18 July 2011
Another consistent week with the REIV reporting a clearance rate of 56%, with 211 of the 377 scheduled auctions selling. A total of 166 properties were passed in over the weekend and 60% of those were passed in on a vendor bid. This is now the 12th week running that the clearance rate has failed to reach 60%. At the same time last year, the clearance rate was a very balanced 70%.
The NPB clearance rate for the week was a healthy 68%, considerably higher than the REIV’s and 5% higher than the NPB clearance rate of 63% last week. We reviewed 25 properties this week, and 16 of those sold either before auction, under the hammer, or shortly after passing in. It was a solid performance from the lower end of the market, with 5 of the 7 properties we reviewed selling and a clearance rate of 71%. The 2 surprises for the week were the middle range and the high end properties. The $600-1m category struggled this week compared to last week with only 5 of the 9 properties (55%) we reviewed gaining new owners and the “over $1m” bracket saw a clearance rate of 66%, a big improvement, with 6 of the 9 properties we reviewed selling.
We attended a number of auctions this weekend, with 2 standouts. At 3/20 Mary St Kew, about 40 people watched 4 bidders fight it out in a competitive auction. With no-one wanting to start the auction, it began with the common vendor bid to get things going. It wasn’t long before 4 people got involved. Announced on the market when the bidding reached $530,000, it ended up selling for $535,000, which is fair value.
In Bentleigh, the auction at 33 Sunnyside Grv attracted a big crowd of over 100 people. The 4 bedroom Californian Bungalow was being quoted $1,030,000 to $1,130,000 and attracted plenty of interest. Starting on a vendor bid at the bottom of the quoted range, the renovated property eventually sold for a very healthy $1,235,000. My estimate prior to the auction was that this one should sell around $1.2m. At $1.235m, the agents did a great job and I’m sure the vendor would be very pleased with the result.
REIV Releases June Quarter Median Prices
The REIV has just released the June quarter median prices, which indicate that the median price for houses has risen over the quarter by 5.4% to $590,000. As buying property is a long term investment, it is important to consider the performance of any suburb over a longer time period. While the current median is less than the $601,500 recorded in the December 2010 quarter, it does show that prices and demand have remained fairly stable, with a 5.7% rise in the 12 months from June 2010. The median price for units and apartments is also stable with an increase of 3.2% to $474,500 over the last quarter and a 1% increase over the last 12 months. Based on our own review of units and apartments, there still appears to be plenty of demand for these properties in the inner city (ie within 5-10 kms of the CBD), particularly the good ones. Below is a graph showing the performance of both houses and units/apartments over the past 10 years in the Melbourne metropolitan area.
10 Year Trend for Houses and Units/Apartments (source REIV)
If you need any help with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact me.
National Property Buyers
0418 131 950