New data indicates median prices have once again strengthened. Have you missed the bottom of the market??
by Antony Bucello & Catherine Cashmore
New data from Residex indicates Australia wide; the market is once again producing growth on a month to month basis. Whilst this is good news for vendors, purchasers may be wondering if we’re heading into another cycle of price rises.
A breakdown of the figures reveals some interesting statistics. First of all, the housing market – nationwide – has produced better growth than the unit market. This is no doubt due to unit completions producing ample short term supply, however it also indicates owner occupier activity may be improving as “homebuyers” (upsizers pre-dominantly) trend towards house and land purchases over that of units.
Darwin is the outstanding performer and Residex also concludes that Brisbane may be returning to trend.
However, Sydney and Melbourne buyers still have a chance to benefit from the bottom of the cycle, with median prices moving less than 1 per cent for the quarter.
Melbourne’s statistics show turnover – to July 2012 – has improved slightly on the previous year’s figures; however the percentile increase is only 6.72 per cent. Therefore, overall activity is still below trend.
The ABS has recorded a 0.1% drop in ‘owner occupier housing finance’ for the month of June and Westpac’s “Consumer Sentiment Survey,” indicates a drop of 2.5 per cent in August.
Considering all of the above, you could be forgiven in expecting median prices to drop further than all the data indicates. However, there is still a healthy standoff between ‘un-erring’ vendor expectation – (vendor’s not ‘meeting the market’) – and buyers who – (taking into account the numerous consumer surveys) – feel more than a little ‘nervy’ regarding our long term position.
In this ‘lucky country’ of ours vendors don’t have to sell – at least the majority ‘won’t’ sell – unless they can achieve a price they deem appropriate.
Consequently, there is a ‘floor’ beneath how far prices can drop and with ‘stock on market’ figures reducing, the properties that are selling – in particular those that are selling ‘under the hammer’ – are the consequence of a few active ‘home buyers’ being prepared to pay a ‘healthy’ price for a home they both love and need.
The figures feeding into the median therefore, are representative of a particular composition of properties selling, rather than general market recovery. In other words – the ‘quality end of the market’ is proving once again you only ‘win’ at property investment if you buy well initially.
With stock levels reducing, we face a situation where buyers who don’t act now may find limited choices remaining by the time the spring market heats up. Considering Melbourne is still sitting at the bottom of a market cycle, buyers should be thinking about acting now, rather than wait for a tightening of supply to fuel demand.
| Clearance Rate: | 58% | ||
| Total Auctions: | 432 (48 unreported) | ||
| Sold: | 252 | Passed in: | 180 |
| At auction: | 210 | Vendor Bid: | 108 |
| Before auction: | 42 | Real bid: | 72 |
| After auction: | 0 | ||
| Total Private Sales: | 481 | ||
| Weekly Turnover: | 733 | ||
| Source: www.reiv.com.au | |||
The NPB clearance rate is representative of the results evidenced in the ‘quality’ end of the marketplace. We take the results from a range of suburbs; however please note we are not ‘suburb specific’. NPB Melbourne, negotiate on hundreds of properties for their clients each year throughout all areas of Melbourne and the Bellarine Peninsula.
| NPB Clearance Rate: | 71% | ||
| Total Auctions Reviewed: | 38 | ||
| Sold: | 27 | Passed in: | 11 |
| Under $600k+: | 9 | 3 | |
| $600k-$1m: | 10 | 3 | |
| $1m+: | 8 | 5 | |
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 38 properties reviewed by NPB this weekend:
| Suburb | Type | Beds | Quote | Result |
| Thornbury | Unit | 2 | $360-390k | SOLD $390,000 |
| Pascoe Vale | Unit | 2 | $370-400k | Passed In |
| Sunshine | House | 3 | $370-400k | Passed In |
| South Yarra | Apartment | 1 | $370-400k | SOLD $395,000 |
| Footscray | Unit | 2 | $380-420k | Passed In |
| Elsternwick | Apartment | 2 | $400-440k | SOLD $435,000 |
| Collingwood | Apartment | 2 | $420-460k | SOLD $460,000 |
| Reservoir | House | 3 | $450-485k | SOLD $486,000 |
| Ringwood North | House | 4 | $450-500k | SOLD $500,000 |
| Blackburn North | House | 2 | $410-450k | SOLD $519,000 |
| Newport | Townhouse | 2 | $500-550k | SOLD $591,000 |
| Northcote | Townhouse | 2 | $510-560k | SOLD $599,500 |
| Sold | 9 | |||
| Passed In | 3 | NPB Clearance Rate 75% | ||
| Total | 12 | |||
| Suburb | Type | Beds | Quote | Result |
| Prahran | House | 2 | $550-590k | SOLD $600,000 |
| Collingwood | Townhouse | 2 | $560-620k | SOLD $620,000 |
| Ascot Vale | House | 2 | $570-620k | SOLD $620,000 |
| East Melbourne | Apartment | 2 | $500k+ | SOLD $655,000 |
| Port Melbourne | House | 2 | $500-600k | SOLD $666,500 |
| Caulfield North | Townhouse | 3 | $590-650k | Passed In |
| Preston | House | 3 | $650-700k | SOLD $713,500 |
| North Melbourne | Townhouse | 2 | $690-740k | Passed In |
| Richmond | Townhouse | 2 | $695k+ | SOLD $765,000 |
| Essendon | House | 3 | $750-800k | SOLD $830,000 |
| Abbotsford | House | 3 | $770-820k | SOLD $843,000 |
| Richmond | House | 2 | $880k+ | SOLD $960,000 |
| Hawthorn | House | 3 | $900-950k | Passed In |
| Sold | 10 | |||
| Passed In | 3 | NPB Clearance Rate 77% | ||
| Total | 13 | |||
| Suburb | Type | Beds | Quote | Result |
| Fitzroy North | House | 3 | $975-1050k | Passed In |
| Port Melbourne | House | 3 | $1-1.1m | SOLD $1,190,000 |
| Carlton North | House | 3 | $1.1-1.2m | SOLD $1,200,000 |
| Richmond | Townhouse | 3 | $1.15-1.25m | Passed In |
| Mount Martha | House | 4 | $1.2-1.3m | Passed In |
| Hawthorn | House | 3 | $1.2-1.35m | SOLD $1,410,000 |
| Kew | House | 4 | $1.1-1.2m | SOLD $1,411,000 |
| Middle Park | House | 3 | $1.3m+ | SOLD $1,502,000 |
| Canterbury | House | 4 | $1.8-2m | SOLD $2,132,500 |
| Kew | House | 4 | $1.9-2.1m | Passed In |
| Brighton East | House | 4 | $2.5m+ | SOLD $2,665,000 |
| Hawthorn | House | 4 | $3-3.3m | SOLD $3,230,000 |
| South Yarra | House | 5 | $5-5.5m | Passed In |
| Sold | 8 | |||
| Passed In | 5 | NPB Clearance Rate 62% | ||
| Total | 13 | |||
| Sold | 27 | |||
| Passed In | 11 | NPB Clearance Rate 71% | ||
| Total | 38 | |||
AUCTIONS IN THE SPOTLIGHT
1/93 Kambrook Rd Caulfield North
27 Henrietta St, Hawthorn
Comment:
An original 3 bedroom double fronted Victorian in a desirable location – Marketed as “Renovation Opportunity of the Year” – and as such, presented a good ‘foot in the door’ opportunity for the suburb. 5 bidders competed, and the auction moved at a rapid pace. Opening on a genuine bid of 1.120Mil it quickly reached its reserve of 1.340Mil, and with 3 bidders still competing, sold for a boom result of 1.410Mil.
73 Mills Street, Middle Park
Comment:
A crowd of around 40 attended this fully renovated and extended single fronted 3 bedroom 2 bathroom Victorian in Middle Park (walking distance to the beach). The vendors were wanting “in excess of 1.3Mil” and the auctioneer didn’t have to work hard to get it! 4 bidders, heated bidding throughout – and vendor’s that refused to put it ‘on the market’ until the price had almost reached 1.5Mil, saw buyers fiercely competing. The result was big, but in an area that’s tightly held, a quality home of this calibre, was likely to attract competition. The auction was long – bidding frantic – and such was the excitement, the crowd rewarded the auctioneer with a round of applause. Good result in the current market.
23 Queen St, Kew
Comment:
A beautifully renovated 4 bedroom period home in the heart of Kew. Opening on a genuine bid of 1.9Mil, bidding was well paced until at 1.2055Ml the auctioneer broke to talk to the vendor. Unfortunately for the buyers, the property hadn’t yet reached reserve – somewhat deflated, the bidding only managed to push a little higher to 2.1Mil before the property passed in for negotiation. No reserve was disclosed and the property remains ‘for sale.’
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
Comment:
The rain poured for this auction so it was thankfully conducted inside. There was a small crowd – and considering the property was positioned on a busy through road, it was no surprise it took a bit of cajoling to get things moving. Opening on a vendor bid of $570K – it took mid-term break before we saw two bidders step in offering little more than 1 or 2 bids each. The property passed in at $600K and was negotiated successfully for an undisclosed result below the upper end of the quoted range.