Melbourne’s real estate market turned in another positive performance on Saturday, but agents say many house hunters are missing out on good-value buying opportunities because they focus their attention on too few properties.
The Domain Group posted a clearance rate of 78 per cent from 501 reported auctions, marginally below last week’s 79.5 per cent on a smaller sample of auctions. The results of a further 145 scheduled auctions were unreported.
The higher clearance rates of the past four weekends indicate that this year’s two interest rate cuts and Victoria’s robust jobs market are giving added momentum to the market.
Sellers are also being assisted by constrained supply.
Domain Group chief economist Andrew Wilson believed auction listings would track about 10 per cent lower over spring compared with the 2015 market.
Buyers had to compromise because of the fewer offerings, he said. “It is a sellers market in terms of where the clearance rates are situated compared to the stock levels,” he said.
But it’s becoming clear that this year’s market, while strong, is not quite as turbo-charged as the 2015 market. Sentiment could be roundly tested once new listings pile on in September.
Nelson Alexander sales director Arch Staver said vendors were being helped by some inadequately researched buyers who targeted just one or two A-grade properties and ignored similar, but slightly inferior, properties.
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He said many buyers were focusing on the same houses. This meant some auctions achieved runaway results, while the auction of a comparable property held an hour earlier or later often attracted far fewer bidders and sold for its reserve or close to it.
“There is opportunity if you have the willingness to compromise on a couple of little things,” Mr Staver said.
“If you are going for a house that everybody wants, you have to compete with everybody. Buyers need to do their homework at the open for inspections. What are the numbers going through? Are there people coming back for repeat inspections?”
In spring, the scheduling clashes between auctions create opportunities for house hunters to buy below market simply by being in the right place at the right time.
Mr Staver said if clearance rates fell below 68 per cent in spring, it could lead to a change in sentiment.
“This market is not the strong market some people think it is … there isn’t the emphatic urgency that we have seen,” he said.
Jellis Craig’s Richard Earle said some of the heat had gone out of the market, but demand for the inner suburbs was strong.
He said vendor reserves on Saturday were generally exceeded by 2.5 to 5 per cent in “a more straightforward market” that was seeing an increased number of pass-in negotiated sales compared with last year.
Meanwhile, Hocking Stuart reported great crowds with many first-home buyers in the western suburbs. Bayside agents also said inspection numbers were strong.
“The shortage of stock is keeping the numbers up,” said Hodges Sandringham director Paul Bond. “Where buyers once had five to 10 properties to look at on a Saturday, they’ve now got three to five.”
Dr Wilson said Melbourne’s market was also being assisted by the “driving force” of stepped-up buying by investors.
“Last year, investors were vacating the market throughout spring; now they are back into the market and, of course, we could have an interest rate cut in November,” he said.
The market will be aggressively tested next weekend when 907 auctions are scheduled.