Melbourne Auction Results – September 1, 2014

Stock Set To Flood Melbourne Property Market

It’s the first day of spring, and if last week is anything to go by, the cold winter days are behind us – then again, maybe that’s not the case just yet. 

So what’s happening in the Melbourne property market, and how is this going to affect your ability to buy property in the coming months?

Firstly, let’s get the numbers out of the way.

According to the REIV, Melbourne recorded a clearance rate of 76 per cent compared to 70 per cent last weekend. 

“There have been signs that the Melbourne property market has softened…”

This is from 717 auctions from an expected 840 set go under the hammer. Some 123 property results have yet to be reported, but when they come through, I would expect this to downgrade the clearance rate somewhat. 

Traditionally, many passed in properties have sold on the day or within a day or two of the auction, but I believe we will see less of this going forward with second grade stock, especially as listing numbers are set to increase over the Grand Final weekend (the weekend of the 20th). This is a very bad time to be auctioning a property, as most Melburnians will have their focus firmly on the AFL.

Melburnians have no time for property auctions on Grand Final weekend
Photo: Alpha

Forward estimates for this spring indicate that the number of homes hitting the market will be the same, if not more than last year. The number of auctions held last spring in Melbourne was 11,915 (REIV).

There have been signs that the Melbourne property market has softened and is certainly not in the boom territory it was heading in over the past 12 months.

Generally speaking, fewer auctions will lead to multiple bidders fighting over the same property, something prevalent in the past.

What The Agents Are Saying

When I spoke to real estate agents over the weekend, I found that their sentiment reflects my view. 

Gordon Hope of Nelson Alexander in Ivanhoe sold 4 out of 5 properties before even going to auction.

“The one property we had on the market at 13/14 Merton Street in Ivanhoe was passed in at $430,000, then later had an offer of $437,000,” he said. “The vendor’s expectations were in the high $400s.”

13/14 Merton Street, Ivanhoe
Photo: Nelson Alexander

Clearly some agents are wrapping up negotiations prior to the auction and vendors are deciding to secure a sale rather than risk going into the unknown, where they could potentially lose a genuine buyer.

John Holdsworthy of Greg Hocking in Albert Park believes the area “is in a more stable and normal market… Things have definitely slowed down, but we see that as a positive and more sustainable rather than having a boom bust situation.” 

“Generally speaking, fewer auctions will lead to multiple bidders fighting over the same property…”

When I met with John over the weekend at 10/36 Philipson Street in Albert Park, I saw that the property was located only a block away from South Melbourne beach, cafes and lifestyle. “It would be rare to find properties like this in a buoyant market,” he said. “We would expect them to be snapped up”. 

“The change in the market has brought about some good buying opportunities for the discerning investor.”

10/36 Philipson Street, Albert Park
Photo: Greg Hocking

Some Good News For First Home Buyers

The first home buyer market is the one sector of the buying market that has been flagging, but it received some positive news yesterday. The State Government announced that Victoria’s stamp duty concession for first home buyers will rise to 50 per cent from today. 

This means that eligible first home buyers could save $15,535 in stamp duty on a purchase up to $600,000. 

However, if purchasing a newly constructed home, buyers could also be eligible for the $10,000 First Home Owners Grant, so the savings could be closer to $25,535. This substantial sum will hopefully stimulate this sector of the market, which has been dominated by investors so far.

Reserve Bank Meets Tomorrow

Finally, the Reserve Bank meets for its monthly chat tomorrow. The general consensus from economists is that the cash rate will stay on hold at 2.5 per cent. 

Stephen Koukoulas believes that rates could even fall further: 

“The RBA Board meeting on Tuesday will likely leave interest rates unchanged, even though the case for an interest rate cut is strong, with a 12 year high unemployment rate, a record low pace of wages growth and inflation more than comfortably within the target range the key factors behind the case for some more monetary policy easing.”

Overall, I would expect the property market to remain stable, quality properties and quality areas to continue to outperform, and demand and supply to play a major role in property prices. 

In my opinion, Melbourne’s middle and outer eastern suburbs will keep outperforming the rest of the city as pent-up demand outstrips supply. 

Current extraordinary factors influencing prices in this region are expected to continue in the short term.