Another big weekend has come and gone as we edge closer to the Christmas hiatus. The REIV tell us that 633 auctions were held, with a little over 300 selling on or before auction. The clearance rate was 52% which is slightly higher than last week’s 51% but off from this time last year at 57%.
We know that whilst numbers were down at auctions on Saturday because of the flogging rain, there were still plenty of people out to purchase a property before the end of the year. Investors are again prevalent in the market place. They have not quite taken up the entire demand that first home buyers have diminished but it is getting closer. Many mortgage brokers are now telling us that pre-approvals for investment properties are rising dramatically and although the investors are not yet signing on the dotted line, the pre-approvals are there ready to invest when one assumes we have hit the bottom of the market.
With the advent of our property management division, we are now seeing first-hand the dramatic undersupply of rental properties that are available. Since building approvals have dropped so steeply this year and our population is still the fastest growing in the country, Melbourne has to house people somewhere. Most of our rentals are leasing out in the first couple of days and many people are asking whether longer than a year is an option for the lease.
The REIV has said vacancy rates are below 3% and if this continues to be the case, with another interest rate cut forecast in the within the next couple of Reserve Bank meetings, investors will be back to gross yields of between 4 & 5% with shortfall for the year on an average $500k property at around $100 per week after depreciation and tax deductions on the negative gearing.
16 Gowar St Camberwell
A 4 bed 2 bath fully renovated Cal Bung on excellent land. It is in one of the prized sections of middle Camberwell near Frog Hollow Reserve. Flogging rain caused an inside auction with about 30 people
Opening bid 1.45m was a vendor bid. Asking for 10k, after receiving No bids auctioneer called the half time break He came back out and offered another Vendor bid 1.475 before the eventual pass in.
The agent was chasing something in the $1.5 – $1.6M range. The published reserve was $1.55M
This property last sold in 2007 for $1.471M and yet no interest at this level now
41 Highfield Rd Canterbury
Again flogging rain caused the auctioneer to have the auction indoors in front of about 30 -40 people
Asking $1.35M – $1.5M
The 3 bed 1 bath fairly dilapidated period home has 2 living zones and garaging for 2 cars. The advertising blurb read “This original period style home set on the corner of McGregor Street and Highfield Road, offers outstanding value and exciting potential to extend and renovate, build a new luxury home or 2 stunning townhouses (subject to council approval).”
I would class the house as having little value.
As the auctioneer went through his usual spiel, and began talking about the merits of property development, calls from the audience directed at the auctioneer during the preamble set an ominous tone: Hecklers from within the small group of onlookers were saying that the council has said this property cannot be knocked down. A further audience member said that the overlay was on ¾ of Canterbury.
The auctioneer handled himself quite well by saying that if the successful purchaser wanted to renovate or develop the block that it would need to be approved by council or VCAT.
There were a few more exchanges and then the auction started
With the auctioneer beginning proceedings with an opening vendor bid of 1.2m we were underway.
Asking for 20k it wasn’t long before he had a genuine bid of $1.22M
With nothing else forthcoming, the auctioneer called the half time break
After coming back out, the auctioneer decided to one final Vendor Bid to $1.240 and the original bidder very smartly remained quiet and allowed the property to pass in. The reserve was listed today as $1.35M
The vendors may have trouble selling this if there is a concerted effort by neighbours to express vocal disapproval of any development. It seems quite sill as it is a corner block on a fairly busy road. To me it seems sensible to develop this type of property into two townhouses!!
Ian James
Director JPP Buyer Advocates
