Melbourne Property News Monthly Wrap – November 2017

Clearance rates continue to cool. Price growth goes to the beach.

On November’s 4 weekends in excess of 4,255 auctions were reported to the Real Estate Institute of Victoria (REIV). More than 2,081 sales were recorded. Approximately 1,061 properties were passed with 503 of those on a vendor bid. The clearance rate averaged 71%, down on November 2016 which was 76.5%.

Great tropical weather in November didn’t help clearance rates, which are noticeably down on last year with the initial REIV estimate at 69%, but property researchers Domain Group and Corelogic put it just under 67%. According to some commentators it’s further proof the Melbourne market is plateauing.

So why are clearance rates going lower and what does it really mean? Firstly there’s more stock this year than in 2016 so buyers have more choice and more supply. Vendors expectations are running strong after all the recent price growth and reserves are set high. Both these factors can cool auction success rates. Clearance rates now are closer to those back in 2013 to 2015. But 2017 is different because generally there’s more stock available, which means 2017 clearance rates are actually holding up pretty well, considering the big volume of auctions!

In November agents reported strong demand for blue chip properties above the $3 million mark, this segment being driven largely by baby boomer professionals still in the workforce, who have ridden the market up for decades. These high-end properties are often selling well above reserve. Western suburbs performed strongly also, as more middle class families buy in for value. But the meat in the sandwich are homes in the $1.5 to $3 million range, which are under pressure, because of plentiful supply.

CoreLogic’s ‘Top Performing Suburbs Report’, released in November listing growth in median house value over the last 12 months, showed the premium on sand and water, with bay suburbs currently grabbing all top-five spots.

At the top was Middle Park with 48.3% growth and a median of $2.58M.
Second is St Kilda, with 38.6% growth at $1.29M.
Third is Frankston North, 38.6% growth at $434,183.
Fourth is Highett, 35.3% growth at $1.32M.
Fifth is Elwood, 32.3% growth at $1.80M.

Craig Knudsen
Principal Advisor
Vendor Marketing

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