'It's a strange market': Middle ring faces price pressure at weekend auctions

Dozens of properties in Melbourne’s middle-ring suburbs are under downward price pressure because of “flat” levels of buyer demand, real estate agents say.

The price-sensitive middle ring, 10-20 kilometres from the city, underperformed at the weekend – a trend reflected in the lacklustre weekend auction clearance rate of 49.1 per cent from 609 auctions reported to the Domain Group.

In Glen Waverley, 12 auctions were scheduled on Saturday, but it was a hard slog to sell some properties.

Harcourts-Judd White auctioneer Dexter Prack had to sell an old house on 764 square metres for below its quoted range of $1.8 million to $1.98 million because of insufficient buyer interest.

Only one bidder – a developer with plans to build a new single house on the site – made an offer. He picked up the property for $1.755 million, $45,000 below the bottom end of the quote.

Prack said the listing, in the popular Glen Waverley Secondary College zone, would have “got close to $2 million” a year ago.

“If there is not much competition, the buyers are not paying the price,” he said.

“Prices, for us, have definitely eased off by 10 per cent or 12 per cent. It is a strange market. Stock levels are lower and that usually that means more demand. But buyer demand is flat, as well.”

The middle ring is seen by property observers and some agents as the weak spot in Melbourne’s market, although demand for middle-area land and homes can vary greatly between suburbs.

Sales in the inner suburbs are supported by population growth, A-grade facilities and there are usually more buyers than sellers. The outer suburbs, too, are supported by the affordable cost of homes compared with those in the middle ring.

Some middle-area agents say “stale” properties – homes that have failed to sell within four weeks of listing – are dragging down the prices of fresh stock.

On Saturday, 25 onlookers watched a brick-veneer home on 697 square metres at Balwyn North go to auction.

The deceased estate was inspected by just 15 groups of buyers during its sales campaign. At auction, the home landed no genuine bids, and was passed in by Fletchers’ auctioneer Jeremy Desmier on a second vendor bid of $1.275 million.

Desmier said Balwyn North land prices had fallen below the peaks seen two years ago, but vendors were achieving prices above 2014 price levels.

“It makes it hard for the fresh stock to achieve good prices when there are a lot of older properties that have been on the market for a while, and their vendors are dropping their prices,” Desmier said.

Despite Saturday’s clearance rate being less than 50 per cent, there were upbeat results in in-demand areas.

A 1970s-style unit close to the beach at Sandringham did well. Amanda Jones, of Hodges Sandringham, said five buyers – a mix of investors and home buyers – had expressed interest.

But, only three of them bid after the property landed a strong opening bid of $570,000. It then went on to sell to a middle-aged couple for $631,000, $41,000 above reserve.

Jones said segments of the family home market in Sandringham and Highett were under pressure.

“The two and three-bedroom properties on smaller land are still doing well, but anything above the $1.5 million level is struggling, and particularly when you move up to $1.7 million and above,” she said.

“That market has definitely come off, and it came off rather rapidly through August and September.”

Sales of houses in Melbourne’s north were relatively robust on Saturday.

Miriam Sandkuhler, a buyer’s advocate with Property Mavens, said four buyers contested a renovated, double-fronted home in Coburg.

She said auctioneer Brad Teal, of Brad Teal Real Estate, took the unusual step of announcing that the home had a $950,000 reserve. The home sold for $1.12 million after vigorous bidding.

Ms Sandkuhler said there were lower levels of good-quality stock in the middle ring’s northern suburbs. This, combined with local owners choosing to renovate instead of upgrading to a new house, was resulting in home buyers competing for scarce, renovated period properties that they could move into immediately.

The top Melbourne sale reported to the Domain Group was for a four-bedroom, Federation-style house at Deepdene. The home sold for $2.7 million through Jellis Craig.