Melbourne Auction Results – May 5, 2014

By Peter Sarmas on 5 May 2014
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Melbourne Auction Results 28nd April – 4th May2014

70%
Clearance
Rate

704
Reported
Auctions

Sold at Auction: 410 Auction Volumes: $322.93m
Passed in: 208 Weekend Last Month: 1076
Sold Before: 84 Weekend Last Year: 748
Sold After: 2 Houses: 72%
Unreported: 117 Units: 68%
 

Melbourne Property Market Shows No Signs of Waning

As reported by REIV, the Melbourne real estate market passed another big test over the weekend recording a clearance rate of 70 per cent from 704 auctions.

Research house RP Data noted that March was a record month in terms of volume with 5,322 auctions and a clearance rate of 69.8 per cent. While in April there were only 3,176 auctions held in Melbourne.

Whether this next statistic is a reflection of the current strength in the auction market or a sign that many vendors have left the selling of the home to the last minute is unknown. Still, the REIV are projecting more than 3,000 auctions for the month of May, higher than the 10-year average for the month.

“To think that any minute it could collapse is wishful thinking. Though, there are a few dark clouds over the horizon which are beginning to form.”

In a sign that median property prices may be slowing, the latest RP Data results demonstrate that Melbourne prices recorded a minor fall of 0.4 per cent. In comparison to a 1.7 per cent rise over the last 3 months and a 12.2 per cent rise over the past 12 months.

The Melbourne median house price based on settled sales over the last three months is $615,000. Over the past 12 months only Sydney recorded a greater rise in house values.

Stability or Boom?

If you believe the market is about to collapse at any minute, you could be waiting a while. Last weekend’s results exhibited a 70 per cent clearance rate from a healthy number of auctions, which indicated a real strength in the Melbourne property market.

It is important to recognise that the Melbourne property market has experienced a record number of auctions already, this year.  And to think that any minute it could collapse is wishful thinking. Though, there are a few dark clouds over the horizon which are beginning to form.

“There are no signs of the property market abating if the weekend results are anything to go by. What’s clear is, that buyers today are very well informed and savvy.”

Headlines over the budget are dominating the news almost on a daily basis which will certainly have an impact on consumer confidence and therefore the market. The latest Morgan Poll shows confidence down after four straight months of growth. In another recent poll by Galaxy the Abbott government is losing popularity as more tax cuts are expected to be announced in the budget on May 13th .

The latest announcement is the proposed Deficit Tax, aimed squarely at the wealthy – 1 per cent for $80,000 -$180,000 income earners and 2 per cent over $180,000 income earners over the next four years.

On the Ground

There are no signs of the property market abating if the weekend results are anything to go by. What’s clear is, that buyers today are very well informed and savvy. It’s clear individuals are upgrading in an area they are familiar with and if so, they appear to be very particular about the street they live in and the type of property they buy. 

Or if they are venturing to a different suburb they are listening to the advice of research houses or commentators who identify high demand areas. Two such areas are St Kilda East and Brunswick.

“If you believe that the market is about to collapse any minute you might be waiting a while”

Subsequently, I had inspected a property in 45 Elm Gve, St Kilda East. Despite its advertised price of $900,000 plus, the comparable sales data indicated it could be valued at over $1 million dollars.

On Saturday the property sold for $1,150,000, an amount that significantly exceeded the advertised price and our analysis. The second example of strength in the market was Cate Bakos’ experience over the weekend in Brunswick where she witnessed bidding go beyond her client’s reach.

A Word of Warning

If precedence is anything to go by I am expecting the week of the budget release to cause more than a number of headaches for real estate agents and vendors as buyer digest the impact of the budget. Traditionally, significant interest rate hikes have always hurt auctions the week they are announced.

Next weekend the REIV expects about 670 auctions.

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About the Author

Peter Sarmas is a Certified Property Investment Advisor (PIAA) and Vendor/Buyer Advocate. Before becoming the founder of Street News, Peter completed a Degree in Applied Science (Chemistry) and a Graduate Diploma in Property Valuations (Hons). Peter believes property investing is a major and potentially risky undertaking. In his view, everyone should have an independent person acting on their behalf when seeking property investment advice.

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