Melbourne auction clearance rate falls below 50 per cent for second week in a row

Melbourne’s auction clearance rate has fallen below 50 per cent for the second weekend in a row, suggesting further price falls may be on the cards.

Despite the low rate, agents say many owner occupiers are taking advantage of the conditions to upgrade homes in a less competitive market.

Saturday’s 48.6 per cent clearance rate from 746 reported auctions was one of the lowest results in years.

The preliminary clearance rate for the previous Saturday (49.1 per cent from 609 auctions) was revised down to 47.3 per cent when real estate agents reported a further 111 “straggler” results – and this weekend’s auction success rate is likely to ease further.

Agents are painting a bleak picture of the state of play in the inner-Melbourne and middle-ring market segments. Many expect sagging rates of price growth to drag on into 2019 or 2020, but add that upgrade buyers are likely to profit from the slowdown.

Greg Hocking, of Greg Hocking Real Estate, said there was little good news for sellers.

“Those that are heeding the early warning signs and getting on with their decisions to sell are reaping the benefit, because it is probably going to be tougher to sell in the new year,” Hocking said.

“When I talk to a cohort of agents across the board, everyone is saying that in inner Melbourne pretty much everything has come off by 10 per cent, and it is still on a slippery slope.”

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But he said for people who were upscaling to a higher-grade property, conditions couldn’t be better.

In the vast majority of cases, properties aren’t selling for giveaway prices. But agents report that neither are they commanding prices at the top end of expectations – and this is particularly so at the prestige end of the market where the air is thinner and buyers are fewer.

Many clients on agents’ books are vendors who are selling to buy upwards. They believe they can get more value and bang for their buck by trading up now.

If these property punters take 10 per cent off their expectations on a $1.9 million property and roll that into a new purchase, taking 10 per cent off a $3 million property, they win at the exit ramp.

The city’s most expensive property sale at the weekend, a waterfront terrace house at 213 Beaconsfield Parade, Middle Park, sold for $5.3 million, at the low end of expectations.

Graeme Wilson, of Wilson Agents, said the home was passed in at $5.1 million after one buyer bid. Two other parties who had flagged interest in the property chose not to bid, and, after negotiations, the sole bidder raised his offer by $200,000.

Wilson said auctions with only one bidder had become normal.

“The vendors want more and the buyers want to pay less,” he said. “We have to put the sales together using old-fashioned negotiation.”

A more combative auction was held nearby at 8 Foster Avenue, St Kilda. Wilson Agents fielded three bidders who chased down a three-bedroom contemporary home, which sold for $2.57 million, slam bang on reserve.

Other top-priced sales included 43 Grant Street, Malvern East, which fetched $4,350,000 through Marshall White, and a pretty double-fronted Victorian house at 16 Donald Street, Prahran, which sold for $2,575,000 through Jellis Craig.

Across town, an unusual Spanish mission/Victorian house on big land at 135 George Street, Fitzroy, sold for $2,465,000 through Nelson Alexander.

Buyer’s advocate, Frank Valentic, of Advantage Property Consulting, said auctioneers gave the vendor bid “a good workout” on Saturday, as buyers held back.

“If houses are not in A-1 locations, they’re not going to get strong interest,” he said. “Buyers are able to buy some properties for well below the quote ranges at the moment.”

Hocking agrees. “People should get themselves organised for the upcoming market because there is going to be some better buying further up the food chain,” he said.

While Middle Park and St Kilda tossed up high-value transactions at the weekend, the inner bayside precinct also produced Melbourne’s most affordable property sale.

Unit 28 at 233-235 Canterbury Rd, St Kilda West, changed hands for just $315,000. Biggin & Scott’s St Kilda and Elwood office had the listing.