Melbourne Auction Results – June 1st

A clearance rate of 81 per cent was recorded this weekend compared to 80 per cent last weekend and 71 per cent this weekend last year.

There were 1048 auctions reported to the REIV this weekend, with 854 selling and 194 being passed in, 100 of those on a vendor bid. Next week Melbourne celebrates the Queen’s Birthday long weekend so auction volumes are expected to fall to 221 for the first winter weekend.

There were more than 150 suburbs in metro Melbourne where the median price recorded in the first quarter of 2015 was below the metropolitan median of $688,000. The highest clearance rates recorded so far this year for these areas were Bayswater (100 per cent), Knoxfield (100 per cent) and Heathmont (97 per cent).

Photo Source: realestate.com.au

Worrying Signs In The Economy

The big news out this week was the poor data released on CAPEX. Capital Expenditure Spending, also known as CAPEX, fell to 4.4 per cent in the March quarter, double what was expected by economists and according to them signalling recessionary levels. Plant and equipment investment was down 0.5 per cent in the March quarter while spending on buildings and structures was down 6.5 per cent.

CAPEX is an important gauge for the interest rate outlook, with the Reserve Bank relying largely on a pick-up in non-mining investment to offset the expected slump in mining investment currently underway. The Australian dollar immediately fell on the news to 76.75 against the US.

The CAPEX report was much weaker than expected and provides further evidence that the transition toward investment in the non-mining sectors remains quite some time away. The report’s estimates for 2015-16 investment intentions were further downgraded and now suggest that non-mining businesses expect to cut their expenditure by 10% in 2015-16. The RBA will be disappointed by this soft result, which provides further confirmation that rates are likely to remain on hold for an extended period or perhaps see another cut. We will see what happens this Tuesday when the RBA meet to review what is already a very low rate.

In what looks like a complete contrast to business conditions and a much needed boost for our ailing economy, the latest Westpac-Melbourne Institute Consumer Sentiment Index jumped above 100 for the first time since February. The survey was conducted between the period of 11th-16th of May.

According to Westpac, this is a very strong result as it’s the highest level of the index since January last year. Any reading over 100 means that optimists outweigh the pessimists. Clearly, the two driving forces behind this boost have been the rate cut by the Reserve Bank and the “soft” Federal Budget delivered in May, a far cry from last year’s cost cutting budget.
A separate question was asked in the survey specifically about the impact of the Federal Budget on family finances over the next 12 months. Of the last six budgets, this year’s result was the highest since 2010 and in contrast with results from the 2014 Budget. Typically consumer confidence falls after a budget announcement, however Westpac say this is the first time they have seen such a strong result since 2007. Coincidentally, 2010 and 2007 were both very strong property markets in Melbourne and both experienced a downturn the following year.

The finance and economic outlook components measured by the Index were also strong. “Family finances vs. a year ago” improved by 5.8%; “Family finances over the next 12 months” lifted by 2.2%. The outlooks for economic conditions over the next 12 months (up 9.2%) and next five years (up 20.2%) were both encouraging and would explain confidence in the property market.

On The Street

We had a busy period over the past 2 weeks selling 3 properties for vendors and achieving some extraordinary prices, but more about that next week.

This week we were out to buy an investment property for our client and had honed in on a property in Thornbury.
Quoted at $520-$570,000 this two bedroom front villa unit ticked all the boxes. Unfortunately it also seemed to tick a lot of boxes for other buyers as well, many which appeared to be first home buyers. Thornbury is only 8kms from the CBD, has very good infrastructure and is seeing incredible gentrification.

At the auction the bidding started at $500,000 and with increases of 10,000, made its way up to $600,000 within minutes and was put on the market. Now down to two bidders and bidding in lower increments of $1,000 and $5,000 bids, the price went all the way up to $634,000.

Needless to say this surpassed what we expected the property to sell at and despite all our due diligence we are back to the drawing board looking for another opportunity. This is a tough market to find a good property at the right price!

Top 5 Houses

1. 3 Miller Street, Brighton $8,040,000
2. 36 Wentworth Avenue, Canterbury $3,950,000
3. 6 York Street, St Kilda West $3,500,000
4. 24 Northcote Road, Armadale $3,000,000
5. 3 Percy Street, Balwyn $2,950,000

Top 5 Bargain Houses

1. 11 Allawah Court, Hoppers Crossing $290,000
2. 4 Currawong Street, Mornington $300,000
3. 11 Mica Court, Kings Park $314,000
4. 50 Learmonth Crescent, Sunshine West $326,000
5. 2 Silverton Court, Craigieburn $330,000

Top 5 Apartments

1. 10B Roselyn Crescent, Bentleigh East $1,420,000
2. 4/31 Cookson Street, Camberwell $1,340,000
3. 2/19 Hartley Avenue, Caulfield $1,280,000
4. 5A/9 Beach Street, Port Melbourne $1,230,000
5. 22 Stillman Street, Richmond $1,221,000

Top 5 Bargain Apartments

1. 3/6 Hatfield Court, West Footscray $220,000
2. 4/230 Ascot Vale Road, Ascot Vale $236,000
3. 9/1 Kokaribb Road, Carnegie $260,000
4. 2/5-7 Princes Street, Abbotsford $270,000
5. 3/24 Methven Avenue, South Morang $272,500

Source: REIV