Melbourne Property News Monthly Wrap – October 2023

Auctions deliver the top sale prices this Spring

Over October’s four weekends the Real Estate Institute of Victoria (REIV) recorded more than 3,877 auctions. 2,582 properties sold. 1,854 at auction, with 979 passed in. 724 properties were sold before auction & 4 properties were sold after auction. The clearance rate averaged 72.75%, slightly down on September’s 74.75%.

Melbourne is Australia’s auction capital and auctions boomed through October ending with a Super Saturday (over a thousand auctions) in the final week, with numbers boosted by the coming Melbourne Cup long weekend.

Auctions do better than private sales so far in 2023

The latest REIV data shows that in the 12 months leading up to the end of September homes sold at auction have been delivering better prices than those sold by private sale. Although home values were in retreat and responding to interest rate rises over the period, houses averaged a 7.8% better result at auction than at private sale and units averaged a better price by 4% at auction than by private sale. It’s the competition at auctions that drives results higher.

The Spring market is well-balanced and much more confident than this time last year. Buyers are doing their homework and planning for the possibility of some fluctuation in interest rates, if it happens.

What is the outlook for interest rates after October?

The Reserve Bank held Interest rates steady at 4.1% on October 3 which is good news. Inflation had edged down in the September Quarter (5.4%) but started creeping higher by mid-October to around 5.7%. This caused a bit of a flutter in the media with some forecasting another rate rise later this year as a counter measure, if the upward inflation trend continues into the next Quarter. The Reserve Bank’s next interest rate review will be on November 7. However, Reserve Bank analysts expect inflation to ease to around 3.3% in 2024, and 2.75% by the end of 2025.

Most overseas buyers and renters are targeting Melbourne

Over the last Quarter, Melbourne has had the most attention in Australia from overseas investors or visitors doing online searches on realestate.com.au. People from China and the UK were the biggest enquirers.
Being one the best places in the world to live, invest, or study is driving this interest of course but also contributing is the great value Melbourne homes currently offer.

Melbourne home values are up only 0.07% over the last 12 months, compared to Sydney values up 6.86%, Brisbane’s up 5.82%, Adelaide’s up 8.31% and Perth’s up 9.24%. It’s a big drawcard.

The Power of Granny’s

According to CoreLogic the most immediate and cost-effective opportunity Melbourne has to add to our shrinking housing supply is by building granny flats. This nickname for dual-occupancy residences understates the great value they can add to a spacious house block, not just helping out with family accomodation but for lucrative rental income and genuine extra worth added to the property. CoreLogic surveyed the market and identified 230,000 potential sites in Melbourne, which is 13.2% of all stock. CoreLogic named Mornington Peninsula, Manningham, Monash, Casey and Knox as the top five municipalities for potential granny flat development sites.

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