But clearly nobody explained that to the market. 82% clearance rate on 925 Auctions according to the Real Estate Institute of Victoria. With winter officially upon us next week, traditionally clearance rates drop somewhat and turnover decreases. I am not too sure this will occur. Whilst many agents fly north for holidays during these traditionally quieter times, I don’t think as many will this this year.
There will be many more deals done over the next 3 months than are usually done at this time of year simply because the appetite of buyers is rampant. Who knows when or if the tsunami of buyers will ever relent? Or is this going to become the new standard. If so, who will find a way to increase supply? And supply of what people want to buy.
15 years ago 2 bedroom apartments within 5-7km’s of the CBD became the staple diet of the investor. In the long term this is still true, but with the massive oversupply of apartments through the CBD, Docklands, Southbank, Abbotsford and soon through Fisherman’s Bend, we see the traditional 2 bed apartment in some suburbs like Richmond and South Yarra can be more difficult to lease out than in previous years. The yield percentage has fallen.
But the new areas that price is skyrocketing is further out of the CBD in the Eastern and South Eastern middle ring areas of Melbourne and the inner Northern zone. Here people are looking for family homes. They don’t have to be on big land, townhouses are just as sought after as full size blocks. It is owner occupiers driving this segment of the market place not investors.
Over the next 3 months of colder weather the auction numbers tend to decline, but I very much doubt turnover will. I believe there will be a rise in private treaty negotiations and off market sales until the traditional spring selling season “kicks-off” after the AFL Grand Final in September.
Please be aware there are now another 2 clearance rates being strongly publicised in the media. The Realestate.com.au auction clearance rate put out by Newscorp papers and the Domain Groups’ clearance rate published in Fairfax papers. Just remember, the clearance rate is not a percentage of properties that sell under the hammer. It is the percentage of properties that sell under the auction system. 80% clearance does not mean 8 out of 10 properties sold under the hammer. Actually the vast majority of properties still sell under private treaty, or one on one negotiations. The clearance rate includes all properties sold before and all properties sold after a pass in as well as properties that get sold under the hammer.
If you are considering a property purchase this year, you should look to a professional for assistance. All buyers advocates must be licensed real estate agents by the Business Licensing Authority of Victoria as JPP Buyer Advocates are. Please feel free to give us a call to discuss your next property purchase.
Ian James
Director
JPP Buyer Advocates