Melbourne Auction Results – February 16th

An auction clearance rate of 74 per cent was recorded this weekend, compared to 65 per cent last weekend and 70 per cent this weekend last year.

Of the 445 auctions reported to the REIV, 328 sold and 117 passed in, 58 on a vendor’s bid. As of December quarter 2014, there are over 59 suburbs with median prices over $1 million dollars in Melbourne. Three suburbs – Richmond, Northcote and Strathmore have joined the million dollar median list for the first time ever. In 2014, auctions accounted for 60 per cent of all sales within these suburbs (REIV)

Was Last Weeks Auction Results An Aberration?

Perhaps last week’s surprising lower than expected auction results were an aberration or just not accurate due to the smaller numbers. Regardless, this weekend’s 74 per cent clearance rate was more reflective of the sentiment we witnessed last week and this week with both inspection numbers and auction results strong according to a number of real estate agents around Melbourne. We need to see a trend before we get too excited about Melbourne’s property market this year and hope the Federal Govt brings back some stability and confidence after last week’s debacle spill election.

The highest clearance rates were reported in the Inner East (90 per cent) while for units Inner Metro Melbourne performed best (66 per cent) both above last year’s figures for the same time.

The Reserve Bank’s chief Glenn Stevens is strongly indicating another interest rate cut next month taking cash rates to a new low of 2 per cent with another possible cut on the cards to 1.75 per cent by the years end. This means, should the banks pass on all of the cut, interest rates could fall another half a percent and near 4 per cent.

We need to see a trend before we get too excited about the property market this year.

The reason being cited by the RBA for such drastic measures is our stubbornly high Aussie dollar against other foreign currencies and our sluggish economy growing barely at 2 per cent per annum. This week’s unemployment data added further fuel for another cut with the unemployment rising by 0.3 per cent to 6.4 per cent. This on the back of 100,000 jobs added last December.

A plus and probably reflective of current property activity was the upward bounce of 8 per cent in consumer confidence last week, to which Westpac’s Chief Economist Bill Evans has attributed to low interest rates and lower petrol prices, perhaps a short term boost, we will wait and see.

Despite the Australian Bureau of Statistics rectifying the problem of how they measured their First Home Buyer data, activity by this segment of the market reached a 10 yr low according to latest official figures. This is in contrast to ABS data for investor activity which continues to show a surge in both value and the number of loans and coincides with the latest warning by the Australian Prudential Regulation Authority to banking institutions about risky mortgage lending practices.

The interesting conundrum which puts the Australian economy at risk is the amount of exposure banks have to residential property and indirectly the Australian population has through shareholding in bank stocks via managed funds in their Superannuation. The concern by economists like Christopher Joye, is if there is a downturn in property prices, more than just property owners will be hurt as share prices of key banking stocks will also suffer.

On The Street

Auctions and open houses we saw today across Melbourne all did well. In Doncaster Barry Plant passed in a property at 5 Saxon Street, Doncaster but later negotiated the sale for $1.16 mil. Marshall White sold 8 Johnson St for $1.81mill in front of a crowd of 60 with four bidders fighting it out. Interestingly this property failed to get a bid with another agent 6 months ago, listed privately in September for 1.75mil.

Stock levels continue to improve and build for Feb 28th in what will be a very big day for auctions.

Hocking Stuart Director David Wood was pleased to sell an unrenovated bank house on Williamstown Rd, Port Melbourne for $895,000 on a reserve of $850,000. In the west real estate agent Jas Stephens reported 7 sales from 8 properties auctioned on Saturday. Stock levels continue to improve and build for Feb 28th in what will be a very big day for auctions.

Photo Source: Barry Plant, 5 Saxon Street, Doncaster

Top 5 Houses

1. 26 Ardmillan Road, Moonee Ponds $2,440,000
2. 5 Winmalee Road, Balwyn $2,344,000
3. 6 James Street, Surrey Hills $2,218,000
4. 38 Manning Road, Malvern East $2,115,000
5. 37&39 Bradley Street, Newport $1,850,000

Top 5 Bargain Houses

1. 24 Marie Street, Doveton $265,000
2. 45 Middleton Drive, Woori Yallock $276,000
3. 191 Werribee Street, Werribee $285,000
4. 28 Piccolotto Drive, Melton West $315,000
5. 8 Charleville Court, Carrum Downs $327,000

Top 5 Apartments

1. 1/721 Toorak Road, Malvern $1,620,000
2. 36A Anne Street, Mckinnon $1,231,000
3. 1/19-21 Ormond Esplanade, Elwood $1,230,000
4. 17A Dickmann Street, Richmond $1,195,000
5. 1B Hamilton Avenue, Blackburn $1,055,000

Top 5 Bargain Apartments

1. 2/18 Third Avenue, Dandenong North $255,000
2. 3/44 Type Street, Richmond $270,000
3. 6/62 Snell Grove, Oak Park $290,000
4. 340 Grand Boulevard, Craigieburn $310,000
5. 9/52 Caroline Street, South Yarra $310,000

Source: REIV