Clearance rates remained at 60% on a similar number of auctions to last week. There were 1205 sales reported the REIV last week. This is substantially down on this time last year, when around 1500 properties a week were being reported all the way through to Christmas. With the biggest auction weekend of the year gazetted for next weekend, I would not be surprised to see a drop in the clearance rate.
However, if the clearance rate remains resilient at around 60% this bodes extremely well for vendors next year and means purchasers will be looking at increasing prices for property. Total sales will also help work out what next weeks “litmus test” will mean for early next year.
The REIV have also reported that this year will have been the most auctions ever, surpassing the figures for 1999. That was a year where growth in the Melbourne median had come off a decade low growth after Paul Keating’s “recession we had to have.” Interest rates were very similar to what they are now. Most of 1999 the RBA cash rate was 4.75%. Unemployment rates were dropping until after “9/11” when the World Trade Centre was attacked in 2001. Australia’s Population growth rate was rising, and even our inflation rate (CPI) was climbing. All of these indicators were similar to what we have now. In the years 2000, 2001 & 2002 we had median house prices in Metropolitan Melbourne increase 9.2%, 18.42% & 15.56% respectively, according to Valuer General Data. I would consider the last decade to have been different to the ‘90’s’ and this is the reason I do not foresee exactly the same results but would assume a trending upward of the Melbourne median price to be a foregone conclusion over the next five years.
Some sales of note for this week:
10/120 Ferntree Gully Rd, Oakleigh East. Not the best location, however from an affordability point of view it had attraction for home buyers looking for a nicely renovated 2 bedroom villa unit for the same value as a one bedroom in a better location. Quoted $310,000 – $340,000, the auction opened on a genuine bid of $310K and took no time at all to exceed the quoted range and be declared ‘on the market’ at 350K. It sold 37K above reserve for at $387,000
31 Hopetoun Rd, Elsternwick – A beautiful location – 450 sqm of land, with an original Edwardian ‘renovators delight.’
This result was outstanding and surprised even those well-educated on sales in the suburb. Quoted at $1Mil – $1.150Mil. The agent opened conservatively on a vendor bid of 1Mil. There were 5 bidders keen to get involved (with 2 buyer advocates attending), however the next bid surprised all and knocked a few out before they’d even had a chance to raise a hand. A lone voice from the back of the crowd shouted out 1.2! – And resulted in the property going immediately on the market. Only one other bidder was willing to get involved over this amount, and after a speedy back and forth battle, the final selling price was $1.350 Mil. The vendors looked very happy, and I understand the purchaser is an owner occupier who plans to renovate rather than rebuild.
There are still over 2000 gazetted auctions scheduled for the rest of the year. If you are considering a purchase before Christmas, or early in the New year, please give us a call for a no obligation chat.
Ian James
