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REIV’s May price index posts eighth consecutive month of gains

Jun 18, 2013 | Latest News, Melbourne Market | 0 comments

by Antony Bucello & Catherine Cashmore

Once again, Melbourne is producing robust results with the clearance rate ‘year to date’ now residing at 70 per cent (up from 68 per cent in April) and the latest REIV house price index posting a 1.4 per cent increase for the month of May.

According to the REIV, this is the eighth consecutive month of ‘house price’ increases, with unit prices also showing a moderate boost – up 0.9 per cent for the month – which is the third consecutive monthly rise.

Not surprisingly, the biggest gains have been recorded in the inner and middle regions of the city – principally, the ‘auction dominated’ terrains – with the outer suburbs remaining stable.

When confidence improves and auction results start to ‘openly’ surpass their reserve, the number of vendors opting to sell using this method increases. As reported by the REIV – by the end of June approximately 3,175 auctions will have been held. Only once in the past decade (2010) have there been more auctions in June, and in the inner and middle ring suburbs there is no perceptible sign of the market weakening, if anything the reverse is occurring.

It’s not quite the rampant atmosphere experienced in 2007 during which the ‘lending frenzy’ leading up to the GFC was pushing excessive amounts of easy credit into the market. Prices are still well below their peak and results patchy.

Albeit, whilst the aggregated data shows only moderate gains, – in areas where auction sales predominate (such as Bentleigh, Hawthorn, Glen Iris for example) a number of economic and social factors have combined to push it well and truly into a sellers domain.

The recent drop in the cash rate, provided buyers will a little more spending power, however the 70 per cent year to date clearance rate with overall turnover increasing and prices swinging past the reserve, is more to do with the effect public auctions have on buyer confidence than anything else.

The physiological impact when bidding against competition for an emotional asset has been well documented – and when confidence improves, this method of sale does result in higher prices – prices which would be extremely difficult to negotiate in a private sale scenario during which there would be no undisputed evidence to the ‘leading’ buyer that a competitor is willing to pay more.

Not unlike sports gambling – a well staged auction actively encourages buyers to lose a sense of considered rationality, with a trained auctioneer pushing the ‘players’ to stretch their budgets past their pre-established limit, which when combined with a strong desire to ‘win’ at all costs, can result in a potentially dangerous set of circumstances.

According to SQM’s weekly “vendor sentiment index,” asking prices are – if anything – trending upwards which once again suggests there is demand in the market currently meeting expectation.

It’s clear, investors remain the most active demographic, with the value of investor finance commitments up by 1% in April, and 18% over the year – the highest level since January 2008, which would have a beneficial roll over effect for those relying on sales to ‘upgrade’ (which it should be noted, increases spending power without the need to increase borrowing levels.)

In a recent survey conducted by Mortgage Choice of a sample 1000 mortgage holders, 83 per cent (roughly four out of five) voiced consideration to use the equity in their principle place of residence to purchase an investment property – the trend is strong.

With the above factors combined, plus expectation of another rate cut (or two) over the months ahead, it’s unlikely we’ll see any change to the current status quo – for the time being at least.

Weekend Clearance Rate Figures

Week Ending Sunday 16th June 2013

Clearance Rate: 70%
Total Auctions: 740 (39 unreported)
Sold: 521 Passed in: 219
At auction: 417 Vendor Bid: 146
Before auction: 102 Real bid: 73
After auction: 2
Total Private Sales: 425
Weekly Turnover: 946
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. The properties we highlight are taken from a selection which we carefully analyse for quality assessment and revise daily.

NPB’s clearance rate is moving in line with REIV data – however it should be noted, the quality and quantity of ‘good’ listings are slowly reducing as we approach winter and it’s expected this could increase competition.

Weekend Clearance Rate Figures

Week Ending Sunday 16th June 2013

NPB Clearance Rate: 86%
Total Auctions Reviewed: 52
Sold: 45 Passed in: 7
Under $600k: 17 1
$600k-$1m: 19 4
$1m+: 16 2

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 52 properties reviewed by NPB this weekend:

< $600k

Suburb Type Beds Quote Result
Ascot Vale Apartment 2 $385-420k SOLD $415,000
Yarraville House 2 $380-420k SOLD $437,000
Heidelberg Apartment 2 $390-430k SOLD $440,000
Prahran Apartment 1 $350-380k SOLD $453,000
Preston Apartment 2 $380-420k SOLD $508,000
Surrey Hills Apartment 2 $480k+ SOLD $510,000
Prahran Apartment 1 $370-400k SOLD $511,000
Box Hill Unit 2 $390-420k SOLD $515,500
Reservoir House 3 $400-440k PASSED IN
South Kingsville House 3 $480-510k SOLD $525,000
Yarraville House 2 $500-550k SOLD $530,000
Hawthorn East Apartment 2 $440-480k SOLD $538,000
Preston Unit 3 $440k+ SOLD $548,000
Reservoir House 3 $480k+ PASSED IN
Collingwood Apartment 2 $520-560k SOLD $562,500
Wheelers Hill House 3 $490k+ SOLD $576,000
Preston House 3 $520-570k SOLD $592,500
Richmond Apartment 2 $500k+ SOLD $596,000
Sold 16
Passed In 2 NPB Clearance Rate 88%
Total 18

$600k – $1m

Suburb Type Beds Quote Result
Reservoir House 3 $480k+ SOLD $600,000
Pascoe Vale House 3 $400-440k SOLD $605,000
Doncaster East Unit 3 $520-570k SOLD $605,000
Kensington Townhouse 2 $550-600k SOLD $610,000
Yarraville House 3 $590-630k SOLD $655,000
Ivanhoe Unit 3 $530-580k SOLD $663,000
Mentone House 4 $650-690k SOLD $734,000
West Footscray House 3 $660-710k PASSED IN
Yarraville House 3 $690-740k SOLD $735,000
Thornbury House 3 $680-720k SOLD $756,000
Richmond Apartment 2 $600k+ SOLD $757,000
Northcote Warehouse 2 $650k+ SOLD $774,000
Caulfield South House 3 $680-750k SOLD $811,000
Clifton Hill Townhouse 2 $700-770k SOLD $846,000
St Kilda East Townhouse 3 $770-850k SOLD $865,000
Maribyrnong House 5 $800-880k SOLD $875,000
Elwood Apartment 2 $800-880k PASSED IN
Richmond Townhouse 2 $800-850k SOLD $910,000
St Kilda House 3 $850k+ PASSED IN
Balwyn North House 3 $800-880k SOLD $920,000
Moonee Ponds Apartment 3 $700-750k SOLD $940,000
Yarraville House 3 $890-950k PASSED IN
South Yarra Townhouse 3 $900k+ SOLD $950,000
Sold 19
Passed In 4 NPB Clearance Rate 82%
Total 23

$1m+

Suburb Type Beds Quote Result
Windsor House 4 $850k+ SOLD $1,029,000
Kew House 3 $1.1m+ SOLD $1,302,500
Hawthorn Apartment 3 $1.25m+ SOLD $1,375,000
Elwood House 2 $1.3-1.4m SOLD $1,400,000
St Kilda Townhouse 3 $1.2-1.3m SOLD $1,460,000
Hawthorn House 2 $1.35m+ SOLD $1,700,000
Parkville House 3 $1.5-1.65m SOLD $1,700,000
Canterbury House 4 $1.6m+ SOLD $1,710,000
Toorak House 3 $1.5m+ SOLD $1,820,000
Balwyn House 5 $1.6-1.7m SOLD $2,210,000
Kew House 4 $2m+ PASSED IN
Sold 10
Passed In 1 NPB Clearance Rate 90%
Total 11

Overall

Sold 45
Passed In 7 NPB Clearance Rate 86%
Total 52

AUCTIONS IN THE SPOTLIGHT

86 Hunter St, Richmond

86 Hunter St, Richmond

  • Reported by:Catherine Cashmore
  • Agent:Jellis Craig
  • Quote:$800,000-$850,000
  • Crowd:50 people (approx.)
  • Bidders:2
  • On Market:$895,000
  • Result:SOLD $910,000

Comment:

The auction started rather slowly with the auctioneer placing two vendor bids starting at $800,000. However, once someone decided to raise a hand, two buyers competed to push the result into the high $800,000s. At $895,000 the home was called ‘on the market’ and a few bids later, it sold for $910,000.

 

2/1B Kintore Cr BOX HILL

2/1B Kintore Cr BOX HILL

  • Reported by:Antony Bucello
  • Agent:Fletchers
  • Quote:$390,000-$420,000
  • Crowd:60 people (approx.)
  • Bidders:5
  • On Market:$460,000
  • Result:SOLD $515,000

Comment:

There was heated competition for this 2 bedroom unit in the heart of Box Hill. With five bidders competing, the price quickly exceeded its quoted range to be announced on the market at $460,000.

Unexpectedly, the final result exceeded $500,000 with the hammer falling at $515,000.

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
Email Catherine

 

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