With an emphatic statement across the weekend, buyers put their money where their mouths are. From over 900 auctions, there was a clearance rate of 73% with only 35 unreported sales. This is at the very upper level of my expectations and it will bode extremely well for vendors over the next 3 months. Of all the auctions we were represented at over the weekend, all sold under the hammer, except one, which sold to us within a few minutes after the pass in.
I believe the media representation of the auction results for the weekend will auger well for Real Estate Agents. I think we will see the pent up demand of upsizers and downsizers to trade in their properties for others that fit their needs much better, leading the charge in the buying and selling areas over the next 3 – 6 months. Many people with properties to sell have been hanging off and waiting until the mass media tell them it is a better time to sell.
The Age 25/2/13: Signs of Rebound in Property
The Age 24/2/13: Market on the Mend
The Age 24/2/13: Auctions Looking UP
The Herald Sun 24/2/13: Super Day for Sales & Market passes the test
Assuming next weekend’s 900+ auctions finish the same as this week, then we can assume over the next 6 – 12 weeks, that we will see an increase in stock numbers for sale. However as most of the new vendors will also be new purchasers, property prices in Melbourne are set to inevitably rise. You can look at every statistical model on the planet and compare GDP with current wages; market sentiment graphics with long term inflation figures. You can look at how the stock market is and has been performing. But fundamentally people buy property for shelter, income protection and prestige. And those who have done well in the past are not afraid to pay a little more to get the new home they want.
It is the fundamental difficulty for first home buyers competing against those that have not only got savings but also capital growth from their existing property behind them. Equity in an existing property is money earned over time but not by one’s own energy expenditure. And this means that many people use it without too much angst.
In the next 6 months we will see most properties in the better suburbs of Melbourne grow in value around 5%. The latter half of the year will most likely be the same, but so many unknowns can become crucial factors that it is hard to predict all the possible outcomes.
If you have been thinking about investing in the Melbourne property market, or looking to buy your first home, then it is probably a very good time to get serious. Interest rates are low, stock is coming onto the market and prices are set to begin an upward trend.
When buying in Melbourne, you should seek the counsel of a competent, licensed buyers advocate (agent). Beware the property spruiker, who is selling you something they already own, or giving you free advice on the best property buys. These people are rarely estate agents and are usually working for the vendor.
Ian James CEA (REIV)
JPP Buyer Advocates