Local Median values still increasing – how can this happen in a ‘buyers market?’
by Antony Bucello & Catherine Cashmore
With fewer auctions taking place each week and more vendors opting for sale by private treaty, it’s fair to suggest the clearance rate isn’t as applicable to the current market as it has been previously. It’s primarily a snapshot of Melbourne’s inner and middle ring suburban locations, of which only the ‘best of the best’ is attracting ‘boom’ results. This week’s clearance rate of 59 per cent broke the trend of the previous few weeks during which we’ve managed to clear the 60 per cent marker – albeit marginally.
The auctions NPB attended all attracted a crowd along with competitive bidding, but as we’ve mentioned previously – we pin point properties that attract the predominate buyer demographic in the particular location of choice. Therefore it can’t be used as a representation of the market as a whole – and is rather representative of a smaller percentage of ‘quality’ sales.
Overall sales turnover is still lagging behind that of previous years which demonstrates the overall health of the real estate market has not recovered to pre GFC levels. However, the marginal increases in the median (over both June and July of 1 per cent and 1.4 per cent respectfully) are representative of the ‘good’ properties selling – as we reiterated above.
A report in the Herald Sun this weekend suggested that Melbourne house prices have soared some 125 per cent over the past ten years. However, it’s important to draw a distinction between ‘house prices’ and ‘median values’.
The term ‘house prices,’ suggests every property has experienced the windfall, however we know this isn’t the case. Once again, it’s all down to the type of property and location you purchase. Common sense alone will dictate that areas close to the CBD and major transport hubs, where the available residential land has been utilised and the population continues to increase, will inevitably underpin established property prices and attract healthy growth for those vendors who chose carefully when purchasing initially. However, there are plenty of vendors who bought into poor acquisitions (the Docklands being a case in point) who wouldn’t have benefitted from a 125 per cent windfall. As with every media report – it’s essential to take note of the broader context before ‘buying into’ the hype.
Having said this – if you did purchase ‘well’ some ten or so years ago, there’s no doubt you would have ‘won’ a healthy increase in capital. As mentioned previously, even in the current climate, median results demonstrate that values can rise if you hold something of value to a broad demographic of property buyers.
Once again – it’s another lesson to get good advice at the start of the buying process. Purchasing property is one area where you want to avoid learning from previous mistakes.
| Clearance Rate: | 59% | ||
| Total Auctions: | 384 (58 unreported) | ||
| Sold: | 227 | Passed in: | 154 |
| At auction: | 176 | Vendor Bid: | 92 |
| Before auction: | 30 | Real bid: | 62 |
| After auction: | 2 | ||
| Total Private Sales: | 519 | ||
| Total Weekly Turnover: | 743 | ||
| 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: | 76% | ||
| Total Auctions Reviewed: | 34 | ||
| Sold: | 26 | Passed in: | 8 |
| Under $600k: | 8 | 2 | |
| $600k-$1m: | 9 | 3 | |
| $1m+: | 9 | 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 34 properties reviewed by NPB this weekend:
| Suburb | Type | Beds | Quote | Result |
| Essendon | Unit | 2 | $460-500k | SOLD $442,000 |
| Newport | House | 3 | $450-490k | SOLD $490,000 |
| West Footscray | Townhouse | 2 | $450-490k | PASSED IN |
| Coburg | Townhouse | 3 | $500-550k | PASSED IN |
| Canterbury | Unit | 2 | $500-550k | SOLD $530,000 |
| South Melbourne | Apartment | 2 | $490-530k | SOLD $535,000 |
| Northcote | Apartment | 2 | $495k+ | SOLD $550,000 |
| Collingwood | Apartment | 2 | $480-520k | SOLD $570,000 |
| Hawthorn East | Unit | 2 | $550-600k | SOLD $591,000 |
| Preston | House | 2 | $500-550k | SOLD $596,000 |
| Sold | 8 | |||
| Passed In | 2 | NPB Clearance Rate 80% | ||
| Total | 10 | |||
| Suburb | Type | Beds | Quote | Result |
| Reservoir | House | 3 | $600-650k | PASSED IN |
| South Melbourne | House | 2 | $580-630k | SOLD $640,000 |
| Elwood | Apartment | 3 | $620-670k | SOLD $672,000 |
| Abbotsford | House | 2 | $650-690k | SOLD $717,500 |
| Footscray | House | 4 | $650-690k | SOLD $722,000 |
| Fitzroy North | House | 3 | $700k+ | SOLD $740,000 |
| Bentleigh East | House | 3 | $650-700k | SOLD $750,000 |
| Ormond | House | 3 | $750-800k | SOLD $810,000 |
| Richmond | Townhouse | 3 | $780k+ | PASSED IN |
| Blackburn | House | 4 | $800-850k | SOLD $870,000 |
| Caulfield South | House | 3 | $850-900k | PASSED IN |
| Camberwell | House | 3 | $900-950k | SOLD $955,000 |
| Sold | 9 | |||
| Passed In | 3 | NPB Clearance Rate 75% | ||
| Total | 12 | |||
| Suburb | Type | Beds | Quote | Result |
| Williamstown | House | 4 | $950k-1.05m | SOLD $1,065,000 |
| Hampton East | House | 4 | $1-1.1m | SOLD $1,100,000 |
| Brighton | House | 4 | $1.05-1.15m | SOLD $1,170,000 |
| Glen Iris | House | 4 | $1-1.1m | SOLD $1,125,000 |
| Canterbury | House | 3 | $1.2m+ | SOLD $1,260,000 |
| Parkdale | House | 3 | $1.15-1.25m | SOLD $1,290,000 |
| Camberwell | House | 4 | $1.2-1.3m | SOLD $1,330,000 |
| Hawthorn East | House | 4 | $1.7m+ | SOLD $2,125,000 |
| Kew | House | 3 | $1.7-1.85m | SOLD $2,200,000 |
| McKinnon | House | 3 | $1.8m+ | PASSED IN |
| Melbourne | Apartment | 3 | $1.8-2m | PASSED IN |
| Albert Park | House | 5 | $3.2m+ | PASSED IN |
| Sold | 9 | |||
| Passed In | 3 | NPB Clearance Rate 75% | ||
| Total | 12 | |||
| Sold | 26 | |||
| Passed In | 8 | NPB Clearance Rate 76% | ||
| Total | 34 | |||
AUCTIONS IN THE SPOTLIGHT
11 Bray Crt, Bentleigh East
371 Koornang Rd, Ormond
Comment:
Another family home, however not in the best position – situated on a busy road close to a main thoroughfare. The house needed work and was marketed as a ‘renovators or developers delight’. Quoted at $570K+ – the auction opened on a genuine bid of $500K, however in no time at all 3 bidders had pushed the price past $600K. The bidding didn’t stop until $650K – however the half time break failed to see it go ‘on the market’ and the house passed in for 652K.
3/29 Ulupna Rd, Ormond
Comment:
This two bedroom unit (1 of 4) located close to shops and transport naturally attracted healthy interest and 4 active bidders. Opening on a genuine bid of $350K, the bidding didn’t slow until $450K at which point the auctioneer went inside to see if the vendor was willing to place it on the market. He returned saying it was still below reserve, however one more ‘coaxed’ bid of $5K, saw it announced on market at $455K. The unit sold some 10K later for $465K.
12/8 Short St, Northcote
Comment:
Only about 12 groups attended the auction of this modern 2 bedroom unit. The bidding opened on a genuine bid of $510K and with 2 bidders competing soon reached $540K before being passed in. Negotiation was successful, and the property sold for $550K
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 triple fronted brick house is typical of the Bentleigh area and suits the predominant buyer demographic – made predominantly of families.
The auction opened on a genuine bid of $650K. There was competition from 3 bidders and the pace was such that at 740K it was announced on the market with no need for an interim break. The house sold under the hammer for 750K.