Melbourne Auction Results – July 27th, 2015

Melbourne Auction Results 27th July 2015
79% Clearance Rate 687 Reported Auctions	Sold at Auction:	445	Auction Volumes:	$417.06m
	Passed in:	142	Last Weekend:	699
	Sold Before:	96	Last Year:	684
	Sold After:	1	Houses:	84%
			Units:	69%

 

A clearance rate of 79 per cent was recorded this weekend compared to 75 per cent last weekend and 70 per cent this weekend last year.

There were 687 auctions reported to the REIV this weekend, with 542 selling and 145 being passed in, 56 of those on a vendor bid.

A number of Melbourne suburbs have recorded annual capital growth of more than 20 per cent. These include Mount Waverley (28 per cent), Doncaster (28 per cent), Burwood (27 per cent) and Balwyn North (23 per cent).

In contrast, this weekend’s results mark the fifth consecutive week where auction clerance rates in Melbourne were below 80 per cent (APM).

Despite this, Melbourne’s property market has set a new bench mark recording a 3.5% jump in median house prices for the June quarter to an all-time-high of $668,030, while unit median prices recorded a 3.2% increase to $443,549.

A number of real estate agents noticed the “heat” coming out of the market. Michael Richardson of Fletchers Real Estate saying “We auctioned 3 town houses last weekend which by past results should have sold under the hammer. Unfortunately all three passed in and later negotiated. Something we’re not used to seing.”

Anthony De lesi of Barry Plant Northcote also noticed a difference in the market. “Its a real mixed market, we have at the one end single front properties in original conditions seeing 20 plus inspections at an an open and at the other end we passed two apartments on the weekend, it’s that different at the moment.” 

 

 

 

 

 

 

 

 

 

 

 

 

Banks Catch Investors By Surprise And Lift Rates

I’m not sure how many of you who are reading our weekly articles are investors but something happened that even caught me by surprise. ANZ bank increased interest rates to its investor loans by a hefty 0.27% last Thursday, so for a loan of $500,000 investors will now be paying an extra $1,350 per year or $112 per month, not exactly chump change! I wonder how many will be trying to pass on this increase to their tenant as they try to recoup the sudden jump.

The following day, the Commonwealth Bank became the second lender to announce a lift in interest rates for their investor customers. I would expect by the end of this week the remaining two will fall in to line and lift rates as well. Not sure about you, but personally I have been scrambling to lock in my rates for 5 years at 4.59 percent before any further announcements.

Simultaneously, ANZ has announced that it will reduce fixed rates for owner occupiers by as much as 0.40 per cent and cutting its four year fixed rate to 4.74 per cent.

This latest rate hike targeting investors appears to be a sign of intervention by APRA, triggering a change to the property investment landscape. ANZ Australia chief executive Mark Whelan said, “although interest rates for residential property investors are at very low levels historically, the decision to raise interest rates for residential investment lending has been difficult but necessary in the current environment”. Mr Whelan went on to say, “it allows us to balance the mix of our lending between owner-occupied and investment lending, as well as the impact of changing market conditions. This includes a decision to cut fixed rates for new owner-occupied home lending. “This is a considered decision that takes into account our customers’ position and the criteria when we look at setting rates, including our competitive position, our regulatory obligations and the state of the residential property market.”

No doubt APRA has been concerned for a while about the proportion of lending to investors and by imposing regulations which require banks to carry more capital in line with international standards, we have seen an immediate effect in rates. Someone eventually had to bear the cost for this increased capital to safeguard the banking institutions, I just don’t think anyone expected the move would be so swift.

Why are property prices rising?

Economic commentator Alan Kohler wrote an interesting article last week about why property prices are spiking at the moment. The simple answer, cheap money!

Backed by ANZ Research which released a paper on housing affordability, it said low interest rates and cheap mortgages were contributing to rapid growth in house prices, rather than policies like capital gains tax and negative gearing.

While multi-year low interest rates have been good news for mortgage holders, they have made it harder for people to enter the property market by causing house deposit affordability to fall to an “all-time low,” the paper states. 

“Homeowners and investors are likely to benefit from low mortgage rates for years to come, while first home buyers will continue to find home deposit affordability more difficult than previous generations, unless they compromise on current housing preferences,” the report states. “Looking ahead, while deposit affordability for detached houses is expected to remain difficult, a sharp increase in the supply of new apartments in the coming years in Sydney, Melbourne and Brisbane will lift the supply of housing at a lower price point”.

The new question now is how tougher lending standards and newly increased interest rates will affect off the plan purchases made by investors. Will these properties “stack up” when it comes to valuations prior to settlement or will thousands of would be buyers be forced to lose their deposit or forced to “tip in” more money creating what I see as a potential property disaster.

Those with plenty of equity in other assets would have no problem settling on their new purchase but what of those who don’t? And overseas buyers, how will they respond? The continual fall in the value of the Australian dollar will continue to make property in Australia attractive. Let’s hope the foreign buyers don’t have any issues settling on their new purchases because we have a whole economy hanging at the other end!

 

TOP 5 HOUSES
1. 8 Ferdinand Avenue, Balwyn North $3,600,000
2. 59-61 Patterson Street, Ringwood East $3,000,000
3. 110 Mountain View Road, Balwyn North $2,930,000
4. 11 Mitchell Street, Northcote $2,820,000
5. 5 Agnes Avenue, Balwyn North $2,400,000

TOP 5 BARGAIN HOUSES
1. 35 Rostron Way, Roxburgh Park $300,000
2. 5 Dunn Street, Broadmeadows $315,000
3. 6 Scarlet Drive, Doveton $330,000
4. 5 Lytham Court, Sunbury $340,000
5. 17A Apple Tree Drive, Mill Park $345,000

TOP 5 APARTMENTS
1. 2/1 Marne Street, South Yarra $1,740,000
2. 103/33 Wattle Road, Hawthorn $1,420,000
3. 1/305 Gallaghers Road, Glen Waverley $1,195,000
4. 157 Ramsden Street, Clifton Hill $1,185,000
5. 34A Lesden Street, Bentleigh East $1,160,000

TOP 5 BARGAIN APARTMENTS
1. 2/17 Abercarn Avenue, Craigieburn $280,000
2. 1/20 Shankland Boulevard, Meadow Heights $280,000
3. 7/12 Schofield Street, Essendon $290,000
4. 15/78 Argyle Street, Moonee Ponds $295,000
5. 11/114 Mason Street, Newport $316,000

Source: REIV
 

 

 

 

 

 

 

 

 

 

 

 

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