Strong Melbourne auction market storms into spring

The Melbourne home auction market greeted the opening of the early spring selling season with a strong result, bouncing back from last weekend’s weaker performance.

Melbourne recorded a 79.1 per cent clearance rate on Saturday, up from the 76 per cent recorded the previous weekend and higher than the 77.7 per cent rate of the same weekend last year.  

Saturday’s strong clearance rate was recorded despite a wave of spring auctions flooding the market at the weekend. There were 1046 homes listed to go under the hammer, which was an all-time record for an August Saturday, well ahead of the 838 listed last weekend and the 770 auctions conducted over the same weekend last year.

August has been a stellar month for weekend auctions in Melbourne, with a clear monthly record of 4264, an increase of 1075 or 33.7 per cent over the 3189 conducted last August.

This is in sharp contrast to Sydney, where the weekend auction market sustained another sharp drop. Clearance rates hit 73.7 per cent – the harbour city’s sixth consecutive weekend with rates below 80 per cent.

Lower numbers of auctions are listed for next weekend with fewer than 900 homes expected to go under the hammer.

The highest regional clearance rate reported on the weekend was the inner south, with 87 per cent, followed by the outer east, with 84.1 per cent, which recovered strongly from a surprisingly low result the previous weekend. Next highest was the west, with 81.6 per cent, the north (80 per cent), the inner east (78.5 per cent), the north east (78.3 per cent), the south east (74.3 per cent) and the inner city, with a clearance rate of 71 per cent.

Melbourne’s west and north suburbs have recorded rising clearance rates over winter, indicating a sustained revival in buyer activity in those markets.

Notable sales reported at the weekend included a five-bedroom home at 26 Abercrombie Street, Balwyn, sold for $4.205 million by Jellis Craig; a four-bedroom home at 16 Boston Road, Balwyn, sold for  $4.2 million by Marshall White; a five-bedroom home at 2C Fordholm Road, Hawthorn; sold for $3.8 million also by Marshall White; a three-bedroom home at 44 Malin Street, Kew, sold by Jellis Craig for $3.225 million; and a four-bedroom home at 4 Haileybury Street, Brighton, sold for $3.2 million by Buxton. 

The most expensive property reported sold at auction at the weekend was a four-bedroom home at 39 Coppin Street, Malvern East, sold for $4.460 million by Marshall White. The most affordable property reported sold at the weekend was a one-bedroom unit at 9/294 Nicholson Street, Seddon, sold for $263,000 by Jas Stephens Real Estate.

Auction prices continue to rise with Saturday’s monthly median trend auction price of $802,000, up from the $792,000 recorded the previous Saturday. Melbourne’s latest weekend trend auction price remains 9.8 per cent higher than the $730,750 recorded over the same Saturday last year. 

This week the Reserve Bank will meet to determine the direction of official interest rates for September. Rates have been on hold for the past three months and are most likely to remain at the current 50-year low of two per cent next month. 

The bias for interest rate direction over the short-term has however changed sharply over the past month, with unemployment levels spiking over July back to 12-year highs and turmoil in global equity markets reflecting concerns over the declining performance of the China economy.

The Reserve Bank has also now conceded that national underlying economic growth may now be lower than previously expected. If unemployment fails to improve over coming months, another cut in rates will occur sooner rather than later, particularly as dark clouds are now clearly gathering over the global economy.

Dr Andrew Wilson is Domain Group Senior Economist