Hi ,
The REIV clearance rate slightly dropped over the weekend to 73% with some buyers wanting to hold off buying until after the election. There could be a small window of opportunity for buyers in the marketplace however we did still see some competitive auctions over the weekend. Of the 574 auctions reported to the REIV, 314 sold at auction, 101 sold before auction, 2 after auction and there were an additional 157 private sales.
Last week the inevitable happened with the Reserve Bank of Australia increasing the nation’s official cash rate for the first time in 11 years. The increase was 25 basis points from 0.10 per cent to 0.35 per cent. There is no doubt this, and the election have slowed down the property market. Buyers are a little more cautious and being firm with budgets (mostly) but stock levels have also declined which will in turn is keeping the market balanced.
I am expecting the next couple of weeks to be a little quiet in the property market, which MAY lead to the odd opportunity for buyers. However, once the election is done, and people become more accustomed to rising interest rates, I am predicting the property market will become much more active. The reality is that money is still cheap and will be for a long time, we have just been lucky enough to enjoy very low interest rates for quite some time.
An interesting auction of 24 Hotham Street, Hughesdale has interest from 4 bidders. The land site (knock down house) gained good interest, which is a little surprising with some buyers being worried about building costs in the current climate. That didn’t deter these bidders though with the auction starting at a very conservative at $800,000 but moved very quickly to $960,000 (above the reserve price). The bidding kept going where it sold for $1,201,000.
4 Akeroa Avenue, Brunswick East was another strongly contested auction. The bidding started at $1,300,000 and within no time at all the bidding reached $1,540,000. The three bedroom, one bathroom home on 409 sqm ended up selling for $1,580,000 under the hammer.
Have a great week.
Kim Easterbrook
Hi ,
Another weekend of clearance rates sitting in the 70%’s with 770 properties going under the hammer with 416 selling at auction, 145 selling prior to auction and 209 passing in. The end of result was a clearance rate of 73% (according to the REIV).
The Reserve Bank will meet tomorrow and whilst the consensus has been that they will hold off rising interest rates until after the federal election, Economists are now predicting they will go up tomorrow for the first time in 10 years. This is no doubt in the back of buyers minds which is resulting in fewer runaway auction results. It is likely that buyers are factoring interest rate rises more cautiously than they have before. Buyers also seem to be sticking to their set budgets rather than getting carried away in bidding frenzies.
Some buyers (and also some vendors) are holding off transacting until the federal election is over. Not that this federal election will immediately impact anything as both parties are pretty much on an even playing field when it comes to property. That being said, some are using this as an excuse to hold off.
A 155 year old mansion went under the hammer in South Melbourne over the weekend with two bidders fighting to secure this rare property. The five bedroom, four bathroom period home on 699 sqm at 30-31 Howe Crescent, South Melbourne smashed the reserve by $1,000,000 selling for $10,100,000.
13b Tarella Road, Chelsea attracted a large crowd at auction and the very well maintained, single level townhouse had interest from at least 10 parties there to bid. The property was quoted at $1,000,000 to $1,100,000 with the auction opening up at the top of the range at $1,100,000 which knocked some buyers out from participating. The price moved quickly where it sold for $1,259,000.
On the other side of Melbourne, a small two bedroom, one bathroom renovated cottage close to the Yarraville village was quoted for $950,000 to $1,000,000 prior to auction. The property sold for $1,082,000. Interestingly it sold in 2014, unrenovated, for $620,000.
Have a great week.
Kim Easterbrook
Hi ,
1,083 auctions were reported to the REIV on the weekend resulting in a clearance rate of 75%. 586 sold at auction, 225 sold before auction, 1 after auction and there were an additional 178 private sales. This time, last week, there were 1,244 auctions reported producing a clearance rate of 76% and this time, last year, 928 auctions with a final clearance rate of 79%.
With the high volume of sales happening around the state, the talk of interest rate rises did little to deter buyers from putting up their hands at auctions over the weekend. While the major banks are busy trying to read a crystal ball to predict when and how many interest rate rises there will be, the media are starting their usual negative reports with predictions of falling property prices.
The reality is that most property buyers we have spoken to over the years recognise that interest rates were going to rise at some stage. Whilst we have all enjoyed record low interest rates, we also knew that this was not forever and at some point, interest rates would have to rise.
Yes, this is likely to slow down price growth, yet we already know that the price growth that we have seen over the past 18 months has not been sustainable. Buyers also recognise this. It also seems the flood of properties that were going to come on to the market as we got back into some kind of normal life, have now been sold. Landlords that were thinking about selling their investment properties (due to being impacted through Covid) also have mostly put their properties on the market. So whilst we may see a period of some buyers becoming a little bit more cautious, I do believe we also may see a period of the amount of properties on the market reducing.
In addition to the imminent interest rate rises, we have a federal election now scheduled for May this year. The federal election in 2019, had a tremendous negative impact on the property market as the Labor Government pushed to abolish negative gearing. This policy has now been dumped and it appears the federal election this time around should have minimal impact on property prices.
On Saturday, I attended a very competitive auction at 18 Albion Street, Balaclava. An updated, well positioned, three bedroom, two bathroom period home. The property was quoted at $1,800,000 to $1,900,000 prior to auction with bidding starting as soon as the agents preamble ended. Four bids by four different buyers started the auction off where the property jumped to $2,000,000 in the blink of an eye. The agent declared the property on the market (likely reserve was under $2,000,000 as the bidding did not allow the auctioneer to announce it any earlier). Three more bidders participated (seven in total) pushing the price to $2,170,000
Have a great week.
Kim Easterbrook
Hi ,
There were 965 auctions on the weekend with 564 selling at auction, 170 sold before auction, 1 after auction and 230 passed in, producing a clearance rate of 76%. In addition, there were 233 private sales.
CoreLogic released the quarterly median house price growth rates last week which confirmed that Melbourne’s property prices have stabilised. The growth rate for the past three months was 0.1% which is down on the price growth for the same period last year of 5.8% (which is unsustainable price growth). This information is also supported by the clearance rate falling into the mid 70% which also indicates we are in a balanced market. It is a refreshing change to the market which we know historically can shift into a sellers market again in the blink of an eye.
There was an interesting article in the Herald-Sun over the weekend which discussed the sharp increase in $1m property deals in the Melbourne property market. Over the past five years, the number of Melbourne homes that sold for over $1m doubled. Of the 100,849 residential property transactions in Melbourne last year, 32,973 were $1m or more which is a significant increase from 16,501 in 2016 and 5,813 in 2011. Interestingly Geelong also had a boom in million-dollar sales from 130 in 2011 to 1,706 in 2021.
We are seeing more properties pass-in at auction but are selling immediately after. There is no doubt that negotiations of properties that pass-in can be very difficult and emotional, especially for a buyer looking to move into the home. Selling agents are very good at executing strategies to get buyers up in price. 186 Coppin Street, Richmond was an example of a property that passed-in on the weekend. The property was quoted at $2,950,000 – $3,200,000 prior to auction but passed in at auction after receiving a one bid of $3,100,000. The property sold immediately after auction for $3,250,000.
Have a great week.
Kim Easterbrook
Hi ,
There were 724 auctions over the weekend resulting in a clearance rate of 80%. 438 sold at auction, 141 before auction and 145 passed in. There were an additional 176 private sales. These numbers are well down from 1,232 last week and 1,732 for the same time last year (however these numbers were high due to a snap lockdown in February).
There is finally some good news for landlords in which many struggled through 2020-2021 due to some tenants employment struggles. This resulted in decreased rental incomes and increased vacancy rates (and longer lease times) and then on top of that, the government amended the Residential Tenancies Act which introduced tougher, new laws to protect the rights of tenants.
It now appears the wheels are turning with rental incomes rising and vacancy rates dropping. Tenants in Metro Melbourne and Regional Victoria are feeling the pinch as landlords seek to increase rents back to pre-pandemic levels. According to the new Residential Tenancies Act, rents are only allowed to increase once a year which could explain in some cases, landlords have opted to increase the rent significantly rather than a staggered approach which was previously allowed two rental increases in a twelve month period. As a result though, we are hearing reports of some tenants vacating properties due to the rent rises to seek cheaper accommodation.
According to Domain, there is a national trend of vacancy rates falling across the country with Melbourne’s vacancy rate down from 4.4 per cent in February 2021 to 2.1 per cent last month. This has resulted from an increase in rental demand and drop in supply. Some landlords have sold due to hardship through 2020-2021 with unstable tenant incomes and also new requirements introduced by law for properties to be kept to a minimum standard. This has required some landlords having to do works to their property which otherwise they would not have which in turn has increased the running costs of these properties. Some landlords have also put their properties back on the holiday rental market as international and domestic borders opened. I am expecting this declining trend to continue throughout the year and as a company, we are seeing properties generally lease out faster and our vacancy rate has been at its lowest level in at least a couple of years. The REIV reported the vacancy rate for Ballarat to be at 1.1% and Geelong 1.6%.
A renovated, three bedroom, two bathroom, villa unit at 61A Roslyn Street, Brighton went under the hammer on Saturday. The advertised price prior to auction was $1,700,000 – $1,800,000 and four bidders participated pushing the end sale to $2,150,000 which was well above the price where the property was announced on the market at $1,950,000 (however the property could have hit its reserve well before then).
Have a great week.
Kim Easterbrook
Hi ,
There were 933 auctions over the weekend achieving a clearance rate of 76% which is slightly down on the same weekend last year. 508 sold at auction, 199 sold before auction, and 226 passed in.
The amount of properties on the market has now returned to healthy levels with reports that stock levels are tracking 5.5% higher than a year ago and 4.7 percent above the previous five-year average (according to CoreLogic). These levels are contributing to the stabilisation of the property market where we are seeing the clearance rates consistently in the mid to high 70s. This also reflects what we are seeing on the ground, where there are less bidders per property at auction, albeit good properties are still selling under strong competition.
The rental market also appears to be showing signs of recovery with the vacancy rate halving from this time last year. Domain has reported that vacancy rates in February dropped from 4.4 percent down to 2.1 percent. It is predicted that will continue to tighten with immigration from overseas putting further pressure on this market. This is welcome reprieve for landlords with many impacted by the number of tenants in hardship during lockdowns. Landlords are also now dealing with ensuring their properties are compliant with the new Residential Tenancies Act which has put some strict compliance rules in place which must be adhered to by March 2023.
A suburb record price was achieved in West Footscray on the weekend with a large renovated five bedroom, three bathroom home selling under the hammer. 39 Palmerston Street, West Footscray achieved a price of $1,930,000 but only after passing in and was negotiated immediately after the auction. Family homes are still selling strong many buyers are looking for extra space after the lockdowns.
On the other side of town, another suburb record was achieved at 9 Colin Street, Bentleigh East with a newly constructed, 4 bedroom, 4 bathroom home, not in the McKinnon High School zone was sold under the hammer. The property was quoted for $2,650,000 – $2,850,000 prior to auction but sold under the hammer for a huge $3,220,000.
Have a great week.
Kim Easterbrook
Hi ,
A slight dip in the amount of auctions over the weekend resulted in a clearance rate back in the 70’s in Melbourne. There were 888 auctions reported with 683 sold at auction, 205 passed in and there were an additional 196 private sales. The overall clearance rate was 77%. It is expected that the amount of new listings will be reduced this week as we come into the Labor Day long weekend, then we have a clear four week run before we go into the first term school holidays and Easter long weekend.
I have invited Vicky Whittaker (director of Elite’s Regional Victoria office) to provide us with an update of the property markets in Geelong/Bellarine Peninula and Ballarat.
Good morning ,
Property prices in Geelong and surrounding areas have risen over 21% over the past 12 months due to strong population growth and demand from investors. Whilst there is still strong demand, it appears the property market has stabilised somewhat suggesting FOMO (fear of missing out) from buyers has eased and stock levels have been improving. Auction clearance rates have been consistently achieving over 70% on a weekly basis.
The Geelong market remains strong but it is not as heated as it was last year. Geelong prices have risen 21% over 12 months, and with stock levels still low throughout the area, we are seeing many strong sales prices with auction clearance rates being above 70% on a weekly basis.
There has been a strong shift in demand for recently renovated houses with buyers wanting turn-key properties rather than taking on the renovation themselves. This is likely due to the ongoing pressure of building prices, lack of materials, delays in trades due to the backlog from Covid lockdowns and increase in trade prices. Also could be a sentiment of people wanting a more stress free lifestyle and therefore unprepared to take on the project themselves.
According to the ABS, Geelong had Australia’s fifth highest net movement of population after the onset of the Covid pandemic in April, 2020. Whilst some moved from Melbourne for a sea or tree change, this movement has certainly slowed down from movement during lockdown. Many property buyers chose to move to Geelong due to property prices being so high in Melbourne, the ability to work from home and commute to Melbourne two or three times a week, good lifestyle and great schools for families.
Over the weekend, a tiny miners cottage went under the hammer. 4 Sutherland Street, Geelong is a very well located, small and dated two bedroom home on 147 sqm. The property was quoted $599,000 to $627,000 prior to auction with three participants at auction pushing the final sale result to $697,000. The property had last sold in 2014 for $344,000.
For investors, the residential rental vacancy rate in Ballarat and Geelong sits around 1.5% which means there is high rental demand in quality properties. If the property is in good condition, well located and appropriately priced, a landlord could expect multiple applications from just one or two open for inspections.
With a cheaper buy in price, Ballarat is also experiencing a slow down in the capital growth rate, but the demand is still remaining high. Ballarat Central, Soldiers Hill, Delacombe and Wendouree are popular areas for both investors and home buyers with entry level properties selling within the $500,000 to $600,000 range. The days on market is consistently low with many quality properties selling after their first open for inspection.
Have a great week.
Kim Easterbrook and Vicky Whittaker
Hi ,
Another Super Saturday across Melbourne over the weekend resulted in a slight dip in the clearance rate to 76% from 81% last weekend. It seems to be currently bouncing between the mid to 70%’s to the low 80%’s. Of the 1,049 auctions reported, 612 sold at auction, 184 sold before auction and 1 sold after auction. 252 passed in and there were an additional 216 private sales reported.
With war breaking out between Russia and Ukraine, there will be some flow-on-effects which will affect Australians pockets. Surging petrol prices, increase in grocery bills, higher prices for gas and electricity, stock market dropping and imports/exports will also be affected. This could benefit Australia with energy exports likely to increase from sanctions imposed on Russia. The Australian dollar is also predicted to be stronger as a result.
Interest rates are expected to rise as early as next month as a result of the Australian economy recovery. Spending is on the rise as Omicron case numbers drop and mask mandates have been removed in some states. The reality is that rising interest rates are a sign that things are improving. The unemployment rate dropped to 4.2 per cent in December and wages growth is improving. Whilst short term interest rate rises are expected, the rises shouldn’t be steep and will likely be gradual.
Whilst we experienced a slight dip in the clearance rate, it didn’t feel like that on the ground with the Elite team attending some very competitive auctions. 50 Esplanade, Brighton went to auction over the weekend with the property being sold for the first time in over 100 years. The location being directly across the road from the Bay is highly sought after but the property had a strict single dwelling covenant on it which would have deterred some buyers. The property sold for $5.395M.
Have a great week.
Kim Easterbrook
Hi ,
The clearance rate climbed back to 80% on a high volume weekend of 952 auctions. 757 properties sold (563 at auction and 194 before auction), 195 passed in and there were an 180 additional private sales. These numbers demonstrate confidence in the market from both buyers and sellers however some agents are reporting an increase in properties passing in with one or two bidders participating in the auction but immediately selling after. It is worth noting these properties are still listed as ‘sold at auction’.
With the international borders opening today many questions are being raised as to how this will affect the property market. Realestate.com.au have shared data which demonstrates that offshore searches from Hong Kong, Japan, Singapore, China and Malaysia have increased by 13% this year so far. This number is expected to continue to rise.
The latest figures from the FIRB show that for the 2019-2020 period, Victorian sales to offshore buyers dropped to 2% of total sales with comparison in years previous to this showing the rate to be as high as 30%. With the unemployment rate for the country to drop to as low as 3% this year, it is predicted that Australian businesses will soon be looking to recruit overseas for skilled workers. The CBD market is also expected to see some increased property activity with international students returning. Overall, I am expecting this to increase buyer demand in Australian capital cities (particularly Melbourne and Sydney) and surrounding regional towns as the government, no doubt will be looking at population growth as one aspect to assist in the economy recovery from the impact of Covid.
101 North Road, Brighton went to auction over the weekend with a large crowd in attendance. The property is a dated but very liveable single level, three bedroom, two bathroom with a double garage home with no shared driveway. The entry level property was in demand from both young families and downsizers. The property was quoted $2,000,000 to $2,200,000 prior to auction and attracted bidding from four buyers. There were no doubt other buyers attending the auction that did not put their hand up. The property was announced on the market at $2,350,000 and sold for $2,800,000 under the hammer achieving $450,000 above reserve.
Have a great week.
Kim Easterbrook
Hi ,
The auction clearance rate dropped to 77% over the weekend as the number of auctions increased to 724. Of these 724 auctions, 560 sold at auction and 164 passed in. There were an additional 150 private sales.
There could be some early signs that we are heading into a more balanced market as some agents are reporting fewer bidders at auction and a few more pass-ins. This could be welcoming news for buyers as auction clearance rates have been sitting well into the 80%’s for the past 12 to 18 months. Stock levels are also on the rise which will continue to help balance out the market which should result in a confident, stable market for the first six months of 2022.
Whilst we saw a slight drop in the clearance rate, some strong auction results were still being recorded across Melbourne and Geelong with family homes continuing to be the strongest market. 48 Wallingford Street, Cheltenham sold well above the initial price guide of $1,330,000 to $1,400,000 with six bidders actively participating in the auction. The property sold for $1,671,000.
On the other side of the city, an entry-level house was popular with nine bidders trying to secure the property at auction. 81 Woods Street, Newport was advertised at $780,000 to $820,000 prior to auction which for a two/three bedroom liveable house is almost unheard of. The property sold at auction for $961,000.
Have a great week.
Kim Easterbrook
