Melbourne Auction Results – October 20, 2014

Foreign And First Home Buyer Myth Busted: NAB

Gotta love some investigative journalism, no?

Financial commentator Michael Pascoe delved a little deeper into why first home buyer numbers are falling.

Unfortunately for those click baiting publishers, foreign buyers aren’t the reason for their perceived decline. But more of that after we cover this weekend’s auction activity.

A clearance rate of 73 per cent was recorded this weekend, compared to 70 per cent last weekend and 70 per cent this weekend last year.

“The volume of properties hitting the market appears to be shifting the balance of power away from vendors.”

There were 932 auctions reported to the REIV. Of those, 681 sold and 251 passed in, 127 on a vendor bid.

According to the REIV’s September quarter medians which were released this week, Coburg and Balwyn were this quarter’s top growth suburbs.

Both areas also experienced strong demand at auction with above-average results – Coburg recorded a 82 per cent clearance rate for the quarter, while Balwyn recorded 77 per cent.

Photo: The Homepage

There Is Lacklustre Demand For Units, According to Agents

Since May this year, auction clearance rates for units have hovered around the 70 per cent mark. Unfortunately, there has been a steady fall in unit clearance rates since September this year.

This really caught my eye in the results section of The Age, especially after several agents declared that there was “a lacklustre demand for units”. In their opinion, they are only seeing demand in Melbourne’s east.

“Units seem to be struggling to the point where I am issuing a warning to all buyers…”

While auction results for houses appeared solid, and it’s only suburbs in the west and south east that appear to be flagging below 70 per cent, units seem to be struggling to the point where I am issuing a warning to all buyers, especially those seeking one bedroom units, established or new.

Though it has been a seller’s market for many months now, the volume of properties hitting the market appears to be shifting the balance of power away from vendors.  

Buyers now have more choice in property, which is leading to a preference for renovated and well located houses instead of renovator’s delights and units.

Photo: Get You Organised

Are First Home Buyers Being Locked Out Of The Housing Market By Foreign Buyers?

As I mentioned, Michael Pascoe wrote a very interesting article about falling first home buyer numbers.

The culprit, unfortunately, is the Australian Bureau of Statistics. It seems the methodology they used to measure this data has failed them, as they were only accounting for first home buyers who applied for a grant.

According to the ABS, concerns “have been raised that under-reporting could occur if some lenders were only able to accurately report on those buyers receiving a first home buyer grant.”

“Local investors [are] competing with first home buyers, not foreign investors…”

The ABS says it’s conducted a preliminary investigation.

“The investigation indicates that some lenders experience difficulty reporting on loans where the buyer is not receiving a first home buyers grant.

“Estimates of loans to first home buyers are therefore under review and users are advised to exercise caution in referencing this data.”

The quarterly NAB Housing Survey released last Wednesday showed that it was local investors that were competing with first home buyers, not foreign investors, who are buying in a different segment of the property market.

According to NAB, over the past year first home buyers have made up 18.75 per cent of the new housing market, compared to 17.4 per cent for the first year of the survey starting in 2010.

And first home buyers accounted for 17.22 per cent of the existing home market over the past year, up from 16.56 per cent in the survey’s first year.

So myth busted!

Street Advocacy News: Buying & Selling Property With Street News

This week’s advocacy story is about some new clients who engaged me to help them sell their home just the other day. 

To many, selling a home can be an ordeal. There is so much to do and there are so many critical decisions to make.

Without trying to make this sound like a sales pitch, my clients were in a dilemma about how much work to do to their property and whether this would translate into a substantial increase in buyer inspections, competition and price.

For those of you who might be wondering the same, I’ll go through the process I used to help them decide:

1. Check out the current market for the area and the property type you are selling or planning to market. Supply will dictate demand. Too many properties of the same type will mean competition, so you could easily overcapitalise and not recoup a large spend.

2. Determine what the demand will be like for that type of property in the price bracket you are expecting to sell in.

3. Request a realistic price from the real estate agent for the property as is, and with your proposed makeover. Consider how much of a difference it will make to the property price if you include these updates, and whether it will be worthwhile.

4. Will the property market be strong, or at least able to bear the expected increase in value at the time of sale?

From personal experience I have achieved record prices for two properties that I have renovated and sold.

However, in both cases timing was everything, and the quality of the work I had done was at a high standard.

Even as a seasoned property player I still found myself questioning my decision to spend so much time and money.

This year’s series of The Block really highlights my point. As we all know, there was a considerable price disparity between the apartments, despite the volume of work done by the contestants.