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Melbourne Property News Monthly Wrap

Melbourne Property News

Melbourne Property News – 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 REIV (Real Estate Institute of Victoria). 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

Melbourne Property News – October 2017

Auctions aplenty in October, with outer suburbs leading value growth.

On October’s 4 weekends in excess of 4,615 auctions were reported to the REIV (Real Estate Institute of Victoria). More than 3,120 sales were recorded. Approximately 1,064 properties were passed with 519 of those on a vendor bid. The clearance rate averaged 75%, down on October last year which was a very high 80%.

In October sale-boards were springing up on every second corner in the busiest auction suburbs. But after notching up house price growth of 14%, rising to $817,000 over the last 12 months (REIV), the buoyant Melbourne market is at last showing signs of easing. Although great value growth is hitting many outer suburbs now, the overall averaged Metropolitan price growth for the September Quarter was just 0.7%.

The strength of the market has been enough to carry a ripple effect of rising prices from blue chip inner suburbs all the way out – to the relief of outer ring homeowners there who feeling a bit left out. But not any more. Outer Melbourne has dominated the top twenty price growth suburbs in the September Quarter, while inner Melbourne has plateaued, or at least slowed dramatically, which signals the current growth cycle may be reaching its end. Forecasts change according to different sources but some property analysts describe a 3 year cycle as being typical of Melbourne, where strong price growth starts in the inner city before creeping to the outer ring.

Strategists have predicted there will be an increase in for sale listings if a metropolitan value plateau becomes more apparent. Homeowners who have been riding the market up over the last few years will move to cash in on the capital growth, before an ‘adjustment’ or receding values take affect.

Forecasting the future from one Quarter’s results is reading the wind though and in Melbourne we know the wind can swing around. There’s still another big auction market Quarter to go for 2017. This will give us more clarity!

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – September 2017

Spring is here and home values are blooming.

September’s 5 weekends (minus the exciting AFL Grand Final weekend when auction numbers were negligible) produced in excess of 3,417 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2173 sales were recorded. Approximately 917 properties were passed in with 428 of those on a vendor bid. The clearance rate averaged 74%, down on September last year which was 79%.

Melbourne (houses and apartments combined) continues to lead the mainland in value growth for the fourth quarter in a row with a 2% gain over the last (September) Quarter. With a 1% gain in September alone. This makes for 12 month price growth of 12.1%. Hobart is the surprise leader though notching up annual growth of 14.3%.

Great times to be a homeowner! But how is this translating to the average homeowner’s economy? There are significant gains on paper. Melbourne’s median dwelling price is sitting at $703,816 (Corelogic). Loosely based on this median, the capital gain over the last 12 months was around $1637 a week, or $233 every day.

Realistically, this compounding wealth is consolidating in the principal residence – the family home. Unless you choose to sell and take the gains in hand.

However, Economists are telling us that economic confidence is increasing for many city based Australians and its showing up in a trend to invest in equities again. This investment category had been shunned by many small time investors in the wake of the slowdown in the Australian Mining sector and the volatility of the stock market over the last 15 years. But with their bricks and mortar capital gains backing them, many Australians are now having another look.

Some newspapers have tried to tell us there have been a flood of cashed-up property investors at auctions, or otherwise entering the home market. But in reality having a second dwelling (or more) as an investment is not that common, with just 7.9% of Australians owning more than one property.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – August 2017

Boom, or just a strong growth phase? Melbourne rolls on past a solid Winter.

August’s 4 weekends saw in excess of 3,041 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2,129 sales were recorded. Approximately 730 properties were passed in with 361 of those on a vendor bid. The averaged clearance rate was 74.5%, down on August last year which was 77.5%.

Looking at Winter as a whole, auction clearance rates have now averaged 75.1% across the coldest months. 10,046 weekend auctions were held this Winter, 24.4% higher and well ahead of last year’s 8073 . Boom is a word we’re hearing bandied about in the media but experienced real estate agents dismiss this term seeing the current market strength instead as a strong growth phase, driven by Melbourne’s rising population and economic conditions. Buyers are still showing some reserve, baulking at the higher expectations of some vendors.

Melbourne delivered an auction price median of $880,000 on August’s last Saturday, up from $822,500 (7% rise) for the same weekend last year and clearly showing the price growth in play.

New research (Red23) has revealed Indian-born buyers are emerging as a real force in Melbourne’s outer growth zones. 40% of land buyers in Melton, Wyndham, Hume, Casey and Whittlesea have been recent arrivals to Australia from India. Arriving to study, then acquiring residency, this cohort join the workforce and pretty quickly start the process of first home ownership or investment. It illuminates the key role Melbourne’s controversial education industry plays in migration to the city. Builder Dennis Family Homes builds new houses designed specifically for the Indian market, on Vastu Shastra principles, including a possible prayer (pooja) room conversion.

A notable sale in August was a tennis court in Toorak that went for $7.8 million, 2M above reserve. In Port Melbourne, ugly duckling housing commission homes on spacious blocks have become swans. Often on blocks twice the size (440 sqm) of nearby blue-chip zones, these tired homes are now rocketing in value. One in Williamstown Rd. sold on August’s last Saturday for $1,642,000, way over its $1.25 million reserve.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – July 2017

Record auctions in July. Value rises lead the country.

July’s, 5 weekends saw in excess of 3,045 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2,343 sales were recorded. Approximately 702 properties were passed in with 335 of those on a vendor bid. The averaged clearance rate was 75.5%, up on July last year which was 74%.

This was the busiest July in history with the most auctions on record. Over a thousand more than July 2016 (3,502 versus 2,229, according to the REIV).

Despite measures taken by the Victorian State Government to slow investors down Real Estate Agents in July reported a very strong presence of investors still outbidding young home buyers at auctions. Critics predicted this would impact as an obvious side-effect when the State Government decided to remove the ‘Off the Plan’ Stamp Duty Concession for investors, because it only redirects investors towards established homes.

Conditions have produced a market that keeps rolling on, even through the traditionally cooler mid-winter period. In January, experts predicted a rise of 4 or 5% for the year ahead (Domain Group). But values keep escalating and rose by 5% in June/July alone. Melbourne has now exceeded Sydney’s price growth for the last 12 months, with Melbourne at 16.8% and Sydney at 13.6%.

This has produced lots of justified hand wringing by worried economists. And hand shaking by pleased vendors getting healthy capital gain.

The median house price for Melbourne increased by 3.5% over the 2017 June quarter, going up by 3.5%, reaching a new top at $865,712.

Outer fringe suburbs performed very well at the end of July, with first home buyers taking advantage of the new stamp duty savings opportunity. Clearance rates were high in the South East (87%) and West (85.7%) but lower in the inner city (69.6%) and inner-east (63.9%) where higher vendor expectations clip bidders wings.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – June 2017

Clearance rates ease, but first home buyers get ready to roll.

June’s 4 weekends saw in excess of 2,835 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2,128 sales were recorded. Approximately 707 properties passed in with 303 of those on a vendor bid. The averaged clearance rate was 74%, the lowest for this year, but up on June last year at 71%.

Despite dwindling supply clearance rates eased down progressively in June from 77% on the first weekend to 72% on the last weekend. In the current conditions sellers expectations are high, in some cases too high. But buyers know the Spring market brings more choice and some tend to wait winter out. Also, lagging apartment sales are playing a role in dampening clearance rates. Constant media reports about looming apartment oversupply is not helping.

Homes with clever renovations or additions attracted competitive bidding in June, with a stylish Armadale home going for $900,000 over reserve on June’s last weekend to sell for 5.9M. This highlights the boost great presentation and the right preparation can add to a sale price. However if the buyer is a developer, that home might be demolished. An emerging trend in 2017 is the purchase, then demolition of outstanding period homes, usually for multi-unit development. In the past this would often be an off-shore buyer but local developers are now targeting this type of property.

The start of July is expected to bring a burst of demand in the lower value end of Melbourne property as stamp duty exemptions for first home buyers (up to $600,000) kicks in. A rise in values in that sector would logically follow.

Melbourne’s median auction price was $890,250 on Junes’s last Saturday, pushing $900,000. Will Melbourne’s median home price hit a million by the end of 2017?

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – May 2017

Cooling market in May or still hot? Who to believe?

May’s 4 weekends saw in excess of 3,496 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2,758 sales were recorded. Approximately 738 properties passed in with 312 of those on a vendor bid. The averaged clearance rate was 78%, down on May last year with 80%.

The figures show a strong Autumn auction market across May. But there have been  conflicting media reports in the last few weeks about where the market’s headed.

It’s like a tale of two cities. One Melbourne has high demand and frequently smashed reserves. The other Melbourne, according to some economic researchers like Core Logic, has cooling values and is on the brink of a downturn.

Citibank announced in May that a correction’s looming, in the next two years, of as much as 7%. The higher end of the drop applying to high-rise apartments. The cause of this being the cumulative effect of government measures to curb unfettered borrowing and investor buying.

The economic forecasters analyze data like mortgage defaults, which apparently had a spike in the March quarter. And also borrower finance patterns, which shows young home buyers are cobbling dodgy finance together, including informal parent loans and unsecured credit card debt. This makes for shaky ground in an economic environment where the sands have been known to shift. And shift big.

So who to believe about where values are headed? Agents reported multiple bidding at many May auctions. Properties in desirable locations keep smashing reserves. On May’s last weekend, a Northcote house went $700,000 over reserve, a Yarraville house went $340,000 over and a North Balwyn corner block went $500,000 over. Despite the new under-quoting regulations calling for more accurate valuation. Meanwhile on the urban fringe lot prices are rising at an unprecedented rate. Up 6.3% to $250,000 in the March 2017 quarter with no sign of easing. In this light, media reports about sliding Melbourne property values in Autumn simply look out of place.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – April 2017

April numbers break records. Supply going down, prices up.

April’s 5 weekends (with no stats for Easter) saw in excess of 3509 auctions reported to the REIV (Real Estate Institute of Victoria). More than 2847 sales were recorded. Approximately 662 properties passed in with 257 of those on a vendor bid. The clearance rate averaged 79%, up on April last year at 73.5%.

Melbourne’s powerful auction churn rolled on with red flags flying. April auctions were the highest on record for the month – more like a Spring market than Autumn. Low stock in urban Melbourne keeps pushing values up, with higher than expected prices achieved for homes and apartments. Looking forward to Winter with its traditionally lower supply, demand is likely to see rising prices continue.

With price growth surging above predicted levels, Investment Bank UBS joined the many other institutions warning the Melbourne/Sydney property market has peaked. But determined buyers weren’t put off.

April saw Consumer Affairs Victoria act on under-quoting with new regulations. From May 1, the advertised price must be either a single figure, or a price range not greater than 10 per cent. This is a bit of a sticky wicket, with many properties on April’s last weekend selling more than 10% above expectations including homes in Carlton, Brighton, Kew and Sunshine. And dozens of properties sold more than 15% above reserve (Domain, The Age).

April brought another boost for first-home buyers with new Federal Government salary-sacrifice style tax breaks on savings. Getting in soon applies more than ever, because the leg-ups for first-home buyers will create rising demand and values for entry level properties.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – March 2017

March sees strong market, plus dramatic new Govt measures.

Over March’s 4 weekends there were in excess of 3,575 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2,899 sales were recorded. Approximately 676 properties passed in with 299 of those on a vendor bid. The clearance rate averaged 80.5%, way up on March last year at 75.5%.

Melbourne’s remarkably strong sellers market powered on in March with high listings, high clearance rates and high prices. Melbourne’s summer market (Dec to Feb) broke the record for auction sales with close to 5,600 homes sold.

The North continues to boom with a clearance rate consistently around 90%. Many of Melbourne’s fringe areas are seeing stronger price growth than blue chip suburbs, as people look for value further out. March saw the continued trend of rising values in suburbs adjacent to the blue-chips. For example Ashburton next to Camberwell had its first 3M home sale in March.

More ‘bubble’ talk from the OECD failed to turn heads in Melbourne and Sydney but the Vic State Govt has introduced a raft of radical new initiatives as stimuli for affordability and housing supply, including:

– First Home Buyers waiver on Stamp Duty for homes under $600,000.
– Development maximum of 2 dwellings per property has been dumped for many middle ring zones. Developers will now be able to build multiple dwellings in these neighbourhoods, as long as the development provides a modicum of garden space.
– Investors have lost the ‘Off the Plan’ Stamp Duty Concession.
– Off the Plan Investors will also be hit by a 16% purchase tax.
– Vacant (investment) dwellings will be taxed 1% on capital improved value.

The most dramatic change is the new subdivision rule for middle ring suburbs, which will cause dramas in leafy streets in suburbs like Doncaster, Hampton and Glen Waverley as protective residents see established houses and gardens tumble as multi unit developments go in.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – February 2017

February market kicks into high gear.

Figures for the last 3 weekends of February show there were in excess of 2,509 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2,025 sales were recorded. Approximately 484 properties passed in with 194 of those on a vendor bid. The clearance rate averaged 79.5%, a step up from February last year at 75.5%.

The Melbourne market accelerated through February from a slow mid-summer start to a final weekend with high auction numbers and a super high clearance rate of 82%. This is the third highest for the last 12 months. Also – the final tally of auctions is the highest on record for a February!

The boom conditions shows the sky-high levels of demand by Melbourne buyers. In this market the lower-priced outer suburbs are no longer the bridesmaids, with these outer belts producing the best clearance rates of all. The South East, North-East and Western suburbs achieved between 88% and 85% on February’s final weekend.

According to agents properties that are usually more difficult to sell, in middle ring suburbs on busy main roads or with other encumbrances are moving more easily, a sure sign of a boom market.

February was a month of big results. At the sharp end of the market a very ordinary (apart from the address) unrenovated single front cottage at 32 Page Street Albert Park sold for 1.34M getting $10,000 per square meter for 136 sqm – not bad for an outside toilet scenario. Down the street at 115 Page Street a sparkling new renovated home of 330 sqm sold for 4.735M, getting $14,000 per sqm. Highly desired by CBD professionals, East Melbourne saw a 2 bedroom Grey Street terrace house sell for 2.62M, topping at 1.1M above the reserve.

Looking ahead NAB’s forecast for Melbourne is 3.4% growth in home prices for 2017, while tipping a 2.8% drop in apartment values – based on an expected oversupply. The bank also notes growing rent stress will be felt in 2017 as income growth fails to keep up with rent increases.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – January 2017

Melbourne median nudges $800,000. How high can it go?

Our first 2017 publication covers results from Monday the 19th December 2016 to Sunday the 5th of February 2017. 421 auctions were reported to the Real Estate Institute of Victoria (REIV) with 333 sales recorded, 88 properties were passed in, 39 on a vendor bid. The clearance rate averaged 79%, compared with December’s 78%, and up on last year’s Dec/Jan average of 74%.

Well how about that! The experts said double digit house value growth in Melbourne would not happen in 2016 but with the December Quarter figures in, showing a 3.6% rise, the annual price growth was 10.3%. This follows on 2015’s big 14.5%. Values are predicted to rise 4 or 5% in 2017 (Domain Group). But with little change in the current environment expected across 2017 that figure looks a bit conservative. Strong migration to Melbourne is underpinning the market with 100,000 new arrivals each year. Plus of course, record low interest rates make borrowing easy.

So looking ahead, how high is the Melbourne affordability ceiling? And are Melbourne prices starting to outpace average incomes? Looking interstate sheds light on this. The Sydney house price median is currently $1,021,968 and rising. Melbourne’s median is $795,000. (There are several reasons for the disparity including Sydney’s demand for expensive water views fuelling higher prices at the top end).

The average annual income in Sydney is $80,132 (Australian Bureau of Statistics 2016), with Melbourne incomes 5% lower. But home prices in Melbourne are 20% lower. First time buyers aside, this shows average Melbourne home buyers have plenty of spending power in reserve and the Melbourne median could go much higher before affordability tops out.

The overall driver here being the Australian commitment to home ownership and building wealth through the primary residence.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – December 2016

All done, all quiet, all finished.…..Merry Christmas!
Why 2016 was a great year for Melbourne property.

Over the first 3 weekends of December there were in excess of 3,589 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2,804 sales were recorded. Approximately 785 properties passed in with 306 of those on a vendor bid. The clearance rate averaged 77.3%, up a bit on November’s 76.5%, and greatly up on last year’s December average of 67%.

2016 was defined by high clearance rates and rising values. Clearance rates held up even on super Saturdays when stock was plentiful. Home values defied the experts predictions and grew strongly all year. The Spring quarter alone boosted the median house value by 5% to a new high of $796,367, delivering an annual increase of 9.8%. Which added well to Melbourne homeowners’ net worth and security. The median for units rose in Spring also, by 6% to a new high of $472,667.

A notable emerging trend in 2016 was collaborative home selling. Two or more owners (up to 16 in one Brisbane case) get together to sell their homes to a developer. Townhouse and apartment developers are hungry for large sites and pay a premium. The activity is usually driven by one homeowner door-knocking the others and formulating a proposal. Experts estimate it can add 30% to the sale price above the value of the homes if sold separately.

One notable sale on December’s last weekend (before Christmas) was a Brighton beach box for $326,000. Small enough to turn up in someone’s Christmas stocking, but even if you went to the beach every single Summer day for 10 years in a row that would still be $360 a visit. It’s an OK beach, but not that good!

To all our clients, the Real Estate fraternity and loyal our readers, we wish you a very Happy Christmas and a terrific Summer break. See you next year!

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – November 2016

Spring market hits top gear in November. But clearance rates ease on the throttle.

Over the four weekends of November there were in excess of 3,950 auctions reported to the Real Estate Institute of Victoria (REIV). More than 3,092 sales were recorded. Approximately 858 properties passed in with 370 of those on a vendor bid. The clearance rate averaged 76.5%, down on October’s booming 80% but way up on last year’s November average of 67%.

Stock going to auction was more plentiful in November however clearance rates were lower, at 76.5%, compared with October’s 80%.

Reflecting rising home values, November’s median auction price on the last weekend was $856,000, 13% more than the same weekend last year at $755,000. A tidy $101,000 annual increase.

Property trends attracting attention in November included the growth across Melbourne in the subdivision of existing home blocks to get added value from existing titles.

Subdivision and dual occupancy has always been an option in suburbs where backyards are spacious but it’s now experiencing a surge. Frankston Council for example, reports half of the 548 new developments registered in 2015/2016 were subdivisions of existing homes. In some cases if the front yard is bigger than the back, the owner will sell the front. This activity will keep growing as home owning baby boomers go further into retirement and become more cash-strapped.

Melbourne’s property market will remain in top gear through most of December with more than 3000 homes going to auction before the Christmas & New Year break.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – October 2016

Racing house values in October and immigration enters the affordability debate.

Over October’s five weekends there were in excess of 3,392 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2,750 sales were recorded. Approximately 642 properties passed in with 274 of those on a vendor bid. The clearance rate averaged 80%, still climbing from last month’s 79% and sharply up on last year’s October average of 70.3%.

Pundits and researchers keep coming up with new and conflicting interpretations of what’s happening in Melbourne’s house market, but without a doubt 2016 keeps charging forward. With no shortage of demand and ever rising clearance rates, the result is stronger than expected price growth.

Data for the September Quarter shows a 3.1% rise in the median house price to a record $773,669. This makes for an annual rise of 9.1%. Averaged apartment prices went up too in the quarter, by 4.5% to $466,779. Both rises were the best figures for any city in Australia, and higher than predictions.

Just like a Melbourne Cup there were October favourites – the Outer East, the North and the Inner City had some of the highest October clearance rates, all nudging 90%.

A report in October pointed out some under-performing favourites too, as the crackdown on foreign investment continues to impact. North Balwyn, Doncaster and the Waverleys registered price falls over the past year. But considering the price growth these suburbs have enjoyed (North Balwyn’s house values grew 87% from 2012 to 2015) some adjustment is not surprising.

Housing affordability remains controversial with The Australian Population Research Institute (APRI) joining the debate in October with compelling figures claiming immigration is the biggest reason young Melbourne families are being priced out of house ownership. Melbourne is adding 7,200 new people every month, which is Australia’s highest growth. This includes many new families who are competing for new family-friendly houses with land. This lifestyle is a main attractor for immigration. In the decade going forward from 2012 it’s estimated this category will buy 50% of the new housing stock in Melbourne and 60% in Sydney.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – September 2016

Huge demand and a sellers market in September.

There were over 3081 auctions reported to the Real Estate Institute of Victoria (REIV) in September, with 2466 sales recorded. 615 properties passed in, 271 on a vendor bid. The clearance rate averaged 79%, still climbing from last month’s 77.5% and notably up on last year’s September average of 74.5%.

Constant strong demand saw the clearance rate climb through September starting at 77% on the first weekend and finishing at 81% on the last, even with 16% more listings (831 versus 712).

By region, clearance rates were high right across Melbourne topped by the Outer East with 82.9%. Continued low levels of stock contributed to high prices. September 2015 had 1201 auctions on its last weekend but this year offered only 831.

Low interest rates also continued to boost sale prices with September producing more of the smashed reserves we saw in August. Six figures over the reserve mark was achieved in places as diverse as Cheltenham, Box Hill North and Thomastown. But if the home’s in Canterbury it goes to seven figures – 107 Mont Albert Rd. netting 1.3m over its reserve.

The surprising rises keep coming, particularly in the inner suburbs. The most expensive buy on September’s last weekend was a large renovated home at 167 Clarke St. Northcote, selling for a record 4.3 million. This record’s likely to be broken shortly by another Northcote hilltop home on the market now, but with a much larger block. Courtney Barnett wrote her song ‘Depreston’ about being edged out by Northcote’s rising prices. Here’s hoping she sells lots of records and solves the problem!

Melbourne’s hot property market takes a breather this coming weekend for the AFL Grand Final, with just 40 auctions scheduled.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – August 2016

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.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – July 2016

Slowdown forecast but plenty of bidders in July.

There were 2229 auctions reported to the Real Estate Institute of Victoria (REIV) over the 5 weekends of July, with 1712 sales recorded. 517 properties passed in, 223 on a vendor bid. The clearance rate averaged 74%, up on last month’s 71%, but down on last year’s July average of 76.5%.

With some expecting the Reserve Bank to make further interest rate cuts this August, buyers were keen across Melbourne in July. Sunshine had another million dollar sale ($200,000 over its reserve) on July’s last weekend, as the demand for properties in the Yarraville, Newport and Seddon zone spills over to the north. An extended 5 bedroom Edwardian in Malvern sold for $4.98m on July 30 getting $500,000 over its reserve.

Willing bidders have sustained prices growth in 2016 with the median house value now increasing 7.4 % for the year at the end of the June quarter. Apartment prices are also up by 2.7%.

Despite July’s averaged 74% clearance rate many regions had much higher figures on the month’s last weekend, with the South East getting 92%, the North getting 82%, Inner South 80%, Outer East 79%, and the Inner city 78.8%. The Inner East had the lowest figure at 65.4%, which is what dragged the overall average down, showing buyer fatigue in that highly priced sector. East Melbourne bucked this trend however with a perfect 100% clearance rate over the last three months.

Despite the sound price growth BIS Shrapnel has forecast an overall decline in Melbourne house values over the next three years. In its ‘Residential Property Prospects 2016 to 2019’ released on July 11 BIS Shrapnel forecasts house values will rise by 2% over 2016-17. But their crystal ball sees a drop by 3% over 2018-19, leaving an overall fall of 1% over the next three years. They also signalled a looming oversupply of inner Melbourne apartments, which would bring downward price pressure to that segment. Lack of available apartment renters causing lower values.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – June 2016

Market cools as the mercury goes down.

There were 2660 auctions reported to the Real Estate Institute of Victoria (REIV) over the 4 weekends of June, with 1925 sales recorded. 735 properties passed in, 292 on a vendor bid. The clearance rate averaged 71%, down on May’s 73%.

A surge in stock in the rush to sell before winter really kicks in, plus the start of school holidays, contributed to a retreat in clearance rates, which went down to a year low of  71% for the second half of June. This is way down on 79.6% for June’s final weekend last year.

But performance is patchy with some suburbs still clearing well. Yarraville, Pascoe Vale and Caulfield South achieved 90% across May this year. But the Outer East scored only 66.3% and the South East 63.2% on June’s last weekend.

The Brexit vote on June 23 came and went without a noticeable impact on Melbourne auction results. However how the ASX responds in coming months is yet to be seen. Big dips in share prices results in more conservative borrowing and buying, particularly with higher end properties and holiday homes.

Notable sales in June included a $3.06m knockdown at 34 Bowman St. Aspendale as the deep pockets keep heading south along the beach-frontage strip.

Residents of Earl St. Kew saw Chinese investment interest on June 25 when two town house developers competed for a large block, both bidders assisted by Mandarinspeaking agents. The California bungalow on 1115 sqm. sold for $2.87m. Neighbours can expect the home to be razed for a medium-density development.

Far fewer auctions are scheduled for the first weekend of July, with sellers avoiding the election.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – May 2016

Strong May sales at the end of Autumn.

3080 auctions were reported to the Real Estate Institute of Victoria (REIV) over the 4 weekends of May, with 2275 sales recorded. 805 properties were passed in, 327 on a vendor bid. The clearance rate averaged 73%, marginally down on April’s 73.5%. This time last year the clearance rate was a very high 80%.

A trend continuing to firm in May was sales results in Melbourne’s southern and northern suburbs outperforming sales in the east. On May’s last Saturday Coburg showed its strength when a California bungalow there sold for 1.37M after 3 wouldbe buyers parked their pushbikes and started bidding. Bonbeach in the south had 4 bidders vying for a small cottage that went for 1.89M. Absolute beachfront boosted the price.

With less stock available through winter, competition at Melbourne auctions was keen in May with a strong clearance rate and buyers reassured by the latest drop in interest rates. By dwelling type, houses continue to outperform apartments across Melbourne. Villa units are also more popular than apartments, showing the preference owners and investors alike have for properties with at least some kind of a yard or garden. Downsizers may be willing to go smaller but they are used to enjoying a garden and having their own green space is still a high priority.

In the apartment category, blocks from the 60’s and 70’s, or art deco, continue to grow well in capital appreciation and are perceived by many as having more appeal than new apartments and Home Improvement shows on television almost every night show there’s plenty of potential for would-be renovators.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – April 2016

Sturdy figures in April show Melbourne’s resilience.

Over April’s 5 weekends there were in excess of 3456 auctions reported to the Real Estate Institute of Victoria (REIV) with more than 2596 sales recorded. Approximately 887 properties were passed in with 410 of those on a vendor bid. The clearance rate averaged 73.5%.

Sturdy and consistent is the best way to describe the Melbourne market in April. Clearance rates were healthy, generally holding in the mid to low 70’s, but with some stellar performances like Mill Park which scored a 100% clearance rate with its 15 auctions. 11 suburbs have clearance rates running above 90% this year including Seddon, Collingwood and Dingley Village. April’s last Saturday achieved an all time high with a total 1263 auctions. The previous April high was 1247 on the 4th of April 2014.

The busiest suburbs in 2015 are again maintaining robust levels of activity in 2016. Reservoir topped the market in 2015 for auction sales and leads again in 2016 with 83 sales so far. An emerging trend is an increase in auctions in the outer suburbs. It’s up on 2015 by 25%.

April saw plenty of high prices as well with a $6M+ home sale in Balwyn and $4M+ homes selling in Brighton and Hawthorn East on April’s last weekend. Aspendale also kicked a goal with a $3.5M sale.

Media comment in April questioned the direction Melbourne’s apartment market has taken. 24,000 new apartments will be built in the CBD between now and 2019 but over half of them will have only 2 bedrooms. These are too small for emerging family households and are aimed at negative gearers and foreign investors. High density aspects of Hong Kong and Singapore are now reshaping Melbourne’s property market with commentators describing many new Melbourne CBD apartments as among the smallest in the developed world and of the poorest quality.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – March 2016

Records tumble in March, with spillover suburbs attracting buyers.

In March, there were in excess of 2902 auctions reported to the Real Estate Institute of Victoria (REIV) with more than 2156 sales recorded. Approximately 745 properties were passed in with 341 of those on a vendor bid. The clearance rate averaged 72%.

A shortage of stock has characterised the market so far in 2016.  It’s a stop-start period with public holidays interrupting the usual build up to a property sale so some vendors avoid it. The scarcity of homes for sale has contributed to high prices, defying predictions of a cooling Melbourne market for 2016.

A modern luxury home in Toorak fetched $8700 a square metre at auction, breaking the square metre record for that suburb for a second time this year. Yarraville’s record was smashed with a $2.3 million sale. Other records were broken in Mitcham and Sunshine.

A clear trend continuing into 2016 is the growing amount of buyer interest in spill-over suburbs by people priced out of more expensive areas. Pricey Kew for example may be a first choice due to its many good schools, but more affordable North Balwyn benefits from the spill-over factor. Williamstown spills into Newport. Eaglemont spills into Heidelberg etc. Each highly desirable area has a neighbouring suburb getting very good price growth.

Following continued warnings in the press about Australia’s perceived housing bubble Reserve Bank of Australia governor Glenn Stevens spoke out on March 22 at the Annual ASIC Forum, in a session named ‘Can we withstand a major global shock?’. Stevens reassured Australians that the nation was “adjusting quite well” to lower commodity prices and had more policy scope and fiscal ability to respond to a worldwide downturn than most other countries.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – February 2016

Buyers are back for February, with bubble talk in the news again.

In February, there were in excess of 2592 auctions reported to the Real Estate Institute of Victoria (REIV) with more than 2008 sales recorded. Approximately 584 properties were passed in with 275 of those on a vendor bid. The clearance rate averaged 75.5%.

The clearest trend showing for February is a carryover of last year’s strong market – with keen buyers and the highest clearance rates since mid 2015. Autumn looks likely to continue the trend. Late Summer produced a surge in listings when sellers saw demand was strong – as the market kicked into gear after the Christmas & New Year break. People who missed out last year were in a buying frame of mind.

Melbourne’s inner-south produced the highest clearance rates at 82%, with the northeast and west following at 76%.

A February report in UK’s Daily Mail warned again of a housing bubble in Australia, based on historically low interest rates combined with soaring home prices. According to the author, European economic analyst Pater Tenebrarum, the Australian market (Sydney in particular) was in “the grip of insanity”.  Australian property commentators generally dismissed the report’s tone citing Australia’s current economic prosperity as a stabilizer. Interest rate rises are always on the cards, but when they do come, are expected to roll out in increments here, rather than a sudden dramatic increase.

In February local economic analysis also warned of the crippling effects rising borrowing and hidden household debt can have, naming these as a factor in Sydney’s current slowdown.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – January 2016

Auctions take a break in January, but clearance rates are strong.

Welcome to 2016! What will the year hold in store? Stay tuned to VM’s Property Market Wrap and you will know as soon as it happens, or maybe before!

Our first 2016 publication covers results from December 21 to January 31. 210 auctions were reported to the Real Estate Institute of Victoria (REIV) with 156 sales recorded, 54 properties were passed in, 21 on a vendor bid. The clearance rate averaged 74%.

Data from the December 2015 Quarter tells us the demand for affordable housing drove strong localised growth around the outer suburban ring with median prices rising 10% in Frankston South, Warrandyte, Greenvale and Werribee. Middle suburb Parkdale also rose 10%. A strong local economy contributed to price growth over 2015 and will continue to add confidence in outer and middle belts. The booming levels of price growth (6%) we saw in the 2015 June Quarter are unlikely to be repeated in Melbourne’s expensive inner suburbs while the stock market continues its weak performance. In the December Quarter Melbourne’s overall price growth settled down to 1.8%.

Looking interstate, the slowdown in Sydney has sharpened with a clearance rate of just 43% on January’s last weekend. Low clearance rates have triggered a sharp decrease in house values producing a dramatic drop of 3.1% over December, bringing the curtain down with a thump on Sydney’s three-year price boom.

January’s low auction numbers can still give us an indication of the general sentiment in the Melbourne market and the high clearance rate shows signs the sellers’ market is continuing into 2016. But the rising number of auctions over the next few weeks will bring a clearer picture.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – December 2015

Ringing the bells on 2015. A remarkable year for the Melbourne auction market. Merry Christmas!

Over the three weekends of December there were in excess of 3087 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2136 sales were recorded. Approximately 951 properties were passed in with 382 of those on a vendor bid. December’s clearance rate averaged 67%.

December’s three weekends saw clearance rates rise to the high 60’s giving us an encouraging end to the year. Saturday 19 produced the highest clearance rate (70%) for a month.

Typical of 2015’s record breaking form the 642 auctions reported on Saturday 19th was way ahead of the same day in 2014 which had 470 and ahead of the previous all time record of 590 in 2009.

Melbourne saw consistent growth in values in 2015 with the school zones of Balwyn and Glen Waverley creating some of the largest spikes. And the math couldn’t be simpler – high achieving Balwyn High and Glen Waverley Secondary College save parents the expense of private school fees, currently around $180,000 per child. If you have 3 children head to one of these suburbs for a possible $540,000 bonus!

2015 will be remembered for record breaking numbers and for drama as well. Interest rate cuts in February and May and a strong economy fuelled a surging market and saw clearance rates up at 80%, high prices and talk of a bubble. Regulators (APRA) took heat out of the market by tightening lending criteria for Australian property investors. Regulators also reminded the Chinese-investment spruikers that their clients were subject to foreign investment rules, which some spruikers had forgotten to mention. The dampers worked and by Spring clearance rates were cooling but auction numbers were still breaking records.

As we go into Summer clearance rates have steadied giving us a solid end to a remarkable year. 2015 was quite a ride and demand is still strong as we head into 2016.

To all our clients, the Real Estate fraternity and our readers, we wish you a very Merry Christmas and a wonderful break. We’ll see you again in 2016!

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – November 2015

Reserves dip a little to sell in a busy auction market.

Over the four weekends of November there were in excess of 4835 auctions reported to the Real Estate Institute of Victoria (REIV). More than 3316 sales were recorded. Approximately 1519 properties were passed in with 646 of those on a vendor bid. The clearance rate for November averaged 67%.

November was a bumper month for auctions with newspaper reports of 1630 on the last Saturday, which would be an all time National record for one day. November’s auction total was 300 more than this time last year. The market has lost some of the heat it had earlier this year with vendors willing to lower expectations and reserves in order to sell in such a competitive market. Many home sellers in Melbourne’s middle ring suburbs are choosing the secure option of accepting an offer and selling before auction, with one agent reporting a rate of 20%.

Clearance rates continue to soften. November’s 67% was down on preceding months – October 70.5%, September 74.5%, August 75.5%, July 76.5%.

New data has confirmed Melbourne’s inner and middle suburbs have had the highest price growth during the 12 months up to September, rising by 15% for 4 bedroom houses. November saw Melbourne’s most expensive established home sale so far this year with a Toorak property in Yar-Orrong Rd. selling off-market for $20 M.

On Melbourne’s outer fringes the new home buyer market was booming through the Spring quarter with 1200 land sales, as people choose this route (usually house and land) to get a foot in the door. Many buyers who enter this market will later move closer to the city. Land prices in this sector have risen an estimated 20% this year – good news for the young buyers who bit the bullet last year!

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – October 2015

Interest rates up in October. Clearance rates dip.

Over October’s five weekends there were in excess of 4051 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2917 sales were recorded. Approximately 1134 properties passed in with 495 of those on a vendor bid. The clearance rate for October averaged 70.3%.

The big news in October was about the big four banks raising interest rates, shortly before announcing mammoth profits – developments that will only please their shareholders. The rate increases add to the other pressures applied by the regulators to cool the market – that is, tightening of loan to value ratios for investors, deterrents for using superannuation to buy investment property, and increased taxes on Foreign buyers.

With many investors having had their wings clipped, we are now seeing the lowest clearance rates for this year. Values however, are holding strong in Melbourne. Agents report price growth was strong in October in middle to outer suburbs as more people look for opportunities further out.

Grand Final weekend was very quiet as usual with just 44 vendors hoping to sell, but a clearance rate of just 63% was achieved. Sellers also normally avoid the pre-Melbourne Cup Weekend but this year many vendors bucked that trend and joined the race to sell with 435 auctions and a clearance rate of 67%. People are keen to act now and be organised for Christmas.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – September 2015

September holds strong. Clearance rates ease.

In September’s four weekends there were in excess of 3703 auctions reported to the Real Estate Institute of Victoria (REIV). More than 2780 sales were recorded. Approximately 923 properties passed in, 381 of those on a vendor bid. The clearance rate for September was 74.5%.

September produced high auction numbers with the last three weekends each having just under one thousand homes under the hammer. The averaged clearance rate dipped a bit from recent monthly highs, which can be seen as moderating rather than a significant drop. Closer analysis shows the inner city unit market clearance rate of just 55% dragged down Melbourne metro’s overall performance. The large volume of homes presented for sale is also a factor in softened clearance rates, with buyers having more choice and sellers having more competition. The recently introduced investor lending regulations have also had an effect.

Looking further afield, Sydney’s market produced the highest ever number of auctions held on September’s last Saturday (984) but delivered its lowest clearance rate in 3 years, at 69.4%.

A notable auction this month (September 19) saw a family home in Glen Waverley sell for 6 million, based on its very large 1538 sqm block size – about twice as big as its neighbours. The owner, a developer, bought the block in April this year for 4.71 million and turned it around with a 1.29 million profit. However rumour has it the sale has since fallen through.

Although the average new home block size in Melbourne today is around 400 sqm, back in 1900 the average new home block in the East was around 1200 sqm. If you have one of these and you’re still alive, you’ve hit the jackpot!

The Spring auction market will take a break next weekend with Saturday’s AFL Grand Final. Just 50 auctions are listed at this point. The weekend after that kicks back into gear with almost 1200 auctions.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – August 2015

Share market wavers but strong sellers market continues through August.

Over the five weekends of August, there were in excess of 3922 auctions reported to the Real Estate Institute of Victoria (REIV), with more than 3033 sales recorded. Approximately 889 properties passed in, 388 of those on a vendor bid. The clearance rate for August was 75.5%.

Winter caused auction activity to drop for several weeks in June and July, but the market resisted the traditional sharp slowdown, rebounding early with stronger than usual activity through August. August’s clearance rate is also higher this year – up from around 72% to 75.5%.

Agents also reported sales figures well above reserves in the Eastern suburbs indicating values are still edging up there. Instability in global share markets in the third week of August will only reinforce the notion of property as a stable long term investment.

In August, Melbourne was acknowledged by The Economist as the world’s most liveable city for the fifth year in a row. The REIV nominated Carlton as the most affordable suburb with one bedroom apartments there having a median price of $207,750. This reflects the development of student style accommodation, compact but on the CBD’s northern edge and presenting an entry opportunity for city workers looking for a first home.

Maribyrnong and neighbouring Footscray had the most affordable two-bedroom apartments with median prices of $410,000 and $408,000. Glenroy has the cheapest three-bedroom apartments at a median of $465,000, at just 13 kilometres from the CBD.

Chinese buyers helped bolster sales on Saturday, August 8 because the double 8 aspect is associated with luck and prosperity. This is because the figure eight is similar to the Chinese word for luck. Also, the numbers in this year’s date – 2015, added together, equal 8. More luck. Although short on logic, this phenomenon can translate to tens, if not hundreds of thousands of extra dollars, for a ‘lucky’ vendor.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – July 2015

Fewer auctions in July, but the median house price keeps rising.

Over the 4 weekends of July, there were in excess of 2316 auctions reported to the Real Estate Institute of Victoria (REIV), with more than 1798 sales recorded. Approximately 518 properties passed in, 216 of those on a vendor bid. The clearance rate for June was 76.5%. As expected for chilly midwinter, July was slightly down on June with (300) fewer auctions and approximately 300 fewer sales.

In the June quarter the median house price in Melbourne grew by 3.1% from $861,500 to $888,000, a lucky number for some.

Melbourne suburbs which have achieved annual capital growth of more than 20% are Mt. Waverley (28%), Doncaster (28%), Burwood (27%) and Balwyn North (23%). Balwyn North also recorded the highest number of auction sales (39 sales). Reservoir (38 sales) and Glen Waverley (37 sales) were also in the top three.

July saw the Sydney median house price surpass $1 million ($1,000,616). But close to Sydney centre $1 million will buy a 2 bedroom apartment only. However this is better than Paris and New York where A$1 million will buy a 1 bedroom apartment.

Media reports in July cited the steps being taken to cool the borrowing market, targeting landlord buyers, with ANZ and Commonwealth lifting interest rates for those borrowers by 0.27%.

The regulator also called for more capital to be held against mortgages by the big banks as a safety measure against over-borrowing and a potential house price dive. But it is expected that the banks will pass this extra (12 billion) expense onto consumers through miscellaneous charges and fees, rather than a sudden general interest rate hike.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – June 2015

No cooling down so far for Winter.

Over the 4 weekends of June, there were in excess of 2672 auctions reported to the Real Estate Institute of Victoria (REIV), with more than 2111 sales recorded. Approximately 561 properties were passed in, 252 of those on a vendor bid. The clearance rate for June was 77%, down a little from last weekend’s high of 79%.

Winter hasn’t put a cooler on the Melbourne market yet and activity is going strong. Auction sales to date for 2015 are close to 14,000 which is the highest on record. Outer Melbourne can claim the highest auction growth – up 20% on last year.

Changeover buyers in the Eastern suburbs are driving that powerful market, with a large Tudor style home in Box Hill selling for 2.61 million and setting a new suburb benchmark, with a tennis court and swimming pool adding spring to the price. Kew displayed its blue chip investment credentials with the successful auction of a 5.56 million home which had gained $200,000 a year in value for the owners, since its purchase for $641,820 in 1989.

Bubble talk dominated the media in June, with plenty of graphs showing dramatic up and down value cycles over the decades. However, analysts reminded us that Melbourne has seen periods of much higher growth, for example the current rate is just a third of the rate as in the late 1980’s.

BIS Shrapnel warned that research indicates an emerging oversupply in the Melbourne apartment market, as projects reach completion up to 2018, leading to a drop in values. Other commentators noted this would most likely apply to the CBD and surrounds.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – May 2015

Autumn ends with strongest buying in 5 years.

There were in excess of 4644 auctions reported to the Real Estate Institute of Victoria (REIV) in the 5 weekends of May with more than 3736 sales recorded. Approximately 908 properties were passed in, 425 of those on a vendor bid. The clearance rate for May was 79%, with 3 weekends at 80% or higher.

The strong buying reflects the opportunity presented by low interest rates and shows no signs of abating. Activity includes people who are downsizing, or buying a second property. Many are also taking the plunge on upgrading to the best property they can possibly afford, buoyed by the all-time low interest rates, expecting such properties will cost more in a few months time. The keen activity has created a shortage which keeps driving prices up.

Consequently, commentators with longer memories are warning this could become a bubble scenario. After pressure from regulators wanting to take some heat out of the market, some big banks have just started to tighten their lending criteria. ANZ Bank is reducing availability of discounted interest rates. NAB and Commonwealth Bank have also reduced some discounts they had offered to new investor borrowers. This is expected to slow some growth.

Looking ahead, auction numbers will be lower, with the Queen’s Birthday (June 8) holiday weekend and the onset of wintry conditions in June.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – April 2015

Easter and ANZAC Day produce a quieter April, but clearance rates trend high.

There were in excess of 1781 auctions reported to the Real Estate Institute of Victoria (REIV) in April, with more than 1404 sales recorded. Approximately 377 properties were passed in, 195 of those on a vendor bid. The averaged clearance rate for the month was 77%, based on the two busy weekends of 11th & 12th and 18th & 19th showing buyer confidence continues to be strong.

The Easter and Anzac Day weekends produced few auctions, but some strong sales were recorded. An ANZAC day auction in Ringwood saw the home sell for $761,000, achieving $240,000 over the reserve.

Not everyone supports having auctions on Anzac Day, with Premier Daniel Andrews somewhat strangely signalling a possible ban during the week. “It may be legal to be having auctions and things of that nature, but I think it’s pretty ordinary,” Mr. Andrews said.

Trends for the year to date show the Middle and Outer suburbs have produced the greatest net worth gains since this time last year, with Middle suburbs up by 18% and the Outer suburbs up by 27%.

Clearance rates have continued to climb so far this year with the 3 top achieving suburbs being Wantirna 97%, Ringwood 96% and Brighton 93%.

The 3 top suburbs for properties which sold before auction this year are Williamstown 33%, Glen Waverley 31% and St.Kilda 30%.

Traditionally, auction listings ease off in May as we move into colder weather, but May’s first weekend has bucked this trend with 935 auctions scheduled.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – March 2015

Autumn starts with busiest market since 2010.

In excess of 3700 auctions were reported to the Real Estate Institute of Victoria (REIV) in March, with more than 2866 sales recorded. Approximately 834 properties were passed in, 388 of those on a vendor bid. The clearance rate for the month averaged 75.5%.

Getting in early to avoid Easter and Anzac Day produced multiple Super Saturdays in March. Strong demand continues to drive the market in Melbourne with large numbers of auctions and sales. With no end to record low interest rates in sight the dynamic conditions of 2014 look set to continue. The averaged clearance rate for the year to date is 77% which is the highest first quarter result since the high performing 2010. The East is particularly successful with the Inner East achieving a clearance rate of 80%. The Middle and Outer regions achieving 85%. If viewed alone, the Outer East recorded a very high 95%.

It’s official that many Melbourne homeowners are doubling their money, according to CoreLogic RP Data’s ‘Pain and Gain Report’ released on March 30th. In the December 2014 quarter just 5.6% of sellers lost money on their sale, compared to 6.7% the previous quarter and 6% at the same time the year before. At the highest performing end, 38.9% at least doubled what they had originally paid for their property.

March produced another ‘Dump sells for millions’ news headline after a rundown beach front property in Middle Park sold for $4.6 million.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – February 2015

Clearance rates build as the top end shines.

The traditionally quiet period from December 22 to the first weekend of February recorded just 419 auctions with 256 selling, producing a clearance rate of 61%. But the year shifted quickly into gear during the remaining three weeks of February with in excess of 2585 auctions reported to the Real Estate Institute of Victoria (REIV) with more than 1991 sales recorded. Approximately 594 properties were passed in, 297 of those on a vendor bid.

The recent reduction in interest rates to a new all time low has bolstered an energetic start for 2015. Buyers have had the time over the low activity Summer break to firm their resolve and are now making their moves. The clearance rate rose steadily through February to reach 79% on the last weekend, featuring 2015’s first Super Saturday.

The rise in the stock market across February has added to buyer confidence at the higher end of the market where some sales achieved way over reserve. Notably, in February’s last week two properties in Hawthorn’s Scotch Hill precinct went over reserve by a million each. In Port Phillip, a comfortable family home in Middle Park achieved $10,000 per square metre going under the hammer for 5.5 million. However, the busiest suburbs so far this year are South Yarra and Reservoir with 43 and 42 auctions respectively.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – January 2015

2014 – the strongest year on record. What are the trends looking forward?

December 2014 saw in excess of 3170 auctions reported to the Real Estate Institute of Victoria (REIV), with more than 2165 sales recorded. Approximately 1005 properties were passed in, 467 of those on a vendor bid.

At 66%, the December clearance rate was down on Spring’s average of close to 70%. However it’s worth noting activity in late December eases, as attention turns to Christmas and holiday activities.

2014 was our strongest year on record for the residential auction market recording more than 40,300 auctions and 28,500 sales, which was 17% higher than 2013. There were 15 weekends with more than 1000 auctions. Overall we had record breaking auction numbers and record breaking prices.

Interest rate stability also contributed to buyer confidence which should carry momentum forward for 2015. The cash rate has held at 2.5% (a record low) since August 2013, adding further impetus. Leading economists do not expect the RBA to lift rates until late 2015 and some opinion even predicts a possible cut in rates.

Other trends that emerged clearly was the overseas buyer factor, which delivered higher than expected sale prices for some. A classic example of this was reflected on December’s final weekend with a modest Glen Waverley home selling for $2,055,000. This result could also be indicative of how top performing schools can play their part in significantly increasing local property prices.

On the other hand these higher than expected sale results also created unrealistic expectations for some vendors at the top end.

Turning our attention to 2015, the Melbourne property market will spring to life with significant numbers of homes going to auction on the final 2 weekends of February.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – November 2014

November’s auction numbers still strong but clearance rates moderate.

In November, there were in excess of 4832 auctions reported to the Real Estate Institute of Victoria (REIV), with more than 3227 sales recorded. Approximately 1605 properties were passed in, 827 of those on a vendor bid. Although total auction numbers were high in November, the averaged clearance rates have moved lower over the three months of Spring – with a clearance rate of 74.5% for September, followed by 71.5% for October and 65% for November.

Election weekend had a strong auction total (1213+), shrugging off the potential distraction. The large number of homes for auction this month reflects people’s desire to achieve buying or selling plans before Christmas, this includes families who are aiming to relocate (sellers in the Spring market will often be buyers as well) and get established before the start of the new school year.

Top end properties continued to attract high prices this month, particularly near the bay, with a new land price record set in Brighton, with $10,000 per square metre for a large beach-front home selling for $8.52 million, achieving the most expensive sale for Spring’s last weekend (November 29th & 30th). Second place was Brighton East with a $4.43 million sale. Activity on November’s last weekend was high in nearby St.Kilda and Port Melbourne as well. The other hotspot auction suburbs were Richmond, Reservoir and Doncaster East.

According to the REIV, activity will be busy as we enter December with more than 1500 auctions scheduled for the first weekend of December (6 & 7), continuing strongly up until the weekend of 20th & 21st, the last weekend before Christmas.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – October 2014

October’s Super Saturday delivers a super result!

There were in excess of 4262 auctions reported to the Real Estate Institute of Victoria (REIV) in October, with more than 3079 sales recorded. Approximately 1184 properties were passed in, 564 of those on a vendor bid. The clearance rate for the month averaged 71.5%.

September’s AFL Grand Final and November’s Melbourne Cup create a peak auction period in October, and the weekend of the 25th/26th lived up to the ‘super’ tag breaking all previous records, with over 1508 auctions and 1102 sales.

Buyers continued to jump in, banking on a continuation of low interest rates for now – but with a rise anticipated in 2015. Despite the volatility across October, the Dow Jones showed some resilience towards the end of the month, allowing a bit of reassurance for top end home-buyers, looking forward. A home in Victoria St. Camberwell achieved $450,000 above reserve and a terrace in Hume St. Armadale achieved $420,000 above reserve.

Anecdotal reports from agents suggest houses priced between $1 million and $2 million appear to be showing some resistance though. There is a lot of stock in this price bracket and although homes sell, agents are unhappy with some of the prices being achieved – the large supply putting some adverse pressure on prices. Overall properties above $2 million were doing better, agents said.

And according to a prominent Stonnington agent who was quoted in The Age, Oct. 26, smaller inner-urban Eastern properties were still in great demand: “The cottages around Prahran, Toorak and Armadale are on fire.” But fortunately, in a good way.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – September 2014

A great Spring start for vendors!

There were in excess of 2454 auctions reported to the Real Estate Institute of Victoria (REIV) in September, with 1855+ sales recorded. Approximately 599 properties were passed in, 275 of those on a vendor bid.

Vendors enjoyed excellent results with high clearance rates as buyers confidently stepped up to the mark bidding and buying competitively across Melbourne.

September’s first weekend achieved a clearance rate of 76% and the month averaged 74.5% however the last weekend of September there was no official clearance rate due to the low level of auctions as a result of the AFL Grand Final.

Commentators this month, (including The Reserve Bank) continued to suggest some caution for buyers due to the combination of rapidly rising values, low interest rates and the continued presence of investment buyers. But the urge to secure that ‘ideal property’ buyers have set their heart on is a strong one and the Melbourne market powered on.

There is some expectation demand will plateau a bit, as large numbers of sellers continue to put their properties up for sale in the Spring market. But the strong 2014 market has been full of surprises all year and it shows no sign yet of waning. In particular, the demand for good quality property in prime locations is still greater than the supply, which is good news for vendors.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – August 2014

August signs indicate a booming Spring

There were 2998 auctions reported to the Real Estate Institute of Victoria (REIV) in August, with a total of 2208 sales recorded. 790 properties were passed in, 345 of those on a vendor bid.

With an August clearance rate of 71.5%, 2014’s strong activity shows no signs of decline.

August auction numbers reflected a typical Winter slowdown but were more than 14% higher than the August average over the last 10 years. Likewise, July numbers were 17% above the recent 10 year average for that month.

At this point, the extra activity coupled with increased property values has produced transactions topping $10.8 Billion in value for the year so far, which is a 38% increase on this time last year.

August averaged about 600 auctions per weekend but Spring will bring increased numbers with several weekends expected to top the 1300 mark. More homes gives buyers more choice and it will be a real gauge of demand and the market’s willingness to support Melbourne’s record price levels, which have risen 10% over the last 12 months with a current median of just over $600,000. But given sales for this month were up by 6% compared with August 2013 the signs show people are not being deterred by the higher prices.

The fact that money (interest rates) is cheap and the notion that sitting on the fence is expensive, is still top of mind.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – July 2014

July keeps humming despite mid-winter weather

2014 continues with an energetic performance in July. There were 1827 auctions reported to the Real Estate Institute of Victoria (REIV), with 1340 sales recorded. 487 properties were passed in, 228 of those on a vendor bid.

Total numbers of scheduled auctions have tapered a bit with the final arrival of very cold daytime temperatures but clearance rates are still going strong, maintaining a July average of 71%. This is marginally higher than this time last year when it was 70.5%. So far this year 14% of homes have sold prior to auction – the highest level since 2010.

Looking closer at the Melbourne’s Clearance Rates, by region, reveals the Outer East was the star performer with very high clearance rate of 86.5% on the weekend of July 26th and 27th, followed by the Inner South with an 80.2% clearance rate. This compares with a clearance rate of 69% for the Inner City on the same weekend.

Both buyers and sellers singled out Wantirna as a place where it was better to seal a deal quickly, with almost 50% of all homes selling prior to auction.

With the end of the Financial Year came confirmation of the increase in Melbourne’s house prices – being an official 10.3% over the 2013-14 financial year, delivering the best annual result since September 2010.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – June 2014

June maintains momentum

May’s strong momentum has carried on into June with 2385 auctions reported to the Real Estate Institute of Victoria (REIV) and 1721 sales recorded. 664 of these properties were passed in, 350 of those on a vendor bid. As you would expect many vendors gave the Queens Birthday weekend a miss, with just 227 auctions and a 61% clearance rate. This follows the pattern that long weekends in Melbourne are a tricky time to put your property to auction. But as winter weather kicks in and crowds thin, some vendors might view the lack of competition as an advantage, given the continuing demand by buyers. The June clearance rate was generally high, above 70% for all weekends, apart from the Queens Birthday weekend, producing an overall monthly average of 68%.

The Parliamentary Inquiry into Foreign Investment made news this month investigating the impact of Chinese and Malaysian buyers in the Melbourne & Sydney residential markets, with lobby groups claiming both positive and negative effects. Some claimed the growing wave of wealthy Chinese nationals buying homes and apartments has caused price hikes of up to 10% in Sydney and Melbourne. Industry groups noted foreign investment in new property was promoting construction and aiding the economy. The Inquiry continues.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – May 2014

High numbers and high temperatures for May

May not only delivered unusually high temperatures but also high numbers of auctions, seeing 4267 auctions reported to the Real Estate Institute of Victoria (REIV), with 3075 sales recorded. 1192 properties were passed in, 653 of those on a vendor bid. The clearance rate stayed high for most of May with a strong 73% recorded on the last weekend. Over May’s five weekends, property clearance rates started in the high 60’s and finished strongly in the low 70’s, averaging 70.5% for the month. This was up a little on last month’s clearance rate of 70%.

After a booming March, then a quieter April, May was going to be a real litmus test for the ongoing strength of the market. The result was an energetic performance that keeps Melbourne on track for a record breaking season. By the fourth weekend of May there had been over 10,000 sales so far this year, compared to the previous record of 9758 at this point in 2010.

Many vendors who may have been waiting for sustained signs of an improving market have decided to make the move.

There has been a 32% jump in properties sold at auction so far this year compared to 2013. The figures show that people are not only putting properties up for sale, but that the properties are selling too. With the existing momentum and the lead up of May’s mild temperatures we may see a stronger than usual June as well, although traditionally, activity eases through mid-year with colder weather putting a dampener on property presentation, open for inspections and conditions for auctions.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – April 2014

Holiday breaks bring a quieter spell for April

The Easter Break and ANZAC Day long weekends saw a quieter spell for Melbourne’s Property market. Compared to March’s record breaking figure of 4,600 auctions, April was considerably quieter seeing 2,242 auctions. 1,572 sales were recorded with 670 of these being passed in, 338 of which were on a vendor bid. (Source: REIV Sat stats).

Easter Saturday posted only 35 auctions, with 21 selling, achieving an unofficial clearance rate of 60% which was significantly lower than the recent average. (Although the REIV does not include Easter figures as official clearance rates due to the low volume of auctions). The low clearance rate supports the notion that auctioning your home over Easter can pose more risks than usual.

2014 however has continued with its strong performance with nearly 7500 auction sales for the year to date with an average clearance rate this year of 71%. The clearance rate for April weakened just a little however to average 70% (69.67%), which is down on the March average of 72%. It is up on last year’s April average of 67%.

February through to March is one of the strongest times to sell a home in Melbourne and May will see a real test for the current robust market, although based on precedent April sentiment in the market tends to continue on into May.

House prices in Melbourne have risen, which traditionally brings more vendors to the market. Very popular compact inner urban homes such as single fronted, two bedroom properties continue attracting both baby boomer downsizers and young professionals starting families. Both categories are driven by a preference for a self-contained home as opposed to an apartment. This kind of property jumped in value by up to $100,000 in 2013 to around $850,000.

Craig Knudsen
Principal Advisor
Vendor Marketing

Melbourne Property News – March 2014

Record breaking March!

March has been a record breaking month totalling over 4,600 auctions, with 2891 sales reported to the REIV, 1058 were passed in with 682 on a vendor bid. The number of auctions were a full 30% above the last record of 3,525 (March 2008).

The Clearance Rate hovered week by week between a healthy 71% and 74%, giving an average of 72%. The easing rate on the last weekend is attributed to the abundance of stock going to auction. The Clearance Rate is up on last year’s March average of 65%. A good result for vendors.

March saw one quiet weekend – the long weekend (March 8) break which brought a drop in activity with Victorians heading for holiday homes and beaches in the hot weather.

2014 so far has delivered solid results. We’re seeing multiple bidders at auctions and healthy average clearance rates. A higher percentage of homes are selling, but total transactions are tracking lower than this time last year. Private sales are notably lower. This tells us that although the premium end of the market is doing well, the more affordable and larger private sale market is exhibiting some elements of a slowdown.

As well as breaking total auction records for March, median prices for this quarter have risen by 11% in Melbourne.

Craig Knudsen
Principal Advisor
Vendor Marketing

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