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Melbourne Property Market – Weekly Update

Jun 5, 2012 | Latest News, Melbourne Market | 0 comments

Lack of activity in the Luxury Housing Market, Pushing Overall Median House Price Lower

by Antony Bucello & Catherine Cashmore

The clearance rate this weekend came in at 60 per cent – higher than this time last year (during which it was 56 per cent) and activity on the ground, particularly around the State median price range has proved to be robust. However, figures released from RPData this week showed a national drop in capital city median house values by 1.4%, which is prospected to feed into the RBA’s interest rate decision when they meet this coming Tuesday. The greatest drop was in Melbourne and therefore we need to analyse the data a little closer to understand why results are so weak.

Most homebuyers shopping in the market place will understandably be feeling as if the weak conditions should equate to lower prices. There’s no doubt the past couple of years have seen price drops across the market and particularly favoured those able to negotiate, with more homes selling behind closed doors than ‘under the hammer.’ However as we pointed out last week, quality properties in the $400-600K price range in the inner and middle ring suburbs are falling under high demand. If anything we’ve noticed prices pushing higher than during the latter stages of last year, and therefore the drops publicized by RPData are not necessarily representing an easy playing field for the home buyer market.

The median price is simply the middle number of all properties sold, and therefore not helpful when it comes to working out individual values. The one side of the market that is continuing to struggle is the $1.5mil plus price range. With the continual fluctuations in the financial sector along with banks cutting their staff force and sending jobs overseas, home buyers downsizing from luxury homes are being forced to accept lower prices which is naturally lowering the overall capital city median.

Consequently, there’s a split between the lower end of the market represented primarily by a robust apartment market which – with the lack of first home buyers in any significant number – is dominated by the investment sector and performing reasonably well. This is in direct opposition to a weak ‘top end,’ with vendors that ‘need’ to sell reducing prices in an attempt to motivate sales.

Because this sector of the housing market is weak, if you’re looking to ‘upsize’ into the ‘luxury’ end of the housing sector, now would be an excellent time to move. The weakness in this price bracket is presenting some excellent opportunities.

RPData mentioned in their media release that the economy, overall, is looking good and the only reason buyers aren’t moving would be due to diminished confidence. This is a fair statement, albeit there is confidence in some areas of the market as we’ve clearly demonstrated over previous weeks. However, as soon as sentiment improves (as it no doubt will) there’s likely to be a push in market prices. Therefore, it’s worth remembering, when data is provoking the old ‘buyer’s market’ headlines, buyers should take note to ensure they stay ahead of the curve.

The key to buying well is to capture the bottom of the cycle – where we currently sit. Considering the RBA may surprise us with another drop in rates and stimulate demand, it would be an unwise decision to wait.

 

Weekend Clearance Rate Figures

Week Ending Sunday 3rd June 2012

Clearance Rate: 60%  
Total Auctions: 566  
Sold: 340 Passed in: 226
At auction: 278 Vendor Bid: 147
Before auction: 62 Real bid: 79
After auction: 0    
Total Private Sales: 599  
Total Sales: 939  
Source: www.reiv.com.au

The NPB clearance rate, which represents the ‘quality’ end of the market place shows consistency. Properties around the metro median are falling under high demand from both investors and owner-occupiers. Top end sales are under-performing, however good homes, even in this price bracket, are managing to sell with strong negotiation between buyer and vendor expectation.

 

Weekend Clearance Rate Figures

Week Ending Sunday 3rd June 2012

NPB Clearance Rate: 75%  
Total Auctions Reviewed: 36  
Sold: 27 Passed in: 9
Under $600k: 10   2
$600k-$1m: 9   4
$1m+: 8   3

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 36 properties reviewed by NPB this weekend:

< $600k

Suburb Type Beds Quote Result
Cheltenham Apartment 2 $280-310k SOLD $312,000
Hawthorn East Apartment 1 $270-300k SOLD $340,000
Williamstown Unit 1 $320-360k PASSED IN
Abbotsford Apartment 1 $320-360k SOLD $362,000
Ascot Vale Apartment 2 $330-360k PASSED IN
Bonbeach Unit 2 $380-420k SOLD $422,000
Kew Apartment 2 $380-400k SOLD $450,000
Sunshine House 3 $420-460k SOLD $465,000
Coburg House 2 $480-520k SOLD $531,000
North Melbourne Apartment 2 $500-550k SOLD $553,000
Macleod House 3 $500-550k SOLD $555,000
Yarraville House 2 $500-550k SOLD $558,000
Sold 10
Passed In 2 NPB Clearance Rate 83%
Total 12

$600k – $1m

Suburb Type Beds Quote Result
Macleod Townhouse 3 $550k+ SOLD $652,000
Kingsville House 3 $600-660k SOLD $690,000
Mt Waverley House 3 $620-670k SOLD $705,000
Box Hill House 3 $630-680k SOLD $785,000
Richmond Apartment 2 $650k+ PASSED IN
Ashburton House 2 $650-700k PASSED IN
St Kilda Unit 2 $750-800k SOLD $828,000
Richmond Townhouse 3 $770-850k SOLD $865,000
Hawthorn House 3 $830-880k SOLD $929,000
Ivanhoe East Townhouse 3 $830-890k PASSED IN
Thornbury House 4 $810-890k SOLD $970,000
Sold 9
Passed In 4 NPB Clearance Rate 69%
Total 13

$1m+

Suburb Type Beds Quote Result
Brunswick Apartment 2 $800-880k SOLD $1,012,000
South Yarra Unit 3 $850-920k SOLD $1,056,000
Albert Park House 2 $1-1.1m PASSED IN
Beaumaris House 4 $1.05-1.15m SOLD $1,170,000
Prahran House 3 $1.1-1.2m SOLD $1,200,000
Armadale House 3 $1-1.1m SOLD $1,205,000
Surrey Hills House 4 $1.2m+ SOLD $1,470,000
Brighton House 4 $1.4-1.55m SOLD $1,600,000
East Melbourne House 3 $1.8-1.9m PASSED IN
Toorak House 4 $1.8-2m SOLD $2,100,000
Malvern House 4 $3.2-3.5m PASSED IN
Sold 8
Passed In 3 NPB Clearance Rate 73%
Total 11

Overall

Sold 27
Passed In 9 NPB Clearance Rate 75%
Total 36

AUCTIONS IN THE SPOTLIGHT

10 Karma Avenue, Malvern East

10 Karma Avenue, Malvern East

  • Reported by:Catherine Cashmore
  • Agent:Woodards
  • Quote:POA
  • Crowd:60 people (approx.)
  • Bidders:2
  • On Market:N/A
  • Result:SOLD after passing in at $940k

Comment:

Despite a crowd of around 60 demand was not immediately apparent. The auctioneer opened on a vendor bid of 850k and had to work quite hard before he attracted the necessary counter bids to inflate the price and get the event moving. Two bidders competed, however the pace was slow and at 940k the bidding ceased. The property passed in for negotiation and sold a little over the ‘passed in’ figure.

1/14 Repton Rd, Malvern East

1/14 Repton Rd, Malvern East

  • Reported by:Catherine Cashmore
  • Agent:Woodards
  • Quote:$390k – $430k
  • Crowd:40 people (approx.)
  • Bidders:2
  • On the Market:$433,000
  • Result:SOLD $451,500

Comment:

Representing the lower end of the market, this 1970’s unit obviously attracted greater demand than Karma Ave. The auctioneer called for opening bids, however met with with dearth of silence he conceded,and opened up with a vendor bid of 400k. Two bidders took over, going up in increments of 10k, until at 425k, the bidding broke down to 1k, and $500 jumps. At $433k the property was announced on the market and sold under the hammer for $451.500.

56 Margaret Street, Box Hill

56 Margaret Street, Box Hill

  • Reported by:Antony Bucello
  • Agent:Noel Jones
  • Quote:$630k – $680k
  • Crowd:85 people (approx.)
  • Bidders:3
  • On the market:$710,000
  • Result:SOLD $785,000

Comment:

This was a strong auction. Opening on a genuine bid of $630,000, 3 bidders hotly competed to push the price northwards of reserve. The property was announced on the market when the bidding reached $710k. Two bidders fought it out after that and at $785,000 the property sold.

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Antony Bucello and Catherine Cashmore from National Property Buyers

Email Antony
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