Growing buyer confidence and a shortage of homes on the market are producing some impressive results for sellers across Melbourne’s northwest this spring. Many auctions have turned into four or five way contests as clearance rates and property prices rebound.
Competition is stiffest at both the more affordable end and top end of the northwest market.
Brad Teal Head of Sales Bruce Warburton says it’s the perfect time for homeowners thinking of selling to take the plunge and list their property for sale.
“With properties for sale well down on last year, it definitely benefits the vendor because there are more buyers out there looking and they’ve got less choice,” Mr Warburton says.
“That definitely helps the vendor to achieve their reserve price or get a sale in a shorter period of time.”
Mr Warburton recently sold an unrenovated weatherboard at 25 Teague St, Niddrie, for $1.065 million, with four bidders pushing the price $85,000 above the reserve.
The property shortage has seen auction clearance rates rise across Melbourne. The market farewelled winter with clearance rates in the high 70 per cent range.
And they continued to hover in the 70 per cent range in the first six weeks of the peak spring selling season, averaging 74 per cent.
CoreLogic data also shows the northwest produced an average clearance rate of 70 per cent for the same period, with more than 400 auctions held across the region. [i]
While there are fewer homes to choose from, buyers have a bigger appetite to purchase, boosted by recent interest rate and tax cuts, the easing of lending restrictions by financial watchdog APRA and the federal election outcome.
Mr Warburton says that access to finance in the last 18 months has been a challenge for those looking to buy in the northwest market’s middle price bracket of $1.5-$2 million.
“People buying in that range may have higher living expenses, such as kids at school or they’re business owners and they’re the ones that have been hit hardest by lending restrictions,” he says.
However, with recent growth in loan approvals supported by a change to bank lending rules, Mr Warburton says this segment is now also expected to benefit from the supply and demand mismatch that has driven the rest of the market.
The Real Estate Insti e of Victoria expects just 7,000 homes to go under the hammer across Melbourne this spring, down on last spring’s 11,036 and half the 13,844 in the bumper 2017 season.
Overall, auction and private sale listings this year are about 30 per cent down on 2018.
CoreLogic’s Hedonic Home Value Index confirms the shortage is starting to push up prices, with the largest growth in Melbourne home values in two years recorded in September.
The index showed Melbourne’s median house value rose 1.9 per cent to $729,052 and units 1.4 per cent to $546,203, leading to overall dwelling growth of 1.7 per cent.
CoreLogic Head of Research Tim Lawless told the Herald Sun buyer activity has soared in Melbourne in recent months.
Mr Lawless says low mortgage rates, improved access to credit, and strong “economic and demographic conditions” including population and jobs growth were providing “a solid platform for housing demand”.
REA Chief Economist Nerida Conisbee believes sellers are taking longer to respond to the improving market. “There’s been a lot of stimulus put into the market and buyers are definitely back,” Ms Conisbee told Leader Community News.
“But it’s taking a while for sellers to get back into the market – that’s really the sticking point.”
Ms Conisbee says she expects to see more vendors list their properties on the back of strong results in early spring. “If you have a look at some of the auction results in the first couple of weeks (of spring), it’s showing some quite outstanding results,” she says. “Once sellers start to see price movement that will give them more confidence as well.”
[i] weeks ending Aug 24, Aug 31, Sep 7 and Sep 14.