Melbourne auctions defy gloomy forecasts as clearance rate rises
Melbourne has shrugged off gloomy forecasts for a struggling auction market this year.
A wave of upsizers willing to take losses on homes to buy cheap higher up the property ladder has pushed the city’s clearance rate back into positive territory sooner than expected.
CoreLogic Australian head of real estate Geoff White said a citywide 51.8 per cent clearance rate for the year so far was far above expectations, following the weakest spring market in more than a decade.
RELATED: Auction hack backed by science could demotivate other bidders
Home sells $61,000 above reserve in Friday night Craigieburn auction frenzy
Melbourne’s auction market ends with worst spring since GFC
“Because of the consistency of what was happening in the last quarter of last year, you thought it would have to be the same in the first quarter this year,” Mr White said.
“But the way we are going now, the clearance rate could edge up again in the next quarter.”
With some suburbs posting clearance rates above 70 per cent, and figures strengthening in recent weeks, both buyers and sellers are ahead this year — though buyers are still getting the best of it.
But the number of homes going under the hammer is way down — less than half what we saw in spring last year, and almost a third below the number held in the first three months of 2018.
Rather than a sign sellers were abandoning the market, the reduced numbers showed more were considering private sales, Mr White said.
Upsizers and those looking to upgrade their postcode were leading the charge, he added.
One of the biggest surprises so far this year has been the 75 per cent clearance rate in Hillside, to Melbourne’s west, making it the city’s the best performing suburb.
Barry Plant Taylors Lakes sales manager Las Anastasiadis said Hillside’s affordability — with a $642,250 median house price — was drawing buyers from surrounding postcodes.
MELBOURNE’S BEST AUCTION SUBURBS
Hillside — 75%
Fitzroy — 73.9%
Caulfield South — 71.1%
Toorak — 69%
South Yarra — 68.8%
*Source: CoreLogic, March quarter
“We run a lot of our properties to auction, and up to five bidders is common,” Mr Anastasiadis said.
“It’s a nice area, there are good quality homes with affordable prices and the amenities are quite good nearby.”
The recent sale of 9 Kelland Ave for $655,000 under the hammer had highlighted demand in Hillside, with five bidders and a $25,000 bonus on top of the home’s reserve.
Mr White said strong results in more traditional hubs such as Glen Waverley and even Toorak were also positive signs.
“The east was one of the major reasons why Melbourne’s auction market was hurting last year, but it seems to have redeemed itself,” Mr White said.
Mernda has notched the city’s softest clearance rate so far this year at just 11 per cent, showing buyers in many outer Melbourne suburbs are still resistant to buying under the hammer.
Non-traditional auction suburbs could see the number of auctions and clearance rates drop as a result.
MELBOURNE’S AUCTION HOT SPOTS
Craigieburn — 99 auctions
Reservoir — 99 auctions
Brunswick — 92 auctions
Cheltenham — 88 auctions
Mt Waverley — 86 auctions
*Source: CoreLogic, March quarter
Reservoir and Craigieburn tied as the city’s busiest auction postcodes.
Love & Co’s Michael Love said Reservoir’s size, increasingly gentrified streets and comparative affordability for its distance from Melbourne’s CBD made for competitive sales.
“We probably haven’t seen the full effects of the market correction — we’re certainly still getting some good prices,” Mr Love said.
After five years in their two-bedroom Reservoir unit, Matthew and Rachel Allan are now selling their first home at 1/23 Compton St to fund an upsize.
MORE: Bizarre fringe dwelling of jailed recluse linked to toxic dumps sold
Why the time is now to upgrade in Melbourne
Dingley Village compulsory acquisition stuns buyers
“We were looking around and seeing what houses are going for and seeing the value,” Mr Allan said.
“We have loved the area, it’s getting new cafes and has developed. From when we first moved in to now, it’s a different suburb.”