We are back to the shrinking “clearance rate” again. The clearance rate dropped to 53% but the total sales for the week climbed 18%. Whilst most buyer agents and selling agents will tell you the market is “hitting the wall” or that the market is in free fall, this is a total fallacy. Investors are moving into the market in droves. Our enquiry levels for First Home Buyers are up by 75%. There are plenty of good properties out there to buy at very good prices. But don’t be surprised by competition at the best.
Of the properties purchased last week, more than 60% were bought under competition at auction. We purchased one property where 4 interested parties were bidding after the property was “on the market” and the amount between the final bid and the first to drop out was only $4000. The property was sold in excess of $400,000. Conversely, another auction we attended was sold under multiple competition, $150,000 over the asking price. It was very obvious this would happen after due diligence had been performed. This was no surprise to us, our clients or the other real estate agent who was also bidding.
The high end of the market is always the most volatile. The closer to the Melbourne Median Price, the less volatile the prices are. We will see median prices in the top 20 highest priced suburbs show the greatest downward movement over the next 6 months. If you actually analyse these sales you will notice that the majority of these properties will not be the best in their class or there will be some excellent properties selling below their true value for some specific reason, either quiet sale, long settlement or special requirement. It is the latter type of property that will make the most money in the long term. In the lower priced suburbs, under $700k, the key to buying well is selecting good property and then negotiating the best possible price.
Real Estate agents are creatures of habit. Melbourne is so used to auctioning property that both the agents and purchasers expect all property (that is thought to be good) will be auctioned. But good, experienced Real Estate Agents are not stupid. They will change with the times and the market. There will be a lot more private sale negotiation from now on.
It is now imperative to choose the property very well, assess the property very accurately, and now you must also negotiate with a very experienced property negotiator. If you want to secure an exceptional property at the right price come and see us at our free seminar at Glen Eira Town Hall on Thursday November 13, or give us a call to organise a “no obligation” meeting to discuss your requirements.