I attended 2 auctions in flogging rain on Saturday. The first in North Melbourne saw a single fronted Victorian home go under the hammer. In the freezing cold and rain and not enough space inside the home, around 50 people stood outside and waited for the auctioneer. A previous offer of $725k had been rejected early in the campaign and that had been the list price throughout the marketing. With a vendor bid expectation of $700k to get proceedings underway, the final winner of the auction opened and whilst 3 others looked to try and join in, only one other bidder actually got a bid in. The property was announced on the market at $750k and sold for $797,000.
Whilst this sounds cheap, this 102sqm unrenovated home without off street parking and directly opposite the towering housing commission flats of Melrose Street, actually sold extremely well for the vendor.
In Ringwood a very small 1950’s home with a simple makeover went under the hammer. The true value of this property was the 612sqm of land and the proximity to both Eastland and the train. The house looked very good but still had an extremely small living space, no undercover outdoor space and only a carport for the car’s accommodation. It was quoted at $750 – $820 and went on the market at the opening bid of $800k. Multiple bidding saw the winner walk away with the contracts at $890k.
Two totally different properties, in two totally different suburbs each returned outstanding results for the vendors. And after talking to several agents across the weekend this was mirrored across most suburbs regardless of price range. The clearance rates from Real Estate Institute of Victoria and Realestate.com.au data analysts both came in at 76% and Domain at 70% clearance rates.
Many of the commentaries I read this weekend have spoken of a young bidder being supported by their parents. I have seen this on many occasions where the parents are trying to assist their children into the property market, or of course, simply trying to get them out of the family home!!! Many families are joining together in order to buy investment properties. And downsizers are trying to keep the family home as an investment and buy something smaller to retire into.
I have not seen any negative news on the turnaround of the property market in six weeks. There are no media commentators talking about a fall in the property market, only when it will start to climb rapidly. This is actually much faster than I had predicated in February. I thought it would be the end of the year before the market was reinvigorated enough to have the media talking about a return to climbing house prices. But with the election outcome surprise, the drop in interest rates, the relinquishing stranglehold by APRA on the banks to make lending easier and the Reserve Bank’s comments letting everyone know there will be no interest rate rises in the medium to long term, everyone is flooding back to the property market.
The Spring selling season will see a very large increase in property prices with multiple interest at each auction now likely to be the norm. Assuming the property is accurately priced, in the early part of the season the agents are unlikely to underquote too dramatically but after a few good clearance rate weekends, that will change. Simply waiting for a pass in at auction and then strongly negotiating will not be a universal solution as it has been for the past 15 months. To secure your property this spring, you will need to research the property, having a very good idea of what it is worth, and then engage the agent. Securing the property before auction for a fair and reasonable price will potentially become the better option as we move through the Spring selling season.
Anyone who is considering a purchase, “GET YOUR FINANCE UNDER CONTROL NOW!!” Having access to 10% deposit, knowing who to use to organise a pest and or building inspection report, knowing a good solicitor to do the conveyancing and to check contracts before you sign them. We are moving into a very long drawn out low interest rate environment where people will be able to borrow more money. And this will translate into more bids at auctions.
Get strapped in for a big Spring.
If you are considering purchasing a new property or indeed, have been waiting to sell one, please feel free to call me for a no obligation free chat.
JPP Buyer Advocates