

“I’ve had no hint that there is any market softening in the investment areas I’m targeting,” she said.

“In fact, quite the opposite. I should preface this statement by saying that this impression relates to sought-after inner suburbs. I am well aware that fringe suburbs aren’t faring the same, but they haven’t since the first home buyer grant stopped stimulating them.”

“Not all areas and properties are performing the same way…”

“I participated in four auctions on Saturday, and witnessed an extra one for a house I had considered for clients before subsequently deciding on alternative properties.

“The auctions spanned Alphington, Albert Park, Fitzroy, Fitzroy North and Moonee Ponds. It’s fair to say that each of these locations is a sought-after, inner-to-inner-middle city suburb. Each and every one of them exceeded their quote range and not one passed in.

“The stand-out result was the Fitzroy result,” Ms Bakos continued. “The property had an initial quote of $580,000-$630,000, but this was later updated to $600,000-$650,000, as it was obvious the agents felt buyer interest could push the sale result beyond the vendor’s expectation.

“It sold under the hammer for $816,000, which is a notable price for a two bedroom brick 90s townhouse. The Moonee Ponds property was quoted in the $600,000s and sold for $825,000, while the Albert Park property was quoted in the high $800,000s to early $900,000s and sold for $1.055 million.”

So why such a disparity? A closer look at stock levels in these different areas appears to shed light on what’s really happening in the Melbourne market.

Amount of Stock on the Market

Suburb	No of properties
Richmond	183
Doncaster	169
Doncaster East	152
Mitcham	64
Alphington	23
Fitzroy	41
Fitzroy North	72
Albert Park	34
Moonee Ponds	82

Source: realestate.com.au (December 2, 2013)

These numbers help to demonstrate that stronger performing suburbs appear to have lower stock levels and therefore stronger buyer interest, bidding and property prices. 

Breaking these numbers down into property types (house or unit, new or established) would also paint a more accurate picture.

Where to from Here?

Yes, spring is typically a peak time in real estate. It’s when many vendors and buyers decide to make a property move. However, this year there has been a record number of consecutive weeks where auction numbers climbed above 1,000. For the most part, this has been met by strong pent-up buyer demand.

That said, as 4,500 properties will be auctioned over the next three weeks (this figure includes those properties auctioned over the past weekend), there is a feeling that conditions have peaked.

It looks like everyone decided to put their property on the market at the last minute this year due to the level of uncertainty in the economy.

Following a rise in property prices since August and a renewed sense of confidence due to the new government, there have been a number of Super Saturdays during this half of the year.

However, the dilemma faced when supply meets, and in some cases surpasses demand, leads to price stagnation and even a correction.

Last week, RP Data pointed out that their November property price figures for Melbourne are stable, and there has been no reported growth.

“…there is a feeling that conditions have peaked.”

What does that mean? In a nutshell, from a buyer’s point of view there appear to be some good opportunities with unsold homes as we near Christmas, provided they are prepared to compromise.

From a vendor’s point of view there are some worrying signs if you own a property in an area where supply is outstripping demand and you are not prepared to meet current market prices.

While buyers should expand their search to neighbouring suburbs with increased stock levels, they must also ensure they do their research or enlist the help of a property professional.

The RBA Meet This Tuesday

It looks like most economists are resigned to the fact that the Reserve Bank of Australia (RBA) will leave rates on hold when they meet this Tuesday, for what will be the last time until February.

Indications that the US Federal Reserve may stop printing money sooner rather than later, coupled with the RBA talking down our local currency, have helped the Aussie dollar reach a three month low of 90.65.

The hope is that a lower Aussie dollar will help our exporters and boost the economy, preventing the RBA from making further rate cuts.

Top 5 Houses

1. 25 Beach Street, Port Melbourne $5,175,000
2. 17-19 Alexandra Avenue, South Yarra $4,825,000
3. 28 & 30 Auburn Grove, Hawthorn East $2,870,000
4. 61 Alma Road, St Kilda $2,700,000
5. 65 Denbigh Road, Armadale $2,640,000

Top 5 Bargain Houses

1. 28 Loch Street, Cranbourne $250,000
2. 7 Warren Close, Narre Warren $285,000
3. 14/14 Mickleton Grove, Point Cook $290,000
4. 19 Housden Street, Broadmeadows $293,000
5. 103 Kenny Street, Westmeadows $300,000

Top 5 Apartments

1. 30A Rothesay Avenue, Elwood $1,850,000
2. 303/155 Beach Street, Port Melbourne $1,767,000
3. 1A Hardinge Street, Beaumaris $1,530,000
4. 30A & 30B Rooding Street, Brighton $1,379,000
5. 108A Wheatley Road, Mckinnon $1,365,000

Top 5 Bargain Apartments

1. 9a/131 Lonsdale Street, Melbourne $192,500
2. 2/7 Hadley Street, Seaford $247,500
3. 2/130 Queensberry Street, Carlton $248,000
4. 5/246 Buckley Street, Essendon $260,000
5. 2/707 Barkly Street, West Footscray $265,000

Source: REIV

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