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

Hi,

Last week saw a drop in auctions but a significant increase in private sale transactions.  This is due to a less competitive market where agents/vendors will opt to sell via expressions of interest or private sale rather than auction.  There is also an increase in off market activity.  There were 610 auctions reported on the weekend with 325 selling at auction, 95 selling before auction and an additional 286 private sales.

The federal election nervousness and shock felt from the first interest rate rise seems to have eased.  Whilst we have seen a slight increase in the clearance rate over the past week, signs are still indicating we are in a stable/balanced market and a feeling of a normal, winter property market.  As we have been in unusual circumstances over the past couple of years, I believe many have forgotten what a normal winter’s property market feels like.  Vendors hold off from selling, buyers hold off from venturing out to inspect and buy, but the % of buyers and sellers remain stable.  This is exactly what the property market feels like now.  The auctions and opens we attended on the weekend all had reasonable numbers.

Properties that are unrenovated, on main roads, on train lines and generally just compromised in some way, are the ones that are only attracting a limited amount of buyers in the current market.  Properties that are ticking all the boxes (being on quiet streets, renovated, good floor plans and so on) are still gaining strong interest.  61 Walker Street, Clifton Hill sold well above its reserve price in a competitive auction.  Interestingly, the tv series Stingers was filmed there.  The well located, three bedroom, two bathroom, two car home home was announced on the market after the first bid.  The competitive auction resulted in the property selling $530,000 over its reserve achieving $2,680,000

An unrenovated property that sold in the middle of the lockdowns in 2020 for $1,120,000 went under the hammer after some minimal cosmetic updates.  The auction of 21 Mount View Street, Aspendale attracted five bidders.  The property was quoted for $1,190,000 to $1,290,000 prior to auction and had more than 100 groups attend its open for inspections.   Five bidders participated in the auction where the property sold for $1,510,000.

Have a great week.

Kim Easterbrook

Hi,

There were 756 auctions reported to the REIV over the weekend producing a clearance rate of 65%.  392 properties sold at auction, 96 before auction, and there were an additional 146 private sales.

The media have again jumped on the ‘property prices to plummet’ bandwagon which is not a new concept for us to battle.  On the ground though in Melbourne, Geelong and Ballarat, the feeling is somewhat quite different.

Early 2019 (prior to the Federal Election) and early 2020 (just as the pandemic began) were much more difficult markets to work in than the current market with buyers virtually going underground.  In 2019, the Labor Government proposed to abolish negative gearing which threw the property market into turmoil.  In addition to that, 60 Minutes came out with a report that property prices were predicted to drop by 20% which was the last nail in the coffin, and buyers lost all confidence.  The property market pretty much came to a grinding halt until Labor lost.  After this loss, buyers slowly started to gain confidence again to the point the property market was quickly back to some kind of normal.

In 2020, as we were just becoming aware of Covid-19 and the fear of a potential pandemic, the property market again came to a grinding halt.  Buyers (and sellers) put their property plans on hold as we were all entering into unknown territory.  But even then, in time, people just had to get on with it and selling and buying agents worked out clever ways to still transact even in the toughest of lockdowns.  Property investors who purchased during this time generally have done very well with their property investments.

In both of these markets, and during the most difficult times, the media went to town on how bad the property market is and how prices are going to plummet.  And yet again, the market was resilient and quickly bounced strongly.

In 2022, rising cost of living is resulting in high inflation and rising interest rates.  This has now attracted media attention and reports that the property market is going to plummet.  This market we are currently working in does not appear to be anywhere near as tough as the 2019 pre-election market and the 2020 Covid-19 market.  As a company, we are seeing good levels of new buyer enquiry and confidence in buyers to transact.  We also know that many buyers are viewing the current interest rates as still cheap money and factoring in the inevitable rate prices into their overall spending power and budget.  It actually feels like a normal winter market which we have not seen for a number of years.

The sunshine on Saturday brought out the spectators with many attending the auction of 10 Muir Street, Richmond.  The 3 bedroom, 2 bathroom, 1 car terrace home was quoted $1,800,000 – $1,980,000 prior to auction.  Four bidders participated in the auction with the property being announced on the market near the top of the range.  The property sold well above reserve for $2,056,000.

680 Drummond Street, Carlton North went to auction on Saturday with a price guide of $4,100,000 to $4,500,000.  The property is a four bedroom, 3 bedroom, 2 carpark home on 533 sqm.  The bidding flew past the quoted range with the property selling for $4,900,000 under the hammer.

Have a great week.

Kim Easterbrook

Hi

There were 770 auctions reported to the REIV over the weekend producing a clearance rate of 70%.  Last week the final numbers were 1,164 auctions and a 69% clearance rate and this time last year, 668 auctions with a final clearance rate of 97%. 399 sold at auction, 137 sold before auction, 234 passed in and there were an additional 178 private sales.

Of the auctions we attended on the weekend, most of them passed in but passed in on genuine bids.  In most situations this meant that the vendors reserves are still high however some buyers are standing firm on price.  One reason for this is that the buyers are factoring in the interest rate rises in their overall budgets.   In almost all of these auctions that passed-in, the property sold immediately after.

With cost of living rising and interest rates going up, this has created some uncertainty and resulted in some buyers sitting on their hands.  Savvy investors are looking at the winter period as a time to buy with less buyers in the market. That being said, a 70% clearance rate does not necessarily mean we are in a buyer’s market as such, but rather still in a very stable market.  Once inflation is under control, and we have seen a few interest rate rises, many buyers will still see that money is still cheap and decide to buy.  We are predicting Spring to be a very active market.

There are still auctions though that are attracting strong competition.  75 Little Oxford Street, Collingwood is a very unique property and zoned both commercial and residential.  The property was quoted at $1,375,000 to $1,450,000 prior to auction.  It has three bedrooms, two bathrooms, no carparking and requires a lot of work.  6 bidders bid strongly to secure the rare piece of real estate which sold under the hammer for an undisclosed price.

Kim Easterbrook

Hi ,

The clearance rate dropped slightly again this weekend however stayed stronger than I was expecting ahead of Saturday’s federal election. Of 802 auctions reported to the REIV, 444 properties sold at auction, 125 sold before auction and there were an additional 176 private sales.  This resulted in a clearance rate of 71%.

The drop in the clearance rate has been a welcome reprieve for buyers who have been able to enjoy a market with less buyers willing to transact.  That being said, there a lot of buyers who are currently sitting on their hands and will no doubt build confidence to buy over the next few months.  On the flip side of this, there has been less properties on the market.

With the election less than a week away, both Liberal and Labor parties are ramping up their campaigns and announcing policies to help buyers enter into the property market.  The Labor Goverrnment announced a new initiative that would assist first home buyers or buyers who have been out of the market for some time and are struggling to get back in.  Income thresholds would be upto $90,000 for singles and $120,000 for couples and upto 10,000 households a year would be eligible for this scheme.  The scheme suggests that the Labor Government would contribute upto 40% of the purchase price of a new home and upto 30% of the purchase price for an exisiting home with an option to be able to buy the government out.  When the property is sold, the government would take back its equity (a lot of grey areas around this policy, especially if the home buyer has renovated the property).

The Liberal Government yesterday announced the Super Home Buyer scheme which would enable first home buyers to use upto 40% of their super, up to $50,000 to put towards buying a home (both existing and new).  The conditions are that this is for first home buyers only, they must live in the home for at least 12 months but there is no restrictions on age, the property type or income thresholds.  When the property is sold, the full deposit must be returned to the super fund plus 10% of the capital gain.

Any assistance a first home buyer can get to enter the highly priced property market is no doubt welcomed with CoreLogic releasing data last week suggesting that it takes on average, 11 years for a median 20 per cent deposit to be saved.

Whilst some buyers are currently in a ‘wait and see’ phase and we have seen a softening of the clearance rate, there were still some strong results with properties selling well over reserve.  11 Thames Street, Northcote was hugely contested by four bidders.  The near new family home sold for a huge price of $4,302,000 which was $502,000 over reserve.

On the other side of town, another $500,000 sale over reserve, 123 Union Street, Brighton East went under the hammer.  This property is a land site (595 sqm) with a liveable house on it.  Six bidders participated in the auction with the auction starting on a genuine bid of $1,300,000.  The property was announced on the market for $1,550,000 and sold for $2,050,000.

Have a great week.

Kim Easterbrook