The clearance rate improved this week resulting in 76% of properties going to auction selling (as reported by the REIV). There were 726 auctions with 411 selling, 143 selling before auction and 172 passing in. In addition, there were 112 private sales. The same weekend last year was Grand Final weekend with 103 auctions reported producing a clearance rate of 80%.
Last week, the Andrews Government announced that as of the 1st of January 2025, there will be a new tax of 7.5% on short stay accommodation. This tax is calculated on the total revenue not profit. The purpose of the tax is to discourage landlords from turning their properties into holiday accommodation and to encourage them to list them on the long-term rental market. There are currently 36,000 short-stay properties in Victoria and whilst this may help to increase a small amount of supply, it is unlikely to have the effect the Government believe it will. Some properties are simply not set up to be long-term rentals but mostly because many short term rentals are actually holiday homes that people lease out when they are not occupying themselves.
This is just another cost to investors (on top of increased land tax, new compliance legislation and now new laws being introduced to protect renters rights). The Government should be looking at ways of encourage people to invest in properties rather than making it harder and more expensive for landlords. Some landlords are selling up, which will have the reverse effect and will decrease supply and result in higher rents for tenants.
Our team attended some very competitive auctions over the weekend with villa units and renovated houses continuing to be in very high demand. 25 Woodlands Drive, Cheltenham is a three bedroom, one bathroom villa unit on 347 sqm of land. The property was quoted $790,000 to $820,000 prior to auction. In front of a huge crowd, five bidders participated in the auction with the property property selling for $995,500 which was $140,000 over reserve.
On the other side of town, the auction of 9 Maxwell Street, Northcote attracted very competitive bidding. The renovated, three bedroom, two bathroom period home on 537 sqm was quoted at $1,900,000 to $2,050,000 prior to auction. The auctioneer starting the bidding at $1,850,000 but four genuine bidders in total participated with the property selling for $2,481,000 which was $431,000 over reserve.
Have a great week!