'Buyers have the upper hand': Cold Melbourne weather leads to lukewarm auctions

Property buyers swooped on the light offering of houses put up for auction in Melbourne’s inner-city areas at the weekend.

The wider house market was more sluggish as bitterly cold conditions kept down attendance numbers at some auctions.

According to the Domain Group, 239 metropolitan houses sold on Saturday from the 385 that went under the hammer – a 59 per cent clearance rate.

Apartment sales were slightly stronger with a smaller sample of 114 auctioned units producing 72 sales or a 62 per cent auction success rate. The overall clearance rate for all types of dwellings was 59.4 per cent, down on the previous weekend’s 62.3 per cent.

Northcote-based auctioneer Sam Rigopoulos, from Jellis Craig, produced Melbourne’s highest reported auction result of the weekend when he sold a fully renovated and extended home at 77 Roberts Street, Northcote.

A big crowd of 100 onlookers watched the property snare bids from three inner-north families, all hoping to upsize from a smaller homes. The auction kicked off on a genuine bid of $2.2 million, and the four-bedroom home was declared on the market at $2.35 million. The bidding then slowed to snail pace before the home sold for $2.42 million.

“The last $30,000 or $40,000 was a bit painful to squeeze out but, nonetheless, we got there – it was a good result,” Mr Rigopoulos said.

He agreed with other agents that the buyer pool in Melbourne had diminished recently because of the difficulty people are having in raising loan finance, but said the second-time buyer market was one of the strongest segments.

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He said the vendors of the Roberts Street home had benefited from a lack of supply of large family homes, as well as from demand from second-time purchasers with the cash and equity to compete strongly.

“Typically, what happens in these markets is that they get bumpy with the clearance rates,” he said. “It cuts out the passive or speculative seller who will only sell if the market is in good form. And therefore the stock starts to dry up and you get competition occurring as we saw today.”

Over in Clifton Hill, another large extended period home met a lukewarm reception, although the selling agent Nelson Alexander expects that 46 Ramsden Street will sell by early this week.

A beanie and scarf-clad crowd of 35 watched auctioneer Nicholas West place a $2.7 million vendor bid and pass in the property for that amount.

Mr West said later the property had a reserve of $2.9 million “with some flexibility” and he was negotiating with two parties.

“Like a lot of the sales, we just have to work a bit harder to get them to the line,” he said.

Cold weather can hit auction sales and Domain Group data scientist Nicola Powell said the typical winter slowdown was now weighing on the auction market.

“This seasonality could have a more evident impact on markets that were already slowing in the lead up to winter,” she said. “Buyers now have the upper hand with falling demand and rising stock levels, dynamics that are clearly impacting clearance rates and auction volumes. Both are anticipated to remain low through the winter months, although Melbourne continues to be more resilient than Sydney.”

Advantage Property Consulting’s Rob German attended several auctions in the north and the west that misfired because buyers viewed the asking prices as too dear.

“Vendors are probably not reacting quickly enough to a changing market,” he said.

Mr German said one property at 10-12 Erskine Avenue, Reservoir, last changed hands in October 2016 for $860,250. The block with an old house went to auction on Saturday with expectations of $2.4 million after the owner secured planning approval for eight townhouses on the site, a move that substantially lifted its value.

The property was offered for sale last December and snared a genuine offer of $2.4 million from a local builder but this was rejected.

Mr German said the same local builder attended Saturday’s Ray White-run auction and was the only bidder, offering $2.3 million.

“The builder walked at $2.3 million,” he said. “There was a fantastic capital gain available to the owner, even taking into consideration the costs of getting that permit. The result clearly shows that the builder, a professional buyer, has pulled his head in a bit; he believes there has been a $100,000 change in the market in six months.”

Mr German said only three people had attended this auction.

Another northern suburb, Moonee Ponds, was also in buyers’ sights at the weekend as a large period home at 15 Laura Street, sold for $2,350,000 through Nelson Alexander.

Meanwhile, a brick Edwardian residence with three bedrooms at 25 Vail Street, Prahran, fetched $2,205,000. Marshall White had the listing.