Auction numbers are on the rise and last weekend there were 523 auctions being reported to the REIV. 302 sold at auction, 87 sold before auction, 1 sold after auction and 133 passed in producing a 75% clearance rate. There were an additional 124 private sales. Interestingly, a similar amount of auctions were held on the same weekend last year being 509 which resulted in a lower clearance rate of 68%.
Victorian landlords have been selling their investment properties at the highest rate in over five years. According to PropTrack, 29 per cent of sales across the state in June were landlords offloading their investment properties. Reports in the media have been circulating that this has been due to the latest increase in land tax which has further increased the cost of holding an investment property, along with the recent costs to ensure properties were compliant in accordance to the latest rental legislation. However, the feedback we are receiving from our landlords is that they are selling to access their equity to pay off their owner occupied debts due to rising increase in interest rates. Cost of living pressures have been the real reason why we are seeing this rise.
If the levels were this in July, than the levels we are going to be seeing over the next few months leading into Christmas could be even higher, based on the enquiry from our own client base we are receiving. This could be disastrous in the long term for tenants who are already struggling to find rental properties with vacancy rates at very low levels. The Victorian Government are making noises about implementing rental caps which will allow landlords to lift rent only once every 2 years and potentially imposing caps on any rental increase. This will only make the rental crisis worse and we could see critical shortage of housing for renters in the years to come.
Demand from buyers for properties sub $2m is increasing as interest rates rise, buyers budgets have generally decreased and therefore their expectations need to come into align with what they can get for their budgets. 15 Gnarwyn Road, Carnegie is a four bedroom, three bathroom home with a double garage, updated internally but floorplan has only been partly structurally renovated. The property is on 500 sqm and well located but it does have a shared driveway and units at the rear. The property was quoted $1,350,000 to $1,485,000 prior to auction and the auction started on a vendor’s bid of $1,250,000. Four bidders pushed the price to $1,580,000 where the property sold which we believe is $130,000 over the reserve price.
Have a great week.