Auctions numbers increased significantly last week with 568 auctions reported to the REIV producing a clearance rate of 92%. 396 sold at auction, 123 sold before auction, 2 sold after auction. In addition there were 190 private sales.
Anything over an 80% clearance rate indicates we are in a sellers market and 92% clearance rate is a strong clearance rate based on the auction numbers. This should ease though over the next weeks/months with more properties predicted to come onto the market.
Treasurer Josh Frydenberg last week indicated that restrictions on home lending could be introduced before the end of the year to help slow down rising property prices. In the June quarter, it was found that over 20% of home buyers are borrowing more than six times their income which has prompted the predicted crackdown on high loan to value ratio loans. There are concerns that if and when interest rates rise or if a borrower loses their job, they may fail to meet their loan repayments. There was some positive news however with a rise in owner occupiers and first home buyers taking out mortgages.
The 92% clearance rate produced some strong auction results last week and over the weekend. Many auctions are now being conducted mid week to free up agents for one on one private inspections on the weekend.
10/71 Ormond Road, Elwood sold well above reserve which was a surprise as the property was a ‘company share’ titled property. Banks will usually only lend 50 to 60% on these titles which does limit the potential purchases who can actually buy them. Six bidders participated in the auction of the renovated, two bedroom, one bathroom, art deco apartment with no car parking which was quoted at $800,000 to $860,000 prior to auction. The property sold for $1,011,000 which was significantly higher than the last two bedroom sale in the block which occurred in November 2020 for $730,000. I have not previously seen a ‘company share’ titled property sold with so many bidders, many are usually sold via private treaty due to the lack of buyers able/willing to purchase them.
Have a great week.