Usual winter fade but Melbourne market still strong

The June weekend home auction market ends this Saturday and although activity has predictably faded over recent weeks, the Melbourne market remains positive for most sellers

Auction numbers will be lower this weekend with the mid-winter market pause to gather momentum over the coming month. Melbourne is set to host over 900 auctions this Saturday which will be down on last weekend’s 983 listings but similar again to the 901 auctioned over the same weekend last year.

Melbourne’s western suburbs are again the most popular for auctions this weekend with 149 listed.  Next highest region is the inner east with 132 followed by the inner south with 125, the outer east 119, the north east 113, the inner city 100, the north 85 and the south east with 57 auctions scheduled.

Craigieburn is the most popular suburb for auctions this Saturday with 16 followed by Reservoir and Glen iris each with 15 and a number of suburbs with 13 auctions scheduled including Glen Waverley, South Yarra and Hawthorn.

The Melbourne home auction market recorded another positive result for sellers overall last weekend although the market has generally eased over recent weekends with the onset of the typically quieter winter selling season.

Melbourne reported a solid clearance rate of 75.3 percent last weekend which was lower than the previous holiday weekend result of 80.1 per cent but well ahead of the 71.8 per cent recorded over the same weekend last year.

Although last Saturday’s result was the lowest recorded since July last year, the market clearly remains in favour of sellers with the clear prospect of winter resurgence driven by significant stamp duty reductions for first home buyers that come into effect on July 1.

Although clearance rates have generally eased over recent weekends, the northern suburbs continue to produce boom-time results. Lower rates from higher-priced, inner and eastern suburban areas however reflect the typical winter break in activity from these regions.

The Melbourne rental market remains tough for tenants with sharp increases in rents reflecting an overall chronic shortage of available accommodation.

Latest Domain data reports that over the three months ending May the median weekly asking rent for houses in Melbourne increased sharply by 5.0 per cent to $420 per week compared to the same period last year. Melbourne unit rents have also surged over the past year – up by 5.3 per cent to $400 per week and the highest growth rate of all the mainland capitals.

Sharp increases in Melbourne rents reflect a shortage of available homes for lease as indicated by the latest monthly rental vacancy rates.

Although vacancy rates eased slightly over May, this indicated the seasonal impact on listings of the lengthy holiday distractions of the previous month. Melbourne vacancy rates however remain tight at 1.3 per cent for houses, 1.7 per cent for units and an overall rate of 1.5 per cent.

Rents can be expected to continue to increase in Melbourne driven by record migration and an underlying shortage of rental accommodation. Actions by policymakers and banks to restrict activity by residential investors will only add to the current imbalances between rental supply and demand with even higher rents the logical outcome.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.