Melbourne Auction Results – July 20th

19/07/2015

Peter

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Is Winter the best time to sell real estate in Melbourne? This week auction volumes in Melbourne are up significantly, 759 versus last year’s 655 for the same period across the city.

A clearance rate of 77 per cent was recorded this weekend compared to 74 per cent last weekend and 70 per cent this weekend last year. There were 614 auctions reported to the REIV this weekend, with 472 selling and 142 being passed in, 65 of those on a vendor bid. The median house price for auctions in Melbourne grew by 3.1 per cent in the June 2015 quarter to $888,000 from $861,500 in the March quarter. This is up 8.3 per cent from the same period last year, given higher clearance rates.

Clearance Rate: 77%
Reported Auctions: 614
Sold at Auction: 372
Passed in: 142
Sold Before: 100
Sold After: 0

Auction Volumes: $374.45m
Last Weekend: 596
Last Year: 583
Houses: 82%
Units: 70%

Consumer Sentiment Falls But Clearance Rates Hold Up

There were 759 auctions reported to go to auction over the weekend but as you can see from the above figure only 614 were reported, perhaps a sign that things might be slowing somewhat? It will be interesting to see the final clearance rate during the week.

For this time of the year, auction volumes in Melbourne are up significantly, 759 versus last year’s 655 for the same period across the city. Winter is traditionally a quieter time of the year for real estate and often a great time to sell, maybe vendors are waking up to the fact that prices improve during this period as opposed to the Spring season, which I suspect will be a bumper this year.

We reviewed the weekend’s auction results per area, in particular noting any marked changes between last week’s results and this weeks. Highlighted in this weekend’s APM figures was the notable fall in clearance rates in the South East and North for houses, while the biggest gain in clearance rate was in the North East. As far as the unit market, the biggest discernible difference was a drop in clearance rates in the Inner South, while the biggest gain was in the Inner Metro market.

Despite all the turmoil overseas, particularly in China and Greece, we are yet to see any significant softening in Melbourne’s property market. Greece appears to have accepted new tougher measures handed down by the Eurozone and IMF in an effort to secure a bailout and avoid an imminent collapse. This latest economic disaster appears to have been averted once more, at least for the time being anyway.

Overseas, economic issues appear to have had very little or no bearing on the Melbourne and Sydney property markets which have grown over 25.9 and 43.1 per cent respectively, since the current growth cycle began back in May 2012, according to Corelogic.

The latest Westpac-Melbourne Institute Consumer Index and its raft of data released last week, showed consumer sentiment waning. The Reserve Bank’s decision to leave interest rates on hold at a 2% cash rate is believed to have been one of the main causes for the decline in sentiment. The index recorded 92.3 points, below the 100 point equilibrium, so that pessimists outweighed optimists. This is the lowest reading for the index since December of last year, which is concerning.

The two components of the survey which were a shining light and showed more optimism than pessimism, were sentiment for finances for the next 12 months and time to buy a major household item indices.

On the negative side, the time to buy a dwelling index fell a substantial 15.4% to be at its lowest rate since June 2010, while indices measuring economic conditions over the next 12 months and over the next 5 years haven’t been optimistic since December 2013.

There is no doubt property is becoming very unaffordable for first home buyers. With confidence in future economic conditions deteriorating alongside the time to buy a dwelling index, I am struggling to see how property ownership will become part of a younger person’s life going forward.

What I am seeing though are a number of buyers with good incomes jumping into the property market to either create wealth for themselves or use as a future leverage for their children. Some already own one property while others have sat on the sidelines waiting for an imminent property crash only to see a price growth of nearly 26 per cent in Melbourne property prices over the past 3 years.

On The Street

We were out and about over the weekend in Rosanna, just 17 kms North East of Melbourne’s CBD. Situated on 799m2 of land, this original 4 bedroom, 1 bathroom clinker brick property was ready to change hands.
Quoted by the agent, Brad Pearce of Miles Real Estate, between $800-$880,000 the property drew a crowd of 45 people to watch proceedings in what was a sunny but very cold winter’s day.

Spruiked by the agent as being in one of Rosanna’ premier streets, 100 Mountain View Parade quickly found its first bid at $810,000. Strong bidding continued all the way to $870,000, at which point the agent was going to seek instructions from the vendor but for the eagerness of a new buyer who continued the bidding all the way to reach over the $1 million dollar mark. Yet another new bidder entered the frenzied bidding and continued blows with the original young couple who tried to wrestle the house from this new buyer, only to give up at a final result of $1.13 million.

Not surprisingly, the neighbours were pleased for the owner and of course for themselves. After all, another million dollar sale in the street means more money in their pocket or maybe more equity to buy an investment property or help their kids gain a foothold in this hot market..