Surge in listings supply gives Melbourne buyers auction advantage

Home buyers took advantage of Melbourne’s mid-spring surge in property listings at the weekend as the supply-and-demand pendulum swung a little in their favour.

The incidence of good-quality properties tearing away at auction to a final sale price 20 per cent or more above reserve is still evident in the city’s most coveted streets and suburbs. But it’s becoming less of a feature of the market.

Nearly 1700 metropolitan auction properties were up for grabs on Saturday, and observers say a greater proportion of buyers are now paying “on-the-money” prices within or slightly above the quoted ranges for houses and units.

This trend is partly being driven by the impact of the Victorian government’s new price quoting laws, which is reducing the buyer pool for some properties. Other factors affecting the pricing state of play include growth in the number of well-researched buyers who turn up their noses at over-priced houses and units, declines in purchasing activity by overseas nationals and the traditional springtime ramp-up in stock levels.

On Saturday, an extended period home in one of Clifton Hill’s best streets sold for $2.3 million, on the high side of its $2.1 million to $2.3 million quoted range.

About 60 onlookers turned out to see the four-bedroom 7 North Terrace tested in the market. No vendor bids were needed to shift the sale into gear, but the two bidders showed no interest in going beyond the quoted range and as soon as the Nelson Alexander-listing was declared on the market, at $2.3 million, the bidding stopped and the home sold for that amount.

Nelson Alexander sales director Arch Staver said Melbourne was seeing a more equitable real estate market and an increased number of pass-in results compared to the selling scene in 2016 and the first half of this year.

“The market is price sensitive,” he said. “The sensitivity is around buyer and vendor expectations but once the property is on the market, the sensitivity goes because then buyers know it is a genuine sale.

“There are buyers who would like to buy houses but their attitude is: they don’t have to buy the house. Unless the vendor is willing to be fair and reasonable, particularly with their reserve price, the buyers are happy to see the property pass in.”

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Four buyer advocacy companies, who attended about 15 auctions between them on Saturday, each reported a trend to pass-in results and the hefty use of vendor bids by some auctioneers.

The Domain Group reported posted a weekend clearance rate of 71.6 per cent from 1269 reported auction results. This was down on the 74.5 per cent reported for the previous Saturday.

Once straggler auctions counted for the previous weekend of October 21 and 22, that weekend’s clearance rate was revised down to 68.4 per cent. It’s likely that this weekend’s result will also be revised down to a 60 per cent figure, as agents have so far failed to report the results of 408 scheduled auctions.

There were mixed results for higher-priced homes. Buyer’s advocate Woledge Hatt said an attractive inter-war villa at 17 Toorak Avenue, Toorak, sold for just $40,000 more than its on-the-market figure – a negligible amount for a $5 million-plus home.

The Marshall White auction opened on a $5 million vendor bid, with the house declared “selling” at $5.56 million before being knocked down for $5.6 million. There were two bidders.

Across town, a modern five-bedroom home with a pool at 35 Windermere Court, Brighton, opened on a $2.8 million genuine bid. It was on the market at $3,475,000 and sold for $3.6 million. Buxton fielded offers from four bidders.

Another Brighton offering punched far higher. Nick Johnstone Real Estate took 356 New Street, Brighton, to more than $500,000 above its reserve. A genuine bidder kicked off proceedings with a $4.5 million offer and the property was on the market at $4.9 million. Three bidders pushed the sale price to $5.41 million.

Advantage Property Consulting’s Frank Valentic said higher supply in the market was giving buyers more opportunities.

He said this was reflected in the high number of pass-in results seen at the weekend, including the pass-in of a three-bedroom art deco duplex at 5 Kenleigh Grove, Prahran. It didn’t attract any bidders and was passed in at $1.41 million.

In the west, a renovated three-bedroom house on a 600-square-metre block at 130 Suspension Street, Ardeer, also failed to fire despite landing bids from five parties.

“It had strong interest from first home buyers and some investors,” Mr Valentic said. “The property was quoted at $620,000 to $680,000 and passed in for $650,000 against a $700,000 reserve. The owners paid $540,000 in December 2016 and did a cosmetic renovation.”

A much better result was achieved at the sale of 7 Miller Grove, Ringwood East. Statewide Property Advocacy’s Brian Capp said Itrak Real Estate quoted the weatherboard house on 717 square metres of land at $720,000 to $780,000. But four bidders saw value and pushed the sale price to $1,066,000.

Miriam Sandkuhler, from Property Mavens, believes the variable results are partly due to the Andrews government’s underquoting laws introduced in May, which require all listed properties be given an estimated selling price or price range.

“There is definitely still confusion in the market place with the price quoting,” she said. “Many people don’t understand it and are still adding 10 per cent or more to the top of whatever the quote range is.

“The quoting laws are having a mixed effect. There are properties that sell for within the range and there are others that sell for 10 per cent or 20 per cent over the range. I would suggest that it is harder to figure out likely selling prices now than it was before these new regulations came in.”

Melbourne’s affordable western and northern suburbs fared well at the weekend. The west notched up a regional clearance rate of 78 per cent from 320 listed auctions, while the north scored an auction clearance rate of 74 per cent from 375 listed auctions.

The eastern suburbs were a rung down on the auction ladder. This region was scheduled to host 417 auctions and achieved a 66 per cent clearance rate.