Melbourne auctions: competition hots up among sellers

Melbourne’s clearance rate fell again last weekend as record numbers of early spring auctions continue to flood the local market.

A key driver of lower clearance rates is the unprecedented volume of early spring auctions currently surging into the market – providing buyers with more choice and increasing competition among sellers.

Saturday’s clearance rate of 75.7 percent was below the previous weekend’s 76.3 percent result and the lowest reported since February 14th. Saturday’s rate was also well down on the the 77.1 percent recorded over the same weekend last year.

Melbourne has now reported consecutive weekend clearance rates below those recorded at the same time last year.

A September record 1036 auctions were listed on Saturday, well ahead of the previous weekend’s 880 and also well above the 842 listed over the same weekend last year. Melbourne has hosted 1916 Saturday auctions so far this September – an increase of 359 or 23.1 percent over the 1557 listed over the same Saturdays last year.

More stern tests await the local market, with close to 1000 homes again due to be auctioned next weekend and nearly 1100 scheduled for the spring season’s first Super Saturday pre-Grand Final weekend on the 26th.

The south east was a surprise leading suburban region at the weekend with a strong clearance rate of 85.2 per cent. Next best was the north east with 84.3 per cent, followed by the outer east with 80.9 per cent, the north with 77.2 per cent, the inner east with 75.9 per cent, the inner south with 74 per cent, the west with 73 per cent and the inner city with 68.2 per cent.

Lower clearance rates in the inner city reflect weakness in the unit market, which recorded a clearance rate of 59 percent from 61 reported auctions. But the clearance rate for inner city houses was notably higher at 75 percent from 68 listings. Lower inner city unit market auction results from relatively high volumes are also impacting Melbourne’s overall clearance rate performance.

Notable sales reported at the weekend included a four bedroom home at 30 Campbell Street, Kew, sold for $4,210,000 by Marshall White, another four bedroom home at 2 Crossakiel Court, Hawthorn, sold by Kay and Burton for $4,010,000, a five bedroom home at 4 Walnut Road, Balwyn North, sold by Jellis Craig for $3,570,000, a three bedroom home at 1 Barkly Street, Brunswick East, sold for $3,400,000 by Nicholson Real Estate and a five bedroom home at 22 Ross Street, Kew, sold by Jellis Craig for $3,388,000.

The most expensive property reported sold at auction at the weekend was a four bedroom home at 32 Heyington Place, Toorak, which was sold for $4,605,000 by Marshall White. The most affordable property reported sold at the weekend was a two bedroom unit at 3/3 Edna Street Thomastown, sold for $276,000 by Nelson Alexander.

Although the clearance rate was down at the weekend, Melbourne’s trend auction price increased marginally from the previous weekends – $797,250 to $798,972 – and remained 8 per cent above the $739,750 recorded over the same weekend last year.

Lower clearances rates in Melbourne may reflect the recent action by banks at the direction of financial regulators to tighten lending conditions for local investors.

Latest ABS data reported that the value of lending for residential investors fell sharply over July in all states except Queensland. Victorian residential investment finance was down by 4.4 percent over the month, but remains 26.9 percent higher over the first seven months of this year compared to the same period last year.

However, less local competition for new residential investment properties may be particularly welcome for rising numbers of foreign investors who continue to be attracted to Melbourne property.

Dr Andrew Wilson is Domain Group Senior Economist