Big test looms for waning Melbourne auction market

Low interest rates have been a key driver of previously strong market activity, but the rate cut energy of autumn has clearly dissipated. On Saturday, low auction numbers were seen as sellers avoided the distractions of the AFL Grand Final.

Melbourne’s weekend auction market is showing early signs of waning with the market set to be sternly tested over the remainder of spring as auctions flood the market.

Just 31 auctions were reported at the weekend with a clearance rate of 56 per cent. This was well below the clearance rate of 84 per cent recorded over Grand Final Saturday last year from similar listing numbers.

The pause for Grand Final weekend provides the opportunity to reflect on the performance of the early spring auction market. Melbourne’s weekend clearance rates have averaged 75.8 per cent over the five weekends prior to Saturday.

Recent trends indicate that auction clearance rates may continue to moderate over the remainder of spring with rates falling over the past five weekends.

Next weekend the market will resume in full swing with a record early October Saturday of over 1200 auctions scheduled – providing continued downward pressure on clearance rates.

Notable sales reported at the weekend included a three-bedroom home at 52 Lechte Road, Mount Waverley sold for $1,600,000 by Fletchers, a four-bedroom home at 200 Manningham Road, Bulleen sold for $1.28 million by Barry Plant, another four-bedroom home at 33 Bowen Road, Doncaster East also sold by Barry Plant for $1,035,000, a three-bedroom home at 2 Calrossie Road, Blackburn South sold by Ray White Blackburn for $960,000 and a two-bedroom unit at 3/3 Myrtle Road, Canterbury sold by Fletchers for $837,000. 

The most expensive property reported sold at auction at the weekend was a five-bedroom home at 6 Pinewood Drive, Mount Waverley sold for $1.96 million by Jellis Craig. The most affordable property reported sold at the weekend was a four-bedroom home at 74 Ballan Road, Werribee sold for $325,000 by LJ Hooker Werribee.

Weekend Melbourne auction results

Melbourne’s trend auction price fell marginally again at the weekend down from the previous weekends $793,972 to $793,222. Local trend auction prices however remain 12.5 per cent higher than the $705,625 recorded over the same weekend last year.

The Reserve Bank meets on Tuesday for its regular monthly meeting to determine the direction of official interest rates for October. Although the likely outcome is for rates to remain steady for the fifth consecutive month, further indications of deterioration in local and international economic activity and continued volatility in sharemarkets may bring a Melbourne Cup Day rate cut into play next month.

Dr Andrew Wilson is Domain Group’s senior economist