Melbourne auction sentiment picks up amid pent-up buyer demand, fuelling clearance rate surge

Renewed interest in Melbourne’s property market, coupled with pent-up demand from earlier in the year is creating boom-like auction conditions, with continually strong clearance rates so far this spring as agents report strong crowds and bidder numbers.

The preliminary clearance rate on Saturday was 74.6 per cent, based on 594 reported results. Agents had not reported results from 256 auctions by the time of publication.

AMP Capital chief economist Shane Oliver said the market was entering a feedback loop: keen buyers were inspiring sellers to list.

“Since May, sentiment has turned around dramatically. It’s brought investors back into the market,” he said. “Things were going down and it was feeding on itself on the way down, and now it’s turned it’s feeding on itself on the way up.”

In spring it was typical that the influx of sellers keen to settle before Christmas would push down the clearance rate, but this was not the case this year, said Marshall White partner Richard Mackinnon because vendors had been slow to adapt to the rapid change of buyer sentiment.

“There’s no stock so it’s creating that pent-up demand,” he said. “[The market is] pretty much back to how it was 18 months ago before it all dried up. It’s rebounded quite quickly.”

The clearance rate has been holding at above 70 per cent in recent weeks.

On Saturday Mr Mackinnon sold the three-bedroom 11 Primrose Street, Windsor for $2,465,000, in front of a large, enthusiastic crowd.

SOLD - Price Withheld

11 Primrose Street, Windsor VIC 3181

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“Eight months ago the neighbours weren’t even turning up to the inspections,” Mr Mackinnon said. “But it’s not like that anymore.”

In Brunswick, Nelson Alexander’s Jonathan West agreed. On Saturday he sold the three-bedroom 41 Munro Street for $1.57 million.

“We had about 30 people there,” he said. “We’re getting good crowds, a lot of neighbours coming out to see what the market is doing – observing.

“Last year it was just the bidders who would be there.”

SOLD - $1,570,000

41 Munro Street, Brunswick VIC 3056

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Hodges Yarraville director Doris Garofalo said she was run off her feet hosting open for inspections on Saturday, most of them running overtime and packed with buyers.

“Crowds do vary depending on the property, and where it is in the market,” she said. “We tend to see greater numbers at auctions for [properties suitable for] first-home buyers.

“It’s a very different market to what it has been in spring traditionally.

“People aren’t just putting their homes in the market because the flowers are out and look nice, it’s because of the return of confidence into the market.”

Mr Oliver said the return of confidence in the market should peter out by early next year, because concerns around the state of the wider economy would begin to bite into sentiment.

“Consumer sentiment regarding the economy is at its lowest level in four years,” he said. “It could take another month or so. There’s a lot of pent-up demand working through the system.

“Then things could moderate once that’s over.”

He predicted a 5 per cent rise in prices in Melbourne over the 2019-20 financial year. The peak to trough fall in Melbourne has been 10 per cent since 2017.