Melbourne Auction Results – November 25, 2013

Melbourne Auction Results – November 25, 2013

Is There Evidence of a Splitting Property Market in Melbourne?

Last week the International Monetary Fund (IMF), which surveys and monitors economic and financial developments globally, cautioned Australia’s property investors, banks and regulators about the potential risks of rising property prices and an overheated property market in Melbourne, Sydney and Brisbane.

“A sudden house price decline, were it to occur – possibly triggered by a shock to household incomes and borrowing costs – could reduce consumer confidence and impact overall economic activity,” their statement said.

“While there is no sign of a housing bubble, regulators need to ensure strict lending standards are maintained.”

“The authorities would need to be prepared to take preventative actions if household credit growth, transactions volume and prices accelerate.”

Despite these warnings, the IMF believes that Australian financial regulators and the RBA are well equipped to handle any potential price bubble as they did in 2002.

While visiting Australia, the IMF’s deputy managing director Min Zhu stated that while there is no sign of a housing bubble, regulators need to ensure strict lending standards are maintained.

Melbourne Auction Results

Over the weekend the REIV recorded a clearance rate of 66 per cent from 944 properties; somewhat lower than the 70 per cent and above clearance rates recorded over the past few months on large auction numbers (over 1000).

Some commentators are calling this auction clearance rate drop the end of a ‘bull run’, but I’m not quite convinced yet.

Others are talking about a ‘splitting of the market’, where buyers are aggressively bidding on certain property types in certain areas while other properties and suburbs remain subdued.

No doubt the large volume of properties auctioned over the past few months has certainly quelled the urgency buyers seemed to have had to get into the market, but before we call it a ‘plateauing’, let’s see what the trend is for the next few weeks.

What Property Experts Experienced on the Ground

Some commentators are talking about a ‘splitting market’
Photo: Ilaria

Buyer Advocate: Catherine Cashmore

Independent advocate Catherine Cashmore attended three auctions in the south-eastern suburbs of Ormond, Glen Iris and Chadstone.

“Considering the amount of stock being offered for sale, Melbourne is still producing consistent results,” she said. “I attended a number of auctions on Saturday – some in compromised locations on main roads – yet all sold under the hammer around their expected value.”  

“All in all, cooling demand is good for purchasers, because it allows a sense of rationality to override any pre-Christmas fervour.”

Ms Cashmore also noticed the change in attitude. “Buyer sentiment has moderated and this is evident in the lower clearance rates. It should be noted that buyers correct sooner than vendors, therefore there is some mismatch between vendor expectation and the budget buyers are willing to pay. This will play out over the coming weeks.”

“All in all, cooling demand is good for purchasers, because it allows a sense of rationality to override any pre-Christmas fervour.”

But will it be too late for those vendors trying to beat the Christmas season?

Nelson Alexander managing director: Liz Walker

Liz Walker, the managing director of Nelson Alexander in Ivanhoe, has been surprised by the last minute rush.

“Nelson Alexander uploaded over 136 properties online last week,” she said. “We are experiencing huge volumes of stock in the lead up to Christmas. This influx will test the strength of the Melbourne property market.”

Street News director: Peter Sarmas

Meanwhile, I attended an auction at 30 Magnolia Road in Ivanhoe, where there was little interest. Agent Gordon Whale appeared to be perplexed by the lack of bidding for the one bedroom unit, which passed in at $300,000 on a reserve of $335,000.

Although it was in need of some renovation, the property appeared to reflect good buying considering the unit next door sold a few years earlier for $350,000. On the other hand, the next door property was renovated.

Perhaps you could say the value of a renovation is rewarded when you compare this property to another refurbished one bedroom unit in Merton Street, Ivanhoe, which sold for $370,000 a week earlier.

Is this evidence of a splitting market?

Top 5 Houses

1. 15-17 Irving Avenue, Box Hill $6,000,000
2. 5 Lorac Avenue, Brighton $3,150,000
3. 5 Hansen Street, Kew $2,826,000
4. 1 Barry Street, Kew $2,825,000
5. 40 Terry Street, Balwyn $2,820,000

Top 5 Bargain Houses

1. 42 Pearson Crescent, Coolaroo $210,000
2. 132 Riggall Street, Broadmeadows $278,000
3. 3 Deakin Court, Broadmeadows $290,000
4. 57 Elwers Road, Rosebud $313,000
5. 7 Lincoln Court, Noble Park $340,000

Top 5 Apartments

1. Lot 10 Waterfront Place, Williamstown $1,910,000
2. 7/422-426 Glenferrie Road, Kooyong $1,355,000
3. 5/55-57 Manningtree Road, Hawthorn $1,275,000
4. 41A Brunel Street, Malvern East $1,260,000
5. 2/19 Albert Street, Caulfield North $1,085,000

Top 5 Bargain Apartments

1. 7/14 Ardyne Street, Murrumbeena $265,000
2. 10/414 Blackshaws Road, Altona North $300,000
3. 3/133 Smith Street, Thornbury $303,000
4. 11/42 Middle Road, Maribyrnong $310,000
5. 2/1-3 Berry Avenue, Edithvale $317,000

Source: REIV

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