The REIV auction clearance rate remained stable over the weekend with 541 auctions reported. 372 properties sold with 282 of those selling at auction and 91 before auction. There were an additional 190 private sales.
The increase in interest rates last week came as no surprise with the official cash rate rising to 2.35%. There appears to be a consistent pattern with buyer behaviour each time an interest rate rise occurs with the week after, some buyers coming to a standstill. Some need time to adjust to the idea of higher mortgage repayments but also need time to calculate what that means for their budget.
Some auctions last weekend had large numbers in attendance but few willing to put their hands up. Those buyers that are confident enough to bid at auction are often buying the property immediately after it passes in. This means that vendors (generally speaking) are willing to negotiate to ensure they sell their property and likely the buyer has paid less than they were willing to.
We are still witnessing high numbers of buyers walking through open for inspections and also large numbers attending auctions. I believe there are many buyers out there who are currently sitting on their hands waiting to see what happens with interest rate rises and property prices. We know it is likely there are more interest rate rises to come, but once these rises slow down and then cease, it is likely the dormant buyers will come back into the market and be willing to purchase.
1/50 Grant Street, Malvern East went to auction on Saturday which is a well located, three bedroom, one bathroom villa unit in good condition. The property was quoted at $1,050,000 to $1,150,000 prior to auction. Five bidders in total participated in the auction where the property was announced on the market for $1,210,000 and sold for $1,363,000.
In Geelong, the auction of 15 Sanglen Terrace, Belmont attracted a large crowd with the four bedroom, two bathroom, two car updated family home quoted at $900,000 prior to auction. Bidding commenced at $950,000 with four bidders in total pushing the price to $1,055,000.
Have a great week.
Kim Easterbrook
The clearance rate moved back into the 70%’s over the weekend with 546 auctions reported to the REIV. 316 properties sold at auction, 67 before auction and there were an additional 276 private sales.
All eyes will be on the Reserve Bank of Australia with their monthly meeting scheduled for tomorrow. Opinions are divided as to whether there will be a 0.25% or 0.5% rate rise tomorrow with some predicting the rise to be 0.5% tomorrow and then the rises scaling back. It seems we are already seeing some relief to cost of living with some prices coming back down on the supermarket shelves but unfortunately fuel excise will go back to normal rates at the end of the month which means we will be paying for more at the petrol pump. Any real impant of interest rate rises has a lagging affect and therefore, it is believed the RBA will take the foot off the pedal to monitor the overall impact in the months ahead.
The RBA cash rate is currently sitting at 1.85% which is still resulting in cheap money for homebuyers. Over the past few weeks, we have seen a significant positive shift in the confidence of buyers and as a company we have had an increase in new buyer enquiry and willingness to transact. Many buyers are factoring in these interest rate rises within their budgets and adjusting accordingly. Banks are also factoring higher interest rates in the amount they are prepared to lend property buyers.
Spring is gearing up to be an active few months with predictions of stock levels rising but also a rise in buyers in the market. There still could be a two speed market with A grade properties (properties with limited compromises) selling extremely well under strong competition and properties that have compromises (being unrenovated, poorly located and having inferior floor plans), having limited buyer interest.
The auctions we attended on the weekend were mostly competitive with one of them being 1/1 Bowen St, Malvern East. The single level, three bedroom, two bathroom, double garage modern townhouse was extremely popular with buyers and the agents were reporting large numbers through each of the open for inspection. The property was quoted at $1,000,000 to $1,100,000 prior to auction but mid campaign, due to the interest the price quote was increased to $1,100,000 to $1,200,000. 7 bidders in total with some not even getting the opportunity to put their hand up (buyers being a mixture of downsizers and young families) drove the price to $1,410,000 which was $310,000 over reserve. The closest comparable sale was $1,353,000 which was the rear townhouse which was identical in size and condition and that property sold in April 2022.
Have a great week.
Kim Easterbrook
The auction clearance rate dropped back into the 60%’s on the weekend with 518 properties going under the hammer. 279 sold at auction and 67 sold before auction resulting in a clearance rate of 67%. There were an additional 250 private sales.
There is no doubt we have seen the property market stabilise and we have not experienced the decreases in property prices that many ‘so called’ experts first predicted. However, we are very much in a ‘two speed property market’ where some properties are selling much higher than expected, and then others are selling less for or exactly what the property is worth. There seems to be an inconsistency in the final result in which some cases results in the buyer doing well in their purchase, and then in some cases the vendor has achieved a high sale price. More records are being broken with a house in Bentleigh achieving the highest price for a residential house sold over the weekend.
Generally speaking, properties that are well located, updated and have a good floorplan are selling well under competition from multiple buyers. These properties have also been marketing correctly which means presented immaculately and priced accurately online. Other properties that are compromised such an being unrenovated, poorly located, inferior floorplans or not presented well are the ones that tend to be struggling. Buyers are still circling these properties but often waiting for them to pass in at auction, sticking to firm budgets when negotiating and making offers with ‘subject to finance clauses’.
I attended an auction yesterday at 1/21 Turner Avenue, Glen Huntly where there would have been almost 100 people in attendance. The three bedroom, two bathroom single level townhouse is well located, dated but immaculate and styled well with hire furniture for sale. The bidding was slow to start though with the auctioneer kicking off the auction with a vendor bid of $950,000. However five bidders participated with the buyers being a mix of first home buyers and downsizers. The property was quoted $995,000 to $1,090,000 prior to auction and sold for $1,190,000.
Have a great week.
Kim Easterbrook
Hi,
The auction clearance rate for the second week in a row achieved in the 70%’s but the positive news is that it was on a higher number of auctions. 480 auctions were reported to the REIV over the weekend resulting in a clearance rate of 71%. 262 properties sold at auction, 79 before auction and there were an additional 158 private sales.
Whilst there seems to be an improvement in sentiment in the property market, the news headlines last week were abuzz with two properties that had sold in St Georges Road, Toorak which both had broken the previous Victorian house price record. 17 St Georges Road, Toorak, an unrenovated house with a heritage overlay set on a battle axe block of land 7,800 sqm is currently under offer for close to $75m. Up the road at 29-31 St Georges Road, I was privileged to represent the buyer in purchasing what we classed to be ‘the best block of land in the state’. The ‘Ghost House’ as it has been called for many years, is a derilict house that Hoyts boss Leon Fink started building before the recession hit in the 1990’s where he sold it unfinished and the property has not been touched ever since. The land, which is almost 7,200 sqm with no heritage overlay, regular shaped, on the premium side of the street and was an extremely rare proposition. Many properties within this location have a heritage overlay and there are only a handful of this size. We successfully bought the property (under competition from another buyer) for just a tad over $80m.
Putting these two sales aside, there definitely feels like there has been a positive shift in the market which is good news heading into Spring. Again, the open for inspections we attended were crawling with buyers and the clearance rate appears to be slowly climbing back up. The sentiment is suggesting we should have an active spring from both buyers and sellers and property prices should hold firm, some are even suggesting that we may have already hit the bottom of the market.
2/44 Faversham Road, Canterbury went under the hammer on the weekend and is a three bedroom, two bathroom, two car (double garage) unrenovated townhouse on 502 sqm of land was a very competitive auction. The property was first quoted for $1.12m to $1.22m and then the range lifted to $1.25m to $1.35m due to the high interest in the property. Bidding started at $1.3m and got to $1.65m in less than a minute. 4 bidders all up (with many did not even get their hand up) with the successful bidder jumping in at $1.8m and buying the property at just over $1.9m.
Have a great week.
Kim Easterbrook
Hi ,
There was a slight improvement on the clearance rate over the weekend although the amount of auctions decreased. 387 auctions were reported to the REIV resulting in 215 selling at auction, 60 selling before auction and 112 passing in. There were an additional 183 private sales.
The final clearance rate result last week was 68% on a higher volume weekend of 509. The clearance rate has stabilised well and truly into the mid to high 60%’s and the drop in auctions over the weekend pushed it back into the 70%’s.
There sentiment in the property market seems to be a little bit more positive than it was a couple of months ago. More bidders at auction, people willing to transact and many open for inspections are attracting good numbers. The reality is that people still need shelter and there will always be a demand for housing. If someone is buying and selling in the same market at the same price point, then there really shouldn’t be a negative or positive effect. Somebody who is upsizing could benefit with a larger discount on the upgrade but someone downsizing may hold off until the market conditions are more favorable.
Buyers are now fully aware that interest rates are rising and there are potentially more to come. Many buyers are factoring these interest rate hikes into their budgets, but also the banks are also factoring the new interest rates in when calculating people’s borrowing power. Whilst there are buyers on the sideline not acting, there are certainly some buyers who are willing to transact and we are still seeing some strong sales results on properties.
One example of a strong result was a property that sold last week in Elwood. Located in one of the the best streets, the three year old house on 515 sqm had four bedrooms, four bathrooms and a double garage. The property was quoted at $5,750,000 – $6,100,000 via an Expressions of Interest campaign and sold in the vicinity of mid $6,000,000’s (price undisclosed).
Have a great week.
Kim Easterbrook
Hi ,
The clearance rate over the weekend remained stable resulting in 67% of auctions selling. There were 406 auctions reported to the REIV with 214 selling at auction, 60 before auction and 132 passing in. There were an additional 158 private sales.
Core Logic have released their July data which shows that house prices in Melbourne have dropped 1.6% for the month and 0.9% in Regional Victoria. Units have dropped 1.2% in Melbourne and 0.4% in Regional Victoria. So far property prices have dropped 3.2% in Melbourne and 0.5% in Regional Victoria over the past 3 months.
Whilst the media are going to town on property prices, the sentiment on the ground is somewhat different. Some buyers are seeing this market as an opportunity to get in. Some investors are also recognising that property is a long term hold and are biting the bullet to buy something superior to what they would have been able to buy 12 months ago. Some buyers who sold in the stronger market, opted to rent for a short period of time and are looking to buy in Spring when stock levels increase. Overall, there is still good levels of activity albeit volumes are definitely down.
There has also been a lot of media attention in regards to rising rents and whilst we have seen rents recover from pre-Covid prices we are not seeing the large increases like the media are suggesting. There is no doubt, well located renovated houses are in strong demand. But properties that are tired, over priced, not presented/marketed well are still taking some time to lease out. Renters generally speaking still have choice.
Some auctions attracted decent competition at auction with 3/17 Manor Street, Brighton being one of those. The unrenovated three bedroom, two bathroom villa unit on 394 sqm in a premium location of Brighton attracted three downsizers bidding at auction. The bidding commenced at $1,900,000 and sold for $2,350,000 under the hammer.
Have a great week.
Kim Easterbrook
Hi ,
The clearance rate remained stable again at 66% on 515 auctions reported to the REIV. 338 properties sold at auction with 266 of those selling on the day and 71 selling before auction. There were an additional 149 properties sold via private sale. This time last year the auction numbers were similar but the clearance rate was 88%.
The Reserve Bank will meet again tomorrow and decide the amount of the next interest rate rise with economists predicting this to be another 0.5% making the cash rate 1.85%. The Treasurer announced last week that he believes the peak of the inflation will be in the December quarter at 7.75% and then begin to gradually fall next year. He made it very clear that he believes things will get harder before it gets easier. However, there are signs that the tightness of global supply chains have stabilised and could be somewhat easing. It also appears that households are also responding to rising interest rates.
So what does this mean for property prices? Currently, we are in a stable property market (maybe slightly favouring buyers) with auction clearance rates sitting consistently in the mid 60%. Over the weekend, what we found interesting is was the number of buyers out at open for inspections looking at properties. Some opens we attended had HUGE numbers….some in excess of 50 groups with lines of buyers waiting to get through properties. This suggests that there are still many buyers in the market, some won’t do anything as they don’t have the confidence to purchase in the current market, other buyers will have already factored in to the interest rate rises and will be price sensitive, and others that will be ready and willing to pay to secure a property. These are the ones that could reap the rewards if we head into a market of falling interest rate rises next year.
Some auctions are achieving active bidding and others are passing-in. Many buyers are just waiting (hoping) for a property to pass-in and then negotiate. A good example of this is 50 Esplanade, Brighton which is a waterfront new home site on 903 sqm of land. The property passed-in on a vendor bid of $5,000,000 but since the auction, the agent has received multiple calls with buyers wanting to negotiate. Although this strategy can pay off at times, this type of negotiation can backfire as the negotiation environment is no longer transparent (like an auction is) and sometimes can even trigger an auction after the auction.
Have a great week.
Kim Easterbrook
Hi,
There were 439 auctions reported to the REIV on the weekend resulting in a clearance rate of 66%. 220 sold at auction and 71 sold before auction. There were an additional 177 private sales. It seems the clearance rate is sitting steadily in the mid 60%’s with last week’s final clearance rate being 67% on 506 auctions.
With less competition in the market, some buyers are feeling now is a good time to buy. Whether this be first home buyers who have struggled to enter the market or upsizers who are looking for more space. Over the past 12 to 18 months, there have been a huge increase in demand for families wanting more space due to many working now from home. But also generally wanting more space which resulted from being locked down for so long over the past two years. This demand had resulted in many family homes achieving huge prices under strong competition from multiple parties.
The current market is resulting in more auctions passing in, but many properties are selling immediately after. This demonstrates there are less buyers in the market, but some that are still willing to purchase. Some vendors are having to make price adjustments in order to sell their properties which in turn is benefiting the buyers who show up to the auction. For an upsizer, this can greatly be beneficial with the discount on the higher price point exceeding the discount they may need to give whilst selling their smaller home.
11 Hamilton Street, Brunswick West went to auction on the weekend and attracted two bidders before passing in. The structurally renovated four-bedroom, two-bathroom home was quoted at $1,500,000 to $1,550,000 prior to auction. The property passed in on a genuine bid of $1,500,000 and sold immediately after for $1,560,000.
10A Corhampton Road, Balwyn North is a dated, three bedroom, two bathroom single level villa unit which was quoted at $1,500,000 to $1,600,000 prior to auction. Four bidders participated in the auction with the property being announced ‘on the market’ at $1,550,000 and sold under the hammer for $1,705,000.
Have a great week.
Kim Easterbrook
Hi,
351 auctions were reported to the REIV on the weekend resulting in a clearance rate of 64%. 181 properties sold at auction, 44 before auction and 126 passed in. An additional 136 properties sold via private sale.
The Australian economy is continuing to do well and the unemployment rate released last week is at its lowest point in 48 years at 3.5%. This is partly contributing to the high inflation that we are experiencing and resulting in the RBA raising interest rates. Some economists are predicting a rise of 0.75% in August with the aim to gain control of inflation at a faster rate, then if all goes to plan, a pause in interest rate rises in September.
According to Domain, in the June quarter median house rents jumped $10 per week to $460 and units rose on average $20 per week to $410. This is a result of tenants moving closer to the city as workers return to work, but also a result of a reduction in rental listings as some landlords sold to avoid the new rental compliance laws. There has also been a shift in renters moving away from share housing with some young people preferring to live with less people (which appears to have been a result of the pandemic).
57 Tennyson Street, Elwood went to auction on the weekend and attracted four bidders at auction. The 5 bedroom, 2 bathroom property was quoted $3,400,000 to $3,600,000 prior to auction with the property being announced on the market at $3,525,000 and sold under the hammer for $3,724,000.
In a very common scenario in the current market, 4 Shepparson Avenue, Carnegie passed in on a single bid of $1,610,000. The property then sold immediately after the auction for $1,700,000. The house does require extensive renovations and due to the current high construction costs, many properties needing extensive work are struggling to sell, or selling with limited competition.
Have a great week.
Kim Easterbrook
July 11, 2022
Hi,
Auction numbers were down last weekend but the clearance rate was slightly up. 388 auctions were reported with 206 sold at auction, 54 sold before auction and 128 passed-in producing a clearance rate of 67%. Strong increase in private sales (which is a typical way of transacting when the market is a little quieter) with 403 reported.
Interest rates went up again last week by 0.5%, bringing the cash rate to 1.35%. It seems the goal of the RBA is to bring the official cash rate to a more normal level of 2.5% as quickly as possible to assist in getting inflation under control (ideally between 2-3%). A tricky feat with consumer demand not the only reason why prices of fuel, food, power, etc have increased. Many external factors such as floods and war are also contributing to high inflation. There has been lots of talk overnight with a few economists and CBA suggesting that if the interest rate rises resulted in a strong, negative impact on the property market, the interest rate rises could come to a grinding halt. So whilst we are expecting interest rates to rise further, it seems the sentiment now is they won’t go as high as some previously believed.
There is no doubt the interest rates rises are affecting the spending habits and limits of some property purchasers with some bidders waiting for a property to pass-in to then negotiate the purchase. Other auctions though still had strong competition. 2/34 Orange Grove, Camberwell is a 2 bedroom, 2 bathroom villa unit quoted at $1,000,000 to $1,100,000 prior to auction. Six bidders participated in the auction with the property being announced on the market at $1,060,000 and selling for $1,206,000.
Have a great week.
Kim Easterbrook
