We are starting to get used to the Saturday downpours. This is something we have not had to contend with often in the last 10 years. Although many people braved the cold and wet conditions, the clearance rate still remained relatively low at 61%. This is actually 2% higher than the revised clearance rate last week.
Properties still sold well for the week with over 1000 reported to the REIV (Private sales plus sold at auction). There are plenty of buyers but many of them are holding back much more than they have been over the past 6 months. Take Blessington St, a classically renovated art deco apartment in one of St Kilda’s premier locations. It is the type of property that always attracts a good crowd in any type of market. Quoted at 580-630K, the rain wasn’t going to deter anyone. Amidst a sea of umbrellas, 4 bidders immediately got involved. The property was announced on the market at $630k and sold under the hammer to an ecstatic owner occupier for $650k. Blessington Street Art Deco usually sells well in excess of this mark.
Further to this we did 4 deals Thursday & Friday where the agent pre-empted the negotiations and wanted to sell. This is more likely to happen when the agent is not confident of an auction outcome. Whilst the media is driving sentiment down, talking about property prices dropping, reporting the OECD thinks there is still a housing bubble, about interest rates “out of control”, this will eventually drive some vendors out of the market: those that do not have to sell. What we will find then in March or April next year is a lack of supply. With rental yields on the rise, a lack of stock in the middle of the autumn selling season will drive prices up sharply, similar to this year in March and April.
Realistically, by March 2011, the Federal and State Election outcomes should have steadied itself. Interest rates shouldn’t move much more than another 25 basis points and people will want to get back in the market. Prices will begin to rise around March or April and we should begin to see this is the figures released in Mid-year.
If you are considering purchasing a property anytime in the next 12 months, now would probably be a very good time to buy.
Ian James
