Spring kicks off early with smashed reserves.
There were over 2545 auctions reported to the Real Estate Institute of Victoria (REIV) in August, with 1985 sales recorded. 560 properties passed in, 254 on a vendor bid. The clearance rate averaged 77.5%, up on last month’s 74% and up on last year’s August average of 75.5%.
August started with the year’s highest clearance rate of 79% on the first weekend. The trend continued through August with low stock, fierce competition from buyers and the high clearance rates these conditions deliver. The Spring market traditionally kicks off on the last weekend of August and with more stock suddenly available, plus pent up demand, there were some spectacular results in the blue chip belts. A 1938 Hawthorn duplex near the river sold for 3.8 million, 1.2 million over the reserve. A leafy Victorian in Deepdene sold for 6.2 million, topping its reserve by 1.4 million and confirming Deepdene’s deep pockets. A Victoria Ave Canterbury home ($4.11 m) sold $710,000 over reserve earlier in August and a sale before auction in Danks St Middle Park netted 6.7m. Calls that Melbourne prices are moderating don’t apply to the top end.
Although Melbourne’s median home value increased 7.4 % for the year at the end of the June quarter, further data from Domain Group shows a marked slowdown in price growth in parts of Melbourne. The median in Elsternwick and Carnegie has fallen by 2.2% to 1.1 million for example. Commentators have reported price growth in the east has also slowed to a crawl after the sustained increases from 2013 to 2015. Part cause for the drop-off is reduced Chinese interest following the recent stricter foreign investment regulations but it’s also thought the east is hitting its own affordability barriers. However higher home price levels in Sydney ($1.02m median) shows Melbourne’s a fair way ($725,000 median) from that kind of ceiling.
Looking forward, Melbourne home price growth is expected to continue to rise slowly by 1 to 1.5% per quarter, with most gains coming from the northern and western suburbs.
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