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 ,

An expected quieter weekend of auctions with 437 auctions reported to the REIV.  This same time last year there was 1,112 auctions.  The clearance rate again dropped slightly to 70% with 210 properties selling at auction, 93 before auction, 3 after auction and there were an additional 168 private sales.

There is no doubt the property market has quietened off over the past few weeks with some buyers and vendors opting to hold off until after the Federal election.  Regardless of whether you are pleased with the outcome or not, the good news is that there is an outcome and a majority government will be formed.  This will hopefully allow those in a holding pattern to move forward so we can enter into a stable, winter property market.

The Australian Bureau of Statistics released figures last week that showed that housing values have risen at rates more than 7 times the growth of wages from April 2021 to March 2022.  Wages rose by 2.4 per cent with CoreLogic releasing data showing that property values across the nation increased by 16.7 per cent.  This has and will continue to change as property prices remain stable and wages to continue to grow as these increases may not be directly spent on real estate due to increases in cost of living and interest rate rises.

With many people out and about on Saturday, some auctions were well attended with 39 Cobham Street, Cheltenham attracting around 100 onlookers.  The renovated four bedroom, two bathroom home attracted bidding by five parties with the opening bid being $1,400,000 which started the auction.  The property was announced on the market at $1,575,000 and sold for $1,670,000.

Across town the auction of a two storey at 11 Sutton Street, Carlton North also attracted a decent crowd.  The three bedroom, one bathroom townhouse was sought after by four bidders with the property quoted for $1,400,000 to $1,500,000 prior to auction and selling for $1,615,000 under the hammer.

Have a great week.

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

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

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