Melbourne Auction Results – May 25th

Further signs of a strengthening market were witnessed over the weekend with a strong clearance rate of 82 per cent recorded from 940 auctions.

This is up compared to last weekend’s 77 per cent and 71 per cent for the same time last year. In case you missed it last week, a significant change in lending policies are being implemented by a number of lending institutions, but we’ll get to that shortly. Let’s look at this weekend’s results.

Melbourne’s East and Inner South, showed the most strength for both houses and units, with clearance rates for units significantly improving this week compared to last week. The top local government areas which experienced the highest clearance rates this year are Knox (94 per cent), Whitehorse (89 per cent) and Maroondah (88 per cent).

A numer of seasoned real estate agents are heading off to their European or Fijian luxury holiday retreats to freshen up for their return in Spring. The general consensus is that stock levels are expected to plummet during winter and next weekend will signal the end of what has been a very frothy first half of the year. We expect property prices to continue their current trajectory as smart vendors prepare to beat the rush and put their property on the market in time for an August sale. Buyers on the other hand will struggle to compete on limited stock.

Elwers Street Watsonia North

Banks Clamping down on Property Investors

I found it really interesting this week when little or no publicity was generated on what I think could be a game changer in the property investment market. If you have been keeping a close eye on the property market, there were a number of concerns raised by the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority (APRA) about the number of investors entering the property market, particularly in Sydney and Melbourne.

Last week these concerns became a reality when a many banks including the ANZ, NAB, Macquarie, Commonwealth and Bank West without notice made changes to their lending standards, specifically for property investment loans. In an effort to curb property investment, Loan to Value Ratios (LVR’s) were decreased to a new maximum of 80 per cent and interest rates for fixed rate loans and interest only loans have also risen. Exeprts believe these new changes are aimed slowing investor credit growth, however expect APRA to step in again and implement tougher lending standards to stymie property investment if there is no change.

Although I agree both Melbourne and especially Sydney markets could be heading into bubble territory, there is also the fear that many investors, on the back of these new changes, will turn to or setup their SMSF as a vehicle to invest into the property market, despite this sector also being targeted with tougher lending standards this week.

Traffic to Get Worse

The other story that was also kept very low key this week was the report released by Infrastructure Australia, highlighting traffic congestion as one of the biggest costs to the Victorian and Australian economies. City Link and the Eastern Freeway made the top 10 worst congested roads in Australia. Victoria’s population is expected to grow from over 4 million in 2011 to 6 million in 2013 and 8.5 million in 2016, yet the state has not kept up with new infrastructure projects. The report expects demand for public transport will increase by 89 per cent by 2031. So infrastructure reforms must be made a priority if economic competitiveness and living standards in Melbourne are to be raised or even kept the same.

In our view, property near good infrastructure will see the greatest capital growth. Today’s public are very intuitive, they understand time costs money and will move accordingly into suburbs which will give them trains, freeways and a village lifestyle within close proximity.

Elwers Street Watsonia North. Source: www.realestate.com.au

On The Street

This week we auctioned a property for my fantastic clients Jim and Nola. A few weeks ago we managed to help them achieve their tree change to Castlemaine, close to their children and grandchildren. It was now time to sell the family home.

To their credit and after a bit of convincing, I managed to talk them into getting our stylist Anna to help them declutter and then stage their property for sale.

The difference this made on the property itself and how it looked in the photography online was amazing. We had nearly 100 groups through in the four week campaign, reporting after every inspection, meeting face to face every Monday afternoon with the agent to discuss the interest in the property, the advertising campaign etc.

Going into the auction the client, the agent and myself knew we would get a result on the day but did not know what that result would look like in terms of price. At the beginning of the campaign the three agents we interviewed estimated the property to be worth between $535,000 to $550,000 and so the property was priced accordingly.

On the day 13 bidders registered their interest to bid at the auction. Once the preamble was done it was over to the crowd, to which a keen buyer opened the bidding at $500,000. Rising by $10,000 each bid, the price rose to $560,000 at which time it was put on the market to be sold to the highest bidder. At this point only two bidders continued to push up the price but when the price reached $577,500 a new bidder jumped in and fought it out until an unbelievable final price of $636,000 was achieved.

Needless to say the vendors were absolutely delighted having realised a record price for the area. They could now move to their new destination and pocket close to $200,000. The agent made an astute comment after the auction, saying “The decluttering and staging done on the house would have helped add another $70,000 to the price today”.

Top 5 Houses

1. 46 Canberra Grove, Brighton East $4,010,000
2. 1 Russell Street, Toorak $3,960,000
3. 27 Donna Buang Street, Camberwell $3,370,000
4. 82 Maud Street, Balwyn North $3,083,000
5. 1 Grieve Street, Balwyn North $2,805,000

Top 5 Bargain Houses

1. 4 Dumosa Court, St Albans $247,500
2. 17 Brighton Place, Craigieburn $295,000
3. 1 Moorhen Crescent, Carrum Downs $304,000
4. 1 Mitre Crescent, Frankston North $308,000
5. 43 Trafalgar Street, Albanvale $317,000

Top 5 Apartments

1. 1001/115 Beach Street, Port Melbourne $2,350,000
2. 8B Webb Street, Caulfield $2,270,000
3. 114/350 St Kilda Road, Melbourne $2,100,000
4. 2/29 Park Street, South Yarra $1,530,000
5. 4/55-57 Manningtree Road, Hawthorn $1,508,000

Top 5 Bargain Apartments

1. 8/35 Stud Road, Dandenong $210,000
2. 2/66 Dundas Street, Thornbury $247,000
3. 7/210 Clarke Street, Northcote $270,000
4. 2/2 May Street, Altona North $280,000
5. 8/9 Murrumbeena Road, Murrumbeena $285,000
6. 2/465 Princes Highway, Noble Park $300,000

Source: REIV