Melbourne trophy homes in demand, as buyers fork out millions for property

Well-heeled buyers battled hard for $4 million-plus trophy homes at the weekend, while most auctions of low and mid-priced properties also attracted hefty competition.

On Saturday, seven bidders took the gloves off in Brighton as they chased down a rare offering in the exclusive Golden Mile enclave.

Marshall White’s Richard Mackinnon said more than 200 people came to the auction of 7 St Ninians Road. The deceased estate, three-bedroom home sits on 719 square metres and is less than 100 metres from the beach.

The older-style house was on the market at $5.1 million but went on to snare another $580,000 in bids. A man who intends to construct two high-end townhouses on the site beat off other eager bidders, sealing the deal with his $5.68 million top bid.

Buyer’s advocate Paul Osborne, from Secret Agent, said the result showed affluent buyers were happy to fight it out to secure scarce locations.

“Trophy assets like this come up once in a generation,” he said. “You don’t often get a chance to buy something that is 50 metres away from the water without a major road or a train line running between your property and the waterfront.”

Other auctions in the $3 million to $4.2 million band in Canterbury, Albert Park and Brighton also produced spirited bidding and above-reserve results.

Hundreds of would-be buyers missed out on auction properties in the second half of last year. The unsatisfied demand has clearly carried through into this year’s market.

But a potential blip on the horizon for the market may come in the form of a rapid proliferation of “excited vendors” with high expectations. They are setting ambitious reserves that some well-researched buyers – all too aware that housing stock will spike up sharply over the next three weeks – are refusing to meet.

The weekend auction market was solid across different price points and regions.

The Domain Group posted a clearance rate of 79 per cent from 719 reported auctions. Agents did not report on a further 180 auctions. Many of these are likely to be pass-ins.

Hocking Stuart sold 59 of the 73 properties it auctioned on Saturday. The southern and eastern suburbs generated the company’s highest clearance rates, although Domain Group data identified the north-east and northern suburbs as having the best-performing clearance rates for the weekend.

Hocking Stuart Armadale-based director Andrew James easily knocked down a two-bedroom weatherboard cottage at 14 Murray Street, Prahran, once it shot past the $1,060,000 reserve.

“We had two people giving this auction a real ding-dong battle,” Mr James said. “It sold for $1.26 million, which was a strong result.”

He said inner-eastern townhouses in the mid-$800,000 range also sold under heavy competition. Multiple bidders contested lower-end two-bedroom apartments as well, he added.

“There is competition in all sectors and it’s probably because there is not a huge amount of stock,” Mr James noted. “We’re seeing good pent-up demand from 2016 in this market. People are positive in terms of trying to purchase a property and get in and out of the market.”

The upbeat start to this year’s market has encouraged vendors to set very high reserves. Many are “moving up” their reserves during a sales campaign if early inspections and inquiry levels are strong.

Mr Osborne said the push to hike up reserves was a major feature of the current sales scene. He added that “excited” owner occupiers who sold first and bought later were the biggest culprits: “They are trying to build in some margin because it may take six months for them to find another property that they want”.