Median Melbourne prices down

While the opening quarter of last year’s property market was the strongest in seven years, the start of 2011 is one of the weakest in a decade.

According to the REIV, Melbourne’s median house price fell 6 per cent in the 2011 March quarter to $565,000.

In contrast, the median house price fell 2 per cent at the start of last year.

The figures indicate a radically different market, with the feverish and insatiable demand for property in 2010 replaced with more caution and hesitancy from buyers in 2011.

At the weekend, 889 auctions were reported, with a clearance rate of 62 per cent.

This time last year, the clearance rate was 83 per cent from 928 auctions.

Advantage Property Consulting’s Frank Valentic said the house price figures were not surprising, given the 2011 auction market’s late start.

”If prices had gone up, it wouldn’t have been reflective of the current state of the market.”

Adrian Jones from Noel Jones said that median prices traditionally decreased in the March quarter, though 2011 had seen a slightly bigger drop. ”But according to the number of properties, we’ve still sold more than last year so the market is absorbing the stock levels,” he said.

”Last year’s price increases were unsustainable, so it had to level out.

”There’s a good choice of property on the market, prices have stabilised and supply is good, while the clearance rate is still adequate for vendors.”

Mr Valentic said realistic pricing by vendors led to a strong sale of two art deco apartments at 25 Lalbert Crescent, Prahran East, in front of the biggest auction crowd he had seen this year.

The auction opened at $1.1 million, was on the market at $1.4 million and sold for $1.8 million – $900,000 an apartment.

”Even in a flatter market, the cream always rises to the top,” Mr Valentic said.

Jellis Craig’s Alastair Craig said the market was reflecting the imbalance of supply and demand.

”Buyers are spread more thinly as we have more of an over-supply situation, which is why clearance rates are down.”

His agency had the biggest sale of the week at 68 Hopetoun Road in Toorak.

It opened on a vendor bid of $2.8 million, then two bidders pushed the price to $3.02 million, at which point it was passed in. It sold after auction for $3.05 million.

Mr Craig also said there was a high clearance of properties that had previously been passed in at auction, ”as long as vendors’ prices are in line with the market”.

Buxton Bentleigh’s Craig Williamson said he had also secured the sale of three properties that had been passed in over the past two to three weeks.

Mr Williamson said he had a strong weekend of sales, ”against a backdrop of negativity” about the market.

With an expectation of between $360,000 and $370,000, 8/87-89 Mitchell Street, Bentleigh had five parties ”fiercely bidding” and it ended up selling for $421,000.

Mr Williamson said the drop in house prices was ”a little correction we needed to have”, after the median house price surpassed $600,000 at the end of 2010.

Maurice Valmorbida from Thomas Quixley Fairfield expected more people at the auction of four flats at 1-4/40 Dundas Street, Thornbury, which was passed in on a vendor bid of $1.8 million.

However, after auction there were three people wanting to negotiate and the block sold for $2.01 million, just over its $2 million reserve.

Brad Teal Real Estate’s Hendrik Smit said the ”market is definitely tougher as buyers are holding back more”.

He auctioned 25 Talgarno Street, Broadmeadows at the weekend, which was quoted between $275,000 and $300,000 and sold for $298,000 with three bidders.

Buyer’s advocate Michael Ramsay said the market was still ”quite strong” and that he was seeing active bidding at auctions, and realistic reserves leading to sales being achieved.

He said the corner block at 6/754 High Street, Armadale was well contested, with four bidders. Opening on $600,000, it was on the market $120,000 later and sold for $735,000.