by Antony Bucello & Catherine Cashmore

If you’ve been following the budget and numerous political highlights over the past few weeks and find yourself growing tired of fluctuating insecurity over interest rate movements and unemployment figures, then take a break and look towards the property market because it’s currently in a phase of un-changeable stability.

The clearance rate is now trending above that of last year, but the movements from one week to the next are marginal at best. Last weeks clearance rate of 62 per cent was revised to 61 per cent. This week’s clearance rate of 63 per cent is a strong result however; with 63 results yet to be reported, it may also drop mid-week.

The number of unreported results rises during a flat climate because more properties sell via negotiation than ‘under the hammer.’ Once un-reported results are collected, they go into making up the midweek revised figure. Although it’s frustrating to have a high number of un-reported results pending, agents are allowed to report properties as ‘sold at auction’ as long as auction conditions (no 3 day cooling) are applicable to the sale. Therefore late results coming in indicate the level of ‘behind closed doors’ activity occurring.

Such a climate is ideal from a buyer perspective. Under a heated auction atmosphere there is rarely a chance to take a step back and discuss budget decisions with a partner or take time out to ‘think’. A sale by negotiation allows this to happen.

The lowering un-employment rate in Victoria from 5.8 to 5.3 should be welcomed. However it should also be noted that the number has been patched up with an increase in part time work and fall in full employment. Therefore, it’s unlikely to play a part in the property market other than perhaps increase overall confidence in the economy.

The interest rate drop partially passed on from all four major banks, has helped free up disposable income and allows greater borrowing power from buyers wanting to take this option. However rates that go down below the long-term average also go up therefore it’s expected that buyers will remain cautious.

Perhaps the one dynamic factor that may bear effect on forthcoming results is the gradual drop in stock levels in the more popular suburban locations. It’s seasonal in winter to see lower stock levels, however considering there was record high stock last winter hampering the market for vendors, to see a reduction may entice competition at auctions resulting in greater numbers selling under the hammer and a possible rise in the metro median.

For the time being, power is still largely in buyer’s hands and the market broadly represents a level playing field.

The NPB clearance rate falls broadly in line with the REIV figures this week showing a rise in last week’s numbers. There is a growing shortage of quality stock with strong results evidencing themselves particularly in the inner northern suburbs. Those wanting to purchase this year would be wise to step in before prices start reflecting this trend. This is particularly applicable if your budget falls between $400,000 – $800,000. This is where the bulk of buyer demand remains.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 40 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

If the interest rates had inspired prospective buyers to head out shopping this weekend, the rain put a dampener on any marked enthusiasm. Albeit, there were a few stand out results that raised eyebrows – one auction we attended attracted 6 bidders and sold $175,000 above reserve. Situated in a coveted pocket of Ivanhoe with plenty of period appeal, it was no surprise to see emotional bidding which pushed the result into a ‘boom market’ price range (see ‘Auctions in the Spotlight’ for further details.)

This was the trend across all inner city suburbs. Properties with ‘standout’ attributes, which appeal to the major buyer demographic in the area, are performing consistently and not representing the general malaise lingering over the rest of the metro market. For example, 7/29B Hampden Road, Armadale, – a 2 bedroom apartment abundant with period detail with a quote of $590,000-$640,000 managed to attract strong bidding and sell for $737,000. It was another stand out result defying the overall trend represented in a 61 per cent year to date clearance rate.

However in view of the reality that only marginal rate drops are being passed on from our major four institutions (with a few still delaying announcement), the savings to the average mortgage holder ($600,000 and below) may provide a few dollars additional disposable income, but it’s unlikely to influence in the market in the short term. It historically takes weeks not days for rate drops to show themselves in median data.

Greater influences are issues of job security and the recent announcement by the RBA indicating the economy is weaker than initially predicted. Confidence is the biggest influence of growth in any market based on the fundamentals of tight supply and consistent demand. Therefore, if you’re looking towards a change in sentiment, it would perhaps be more apt to look at the polls rather than the cash rate.

Results so far this year are remarkably consistent as the 62 per cent clearance rate proves. It further emphasises that we’ve reached the bottom of the property cycle and in some suburbs, prices are starting to show hints of growth. However even though I don’t expect any great movement in the short-term, there’s a feeling of optimism across the industry that the news of more prospected interest rate drops may inspire those who have been sitting on the sidelines, to make a decisive move.

The NPB clearance rate is representative of the results evidenced in the ‘quality’ end of the marketplace. The increasing shortage of listings falling under this category, along with the rate drop, which will provide a benefit to most mortgage holders in the upper percentile of sales, is keeping the clearance rate consistently steady. As we mentioned a couple of weeks ago – we expect this trend to continue as we move into the winter months, during which stock levels seasonally drop to their lowest levels.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 39 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

Gap between lending rate and cash rate continues to grow…

Although overall turnover has been lower this quarter than the previous three-year first quarterly results, with an overall clearance rate of 61% compared to 65% this time last year.

The median house price has stabilized and even shown a marginal increase of 0.9% This moves us from a revised December quarter median of $530,000 to a March quarter median of $535,000.

Due to Christmas and Easter both affecting turnover in the first quarter of any year, a drop in the median house price is usually expected. Therefore, prices’ remaining stable keeps us on a level playing field signifying it’s still a ‘buyer’s market’ – although for how long, is debatable.

Depending on various economic factors, which are hard to predict considering interest rate movements are subject – as never before – to the international arena and taking into account banks are now moving rates independent of the RBA, the next move in our property cycle is full of ‘unknowns’.

Albeit, reports from numerous selling agents indicate that stock is significantly lower than this time last year and this is likely to have an inflationary effect on the few quality listings available.

However, prices are not dropping – therefore it’s clear we’ve reached the bottom of the property cycle and taking advantage of current conditions is important if you want to get ahead before prices start to rise.

There’s still a lot of uncertainty in the market which has the ability to stagnate both buyers and sellers as they decide to ‘wait it out’ rather than take advantage of what is currently a ‘predictable’ terrain.

Prices are showing little movement, therefore for buyers ‘stepping in’ there is ample opportunity to employ strong negotiation strategies which are advantageous in securing good property at a good price.

Catherine Cashmore

Suburb by Suburb update

From the suburbs that have recorded more than 30 sales to date, a few are bucking the overall trend in their clearance rates to date.

In alphabetical order:

Catherine Cashmore

NPB 1st Quarter Clearance Figures

72 per cent of auctions reviewed by National Property Buyers over the first quarter of 2012 sold under auction conditions. Each week we pick out a number of quality auctions to review and for some of these properties, competition has been strong enough to attract 6 or more bidders. However, Melbourne’s market place is fragmented and it’s important to understand the dynamics driving each area in order to take advantage of ‘good’ opportunities available.

We’ve noticed stock levels tightening in the inner south eastern and inner northern suburbs. Consequently, this is where we’ve come up against the greatest competition at auction. However, there are plenty of good opportunities in areas where stock levels are still exceeding current buyer demand. As such, we’ve been able to secure a number of homes under – what we would estimate to be current market value.

Looking ahead, I expect the clearance rate to remain steady for the foreseeable future. However, should stock levels tighten, it may move higher as we approach the end of the year.

Catherine Cashmore

NPB Staff News

National Property Buyers are pleased to announce the appointment of Catherine Cashmore to our team of property experts.

Catherine holds the position of Senior Property Consultant.

You’d be hard pressed to find an area of real estate that Catherine hasn’t been involved in.

Originally from the UK, she has resided in Australia for many years working in all areas of real estate industry – selling, managing and purchasing property.

Catherine is a a regular commentator in the media and regular contributor to many property publications including ‘Property Observer’ and ‘Australian Property Investment’ magazine.

She also appears as weekly ‘property expert’ on Channel 10′s ‘The Circle.’

Catherine’s expert knowledge and exhaustive research, ensures she is well adverse to ‘national’ market movements in the residential property sector.

Her appointment further strengthens NPB’s credentials as we expand our office network throughout Australia.

Antony Bucello

2012 – And beyond. Where is the Market Heading?

There is an incredible amount of concentration on the state of the world’s economic situation and what it bodes for the average mum and dad investor in our regional location.

However does anyone really understand all the implications of the data being both reported – and interpreted – by various journalists and economic commentators with pre-conceived ideas of their own?

Let me give you some idea of the range of opinions hitting the papers each week. A recent article in the UK Telegraph by Ambrose Evans-Pritchard – which circulated through ‘twitter’ at a rate on knots – suggested the US economy is not only rising, but “Within five years or so” America will be well on her way to “self-sufficiency in fuel and energy” The report makes plenty of other bullish assertions under the premise that the “American phoenix” is on the rise once again. “World power swings back to America” reads the title and indicates a return to prosperity which would no doubt hit the real estate sector (making purchasing US property now, a very appealing prospect).

However if you care to investigate a little deeper and read the EIA’s Annual Energy Outlook 2011, you’ll see anything but a bullish review of America’s journey to ‘self-sufficiency’ with the disclaimer American “estimates of technically recoverable resources and well productivity remain highly uncertain” The report is long, however in short, the ‘predictions’ outlined in Pritchard’s article are a long way from being set in stone and a close read of the ‘real’ statistics in the report makes this woefully clear. Hopefully no one acted too fast on the ‘mis–information’ it contained.

Closer to home we can also read two sides of the coin on the property market. Chief economist at Commsec Craig James came to the fore recently making the call that 2012 ‘should’ be a year for housing market recovery – the view is widely held by others such as ANZ senior economist Ange Montalti who claims economic growth will lift prices during the course of 2012. Figures have also been released from RP Data which show we’ve started ‘to turn the corner’. However less bullish ‘predictions’ come from Harry Dent and Steven Keen who have both warned we’re at the start of an impending crash – not to mention Prosper Australia’s continuous doom and gloom assertions which were part of a mooted ‘buyer strike’ early in 2011.

So whom do you want to believe? Well if you have pre-conceived ideas of your own, you’ll take the side that backs your personal perspective. It’s natural to do so – it’s incredibly hard to be completely subjective about anything. As the saying goes ‘we see and understand things not as they are but as we are’. It’s very difficult to lump a one-world outlook on any market and expect to hit the nail on the head like some modern day Nostradamus.

Take China for example, where stringent Government regulations have forced a fall in housing demand and subsequently prices. The issue split Chinese society in two. On the one side are the homeowners who want to see prices continue to rise. On the other are the renters, who not only want house prices to drop – they want them to drop some 50%! Sounds like Australia.

No-one’s been immune from the market malaise throughout 2011 – in fact on a par with other years, it was a very difficult atmosphere for industry professionals to ‘muddle’ through. Turnover was down over 20% for the year.

Buyers have sat on the sidelines perceiving prices may drop further and sellers have needed to ‘meet the market’ and make some hard decisions. However, assuming the Government doesn’t follow China’s example, I have only one outlook for the next year – and the subsequent 10 years following – and no doubt it will be brushed under the carpet by those who think we’re merely ‘spruiking’ the party line.

Providing we don’t have a catastrophe on monumental proportions (I’m talking earthquakes and tsunamis) – the only way for property to go in 2012 and beyond is up.

Our property market is based on a simple formula – supply vs demand. Australia is a mere teenager compared to Europe and we’re growing at a dramatic, unstoppable pace. Our population growth is higher than that even of India. In fact the only country set to outgrow Australia by 2050 is Saudi Arabia!

Much of this growth comes from Australia’s immigration program aimed at attracting people of working age with the needed skills to benefit our economy. The simple equation is the bigger the population, the bigger the economy. Whether this has a major effect on our wealth as individuals is arguable and indeed doubtful, but what cannot be argued is the overall effect the population boom will have on the housing industry.

Most are trying to squash into areas that are already straining at the seams (our capital metropolitan regions) and the best seats are taken. No wonder the property market in Australia swings between un-sustainable booms followed by periods of negative growth and sharp market corrections – for decades no one has planned effectively for the growth and we’re some 20 years behind the eight ball.

Unlike areas in Europe and the USA where first home buyers are able to move out of the capital cities and feasibly live in locations with a lower median whilst taking advantage of reliable public transport systems and the decentralisation of jobs, Australia has ensured the bulk of her population and jobs remain confined to inner urban regions. Therefore, when the market’s not growing, rents are rising and an increasing number of first homebuyers find they’re unable to build up a sufficient deposit to get a foothold into real estate.

Since last year, rents have increased up to (and in some cases beyond) 10.1% in Perth and a more modest 5.9% in Sydney (R P Data). Affordability is constrained and the market may well see only marginal growth throughout the course of 2012 – especially if confidence remains on a knife-edge due to factors largely out of our control (both at home and abroad). However if interest rates drop further (and the banks pass them on) – logic alone assumes we’ll see a revival of those desiring to pay their own mortgage and not someone else’s!

We’re already hearing from various mortgage brokers that pre-approvals have increased dramatically. It’s hard to assess at this point how many of those pre-approvals will turn into transactions – and we’re not out the doldrums yet. However it’s reasonable to assume once the starting gun fires an air of confidence and certainty into the atmosphere, we’ll see upward pressure on house prices across the board. The only question is how fast those rises will be and when they will occur.

There may be a good proportion of our population who are suffering, but equally so are a large proportion of our population reaping the rewards of a booming economy. This doesn’t mean by any stretch that you can’t lose money through property investment, it simply means that the right property, in the right location, for the right price, will continue to grow as demand grows – if you don’t believe me get a newspaper from 10/20/30 years ago and look at the prices.

It’s true growth in Australian property has to some extent been fuelled by investor speculation along with easier lending conditions; however that speculation is backed by pretty sound fundamentals. Take away the ‘speculators’ and long term you’d still be looking at ‘home’ buyer demand outpacing supply in the metro regions. This is why property is such a widely accepted model for long term investment.

As time progresses – like Europe – we’ll see a greater split between those who can afford to purchase and those who can’t. We’ll see a growing number of young adults move into the rental market, or wait until their late 30′s and 40′s before they purchase. I also suspect we’ll see a change in demographics, with more joint purchases and a greater number of people sharing property as family’s pool funds to ‘afford the dream’. Less will own their home outright and more will hold the burden of a mortgage. It’s already started to happen.

As for 2012 – if you’ve been thinking of taking the plunge don’t expect the market to stay on a level foothold perpetually. Pondering whether our housing market will crash is an on-going debate that will do the rounds for years to come. The only way to reduce risk when investing in property is to invest in those areas which have the best potential to maintain consistent solid demand. At the moment there is little to suggest that our population will diminish or demand for property decrease so the more time you spend worrying about tomorrow, is time away taking advantage of today.

Catherine Cashmore

The Three Types of Investor

Establishing your needs – what to buy

Buyers often want a solitary answer to the ‘golden egg’ of investment. Some ‘experts’ recommend apartments, whilst others swear by land. However there is no ‘one size fits all’ scenario in the world of real estate. Plans must be formulated for each individual based on long term objectives. If you’re thinking of investment you probably fit into one of the three following camps.

Set and forget - You want something that appreciates in value with little or no maintenance.

• Look for large one bedroom, or two bedroom apartments close to the city located away from main roads in boutique blocks of 8-12 with off street parking and an outdoor area.

  Pros; Units tend to attract a higher yield than houses and maintenance issues are generally taken care of by the property manager and owners corporation.

  Cons; There is little potential to value add to a unit hence the term ‘set and forget’. Options are limited to renovating or updating the interior.

Value add - You like the idea of purchasing to renovate, extend or ‘make over’ a home.

• Look for opportunities in middle-ring established suburbs with good facilities located on tree lined streets. A good example would be an older style villa unit or small house.

  Pros; Renovating a property can add significant value to your investment increasing the on-sale price and improving rental yield.

  Cons; The property is usually vacant whilst renovations take place and if not careful, costs can blow over budget. Take care not to over capitalise.

Developers - Would be developers want subdividable blocks with the potential of ’2 for the price of 1′. Sometimes the aim is immediate subdivision however an increasing number let the land appreciate in value for a few years and rent the existing dwelling in the meantime.

• Search a little further from the city in suburbs that appeal to families with larger blocks of land close to schools and transport. Stick to established suburbs where land has already been built out and subdivision has started to occur.

  Pros; Development creates significant equity giving numerous options – sell for profit or refinance to increase your property portfolio & start on the next project.

  Cons; Development is not for the feint hearted or inexperienced. The road is full of potential pit falls so it’s vital to establish a good team of professionals before you start. Houses generally attract a lower yield than units because your initial outlay is higher due to the land size, however rent is only calculated on the accommodation offered.

Property investment can be extremely rewarding, however there are many shades of gray in-between the above examples, so research is essential. If you’re not sure where you fit in, reduce the risk of making mistakes and seek expert advice.

Catherine Cashmore

PROPERTY HUB – for Property Owners

Following on from our exclusive launch of Property Hub for Property Buyers, we’re pleased to announce the launch of Property Hub for Property Owners, enabling them to keep track of their investment portfolio.

Clients of our Property Management service enjoy their own personal online investment property database which is accessed with their own username and password via our website.

Repository of Information & Tracking System

PropertyHUB acts as a central online repository of information and is where clients access information and are kept completely up-to-date about the status of their investment properties.

Information our Property Managers are able to keep their clients informed about include:

• When a Property is Vacant.
• Open for inspection times.
• Number of parties who inspected the property.
• Number of applications taken/received.
• Applicants status.
• When a Property is Leased.
• Lease status and/or Lease expiry date.
• Maintenance items requiring attention.
• Schedule of Routine inspections.

Clients are able to insert and record comments about properties after viewing detailed photos and comments about them. propertyHUB is available to clients at anytime from anywhere you have internet access. Whether you are the owner of one investment property or you own multiple, propertyHUB keeps track of all properties in a simple and very efficient manner.

Client/Advocate Automatic Alert

Advocates are able to alert clients by email of new information relating to their properties on their database with an inbuilt automatic alert system. Similarly, clients are able to alert their property managers in the same manner.

Document Library

PropertyHUB features an easy to use document library. Every property that appears on a client’s database has a document area and this is where all documents relating to specific property are uploaded for clients to access. Documents typically include monthly and year end statements, photos and images, lease agreements, condition reports, routine inspection reports and comparable rentals.

For a full demonstration of the capabilities and benefits of propertyHUB, please contact us directly.

Antony Bucello

Subscribe to NPB’s Melbourne Property Market Weekly Update

EVERY week Antony Bucello, State Manager of NPB and Catherine Cashmore Senior Property Consultant provide expert commentary on what has happened over the weekend including facts and figures from the REIV and from NPB’s exclusive clearance rate snapshot of premium investment grade listings.

If you are not already receiving his weekly updates and would like to subscribe, click here.

Contact Us

If you need any help with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us.

Alternatively, you may prefer to complete our Help Us Help You online form and we will contact you.

by Antony Bucello & Catherine Cashmore

Melbourne’s market place is growing increasingly fragmented. In an era where low interest rates are promoted by most sales agents as an indication of an imminent market uplift, it’s not proving to be the motivator for a large number of buyers who are more concentrated on their budget and own intrinsic buying requirements than speculating on a market that seems perpetually stuck on level ground. As such, it’s rare to see a buyer get carried away on emotion in this climate and as such the clearance rate remained on current trend at 60 per cent.

You can travel from one suburb where there is a clearance rate of 80 per cent and see heated bidding, to the neighbouring suburb with a clearance rate closer to 60 per cent and houses struggling to exceed the reserve.

Take Bentleigh/Bentleigh East for example where sales figures are strong and clearance figures have been beating the norm by a fair margin. (Bentleigh East’s year to date clearance rate is around 75%.) Every auction I’ve attended in the suburb this year has attracted more than one bidder and if not sold under the hammer, has managed to sell via negotiation on the day. Demand always seems to outstrip supply which is interesting because the Bentleigh and Bentleigh East market has a buyer demographic of principally ‘home buyers’ rather than investors, and more houses than apartments.

This falls in line with data from the ABS which shows loans approved for investors has fallen for the second month in a row whereas owner occupier loans have remained fairly stable.

Bentleigh and Bentleigh East tend to ripple from the more expensive suburbs surrounding them such as Caulfield and Brighton which have a higher median house prices. Both were suffering somewhat last year from low demand and significant drops in their median which was estimated by some to be close to 20 per cent as fewer top end ‘Million dollar plus’ homes sold. This year there’s been a marginal improvement but not enough to compare to the level of demand seen in other inner city suburbs and their clearance rates are below the average coming in at around 55 per cent.

Elsternwick is currently achieving the highest clearance rate of all areas that had more than 40 auctions. According to REIV its clearance rate is currently 83 per cent – consequently you won’t find any shyness from the buying market in this locality. However, the results are emphasized because Elwood is a comparatively small suburb and stock levels are tight. It’s therefore important for purchasers to understand and closely monitor the dynamics of each area before preparing a buying strategy.

The fragmentation in the market is not limited to neighbouring suburbs in the inner southeast. North of the city and in the western suburbs, the same differentiation between localities is evident. As always the good homes – quality listings – well suited to the average second home buyer demographic or young couple able to service a mortgage, are selling consistently. However, it’s hard to draw a line across the whole market and make sweeping statements of either a rise or fall in market sentiment.

The clearance rate in each suburb is an excellent barometer to gain good market knowledge of the heated interest by purchasers within a small suburban locality. It’s also important to get a feel of the percentage that has sold ‘under the hammer’ compared to those negotiated as a post auction sale. In an area like Bentleigh, most ‘appear’ to be selling under the hammer. In Elwood, properties are selling, but there’s evidence many are doing so behind closed doors (Elwood’s clearance rate is 61 per cent). The knowledge is essential from a negotiation perspective and should not be dismissed lightly.

In this week’s breakdown, results are as follows – inner city houses had a clearance figure of 68%, inner east houses 76% and inner south houses 67%. Residex released their March quarter data last week showing Melbourne’s house price had dropped 1.89% and units down 0.52%. This is in contrast to REIV figures which showed a marginal increase in the metro house price of 0.9%. Differences are down to variation in how the figures are collected and collated. However they show we have a way to go until the market – as a whole – shows overall evidence it’s transitioned from its flat platform.

Having said this, there is definite feeling of increased motivation in some areas coupled with a reduction of ‘quality listings’ in most suburbs. Aussie CEO John Symonds spoke on ‘Sunrise’ today indicating that the RBA would need to drop rates more than 25 basis points if they want the banks to pass on a proportion to mortgage holders. It further emphasizes how banks now control RBA movements rather than the reverse. As a buyer, it’s therefore essential that you employ a good broker to source the best deal available if you want to avoid the sleepless nights some are experiencing as a result of increased rate movements from the ‘big four.’

The NPB clearance rate has stayed fairly stable this week. Most properties are selling via negotiation and we have only seen a few auctions where results have pushed over our estimated opinion of value. Should the banks pass on an ‘expected’ interest rate cut by the RBA we may see a change in the prospective landscape and buyers pushing budget limits for the marginal quality stock available. This being the case, the NPB clearance rate would be expected to rise over coming weeks.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 41 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

Another weekend passes and although there was a lift in the clearance rate, which came in at 61 per cent on a reported 532 auctions, there’s little perceptible difference in the market place from the previous few weeks. An overall figure of 921 properties sold during the week and that indicates that the market is holding up well despite economic data signifying Victoria’s economy is strained.

The large number of unreported results at close of business Saturday (17%) makes it clear plenty of deals are still being sealed behind closed doors. This outlines numbers sold ‘under the hammer’ are marginal compared to other methods of sale, keeping our market firmly a ‘negotiators’ domain.

It’s clear from the numbers attending the auctions and opens that people have an appetite to buy, however what is also abundantly clear is the market is stagnated with a gap between what the majority of buyers are willing – or able – to pay and what vendors are willing to accept. However, this is nothing new in the Victorian residential market place, a vendor not needing to ‘meet the market’ is one of the primary reasons we have a platform under how far prices will drop. Consequently; in some areas, there has been a proportion of listings withdrawn from sale leaving poor quality stock lingering and ‘days on market’ extended.

You’ll often hear that our market is ‘fragmented’ and when looking at the suburb by suburb clearance rates this is indeed evident, with some locations with minimal stock outperforming others where supply is in abundance. Of those where more than 30 sales have been recorded, Elsternwick currently leads the pack with an 83.7% clearance rate on a reported 43 auctions.

Markets run on confidence as well as economic fundamentals, and with little confidence to promote more sales under the hammer and lift the mood, the market remains a negotiators paradise. Having said this, there is always the odd one that stands out from the crowd as you’ll see in our ‘auctions in the spotlight’ section below. In the inner northern suburbs, where stock is extremely tight, we’ve witnessed some strong results. I’d even go so far as to say, in some areas the market has tipped into a ‘sellers domain’. However, for most other areas there’s a longer flatter path ahead.

The REIV amongst others have suggested the only way for the market to pick up would be in the form of a ‘stimulus’ such as a drop in rates. However whilst the cost of long-term wholesale debt continues to challenge bank’s profit margins, we need to face the reality that this is unlikely to happen. It’s therefore interesting that two weekends in a row I’ve heard auctioneers announce that rates are low and likely to drop further. Maybe they have inside information the rest of us are not party to, or simply think their buyers are living in a box!?

Regardless, as we move into the cooler months, stock typically drops and this could well translate into higher competition around the few good listings available. For buyers; it’s better to act on those opportunities available than try and ‘time the market’ thereby risking getting caught on the wrong side of the property clock.

The NPB clearance rate has lifted from last week, which is largely in line with results published by the REIV. Mostly made up from those negotiated post auction, it was still surprising to see such a significant jump. With fewer quality listings coming onto the market, we expect the clearance rate to remain stable over the coming weeks and perhaps rise as competition around existing ‘good’ property increases. However whether this will result in price rises is debatable.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 35 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

Suggesting we need more investors in the property market is bound to evoke strong emotions from the first-home buyer demographic. Many blame Australia’s “generous” tax incentives offered to property investors as the prime instigator for what’s considered (by some) to be an “overvalued” market. The argument follows that if fewer investors purchased property, prices would fall and more young people would aspire to the dream of owning their own homes.

The basic premise is correct. Take investors out of the marketplace and there’s no doubt demand would ease substantially with prices experiencing an immediate drop. Investors currently make up about 30% of our market; therefore it’s a significant percentage to bear influence on capital movements. However, if Australia’s real estate prices did drop and experience falls on a par with various states in the US (say some 40% to 50%) would there be a sudden rush of happy first-home buyers eager to snap up the “bargains”? I doubt it.

Due to increasing concern over the global economic outlook and general market uncertainty keeping a tight cap on real estate price growth throughout the past couple of years, along with low interest rates easing the pressure for borrowers, housing in some states is more affordable now than it’s been for years. Some areas have corrected by more than 20% – and although it should be noted this has not happened nationwide, neither has it been restricted to the outer-suburban “nether-regions” where demand rarely stays consistent – inner-urban areas have also suffered from the current malaise.

Furthermore, despite the challenges of our “two-speed economy” and increased financial pressure on small businesses, the overall outlook for Australia paints a comparatively pretty picture, so expecting the slump to continue perpetually is unlikely. As the deputy governor of the RBA Philip Lowe recently pointed out, it is not an exaggeration to say Australia is facing “a once-in-a-century investment boom”.

Aside from this, it seems our prospects over the next couple of years are also sunny. Forecast growth in the economy is expected to remain on trend, unemployment rates low, and underlying inflation is bang on track to fall within 2 % to 3%. Just in case this isn’t enough to inspire at least a smidgin of confidence from the initial home-buyer demographic, should there be any financial upsets resulting from a European disaster, we at least have the flexibility to somewhat buffer the resulting fall-out – so the picture’s looking rather rosy.

Yet despite all the above calling out to first-home buyers to enter now and realise their “Aussie dream”, purchasers love a bargain, but when it comes to property let’s face it, no one wants to take on the expense of a 30-year debt if there’s any hint it won’t provide healthy capital returns for the retirement fund.

Considering what’s happened to the property market in Europe and the US, many purchasers worry it could happen this side of the Pacific. In addition, due to our modern transitional lifestyles, it’s become increasingly important that the first purchase has a large investment component in order to leverage up to the second. You see, unlike during the 1950s, rarely is the first property a place to call home for the next 20 years or so. We leave it longer to get married, have children later in life, and change jobs often.

All in all, first-home buyers prefer the amenity of more expensive inner urban locations than the relaxed atmosphere offered in the middle-suburban city ring “family-friendly” suburbs. Therefore, single first-home buyers struggle to afford their version of the dream and property purchases are often postponed for a later more settled period – during which couples can employ joint purchasing power. However while a combined wage certainly helps, without that initial purchase to tap into, it’s hard to envisage even the family home will be achievable for a growing number caught in the long-term rental trap.  Therefore, with this front of mind, it’s clear where our future model of home ownership is heading – more renters and fewer owner-occupiers.

I’m not here to argue with anyone’s personal financial choices in life, but it stands to reason, if fewer people take the opportunity to buy, more will rent, and therefore as we transition into Australia 2030 with plans to increase housing supply substantially, we better hope there’s a growing crop of investors ready to pool their funds into property to meet this growing rental demand.

There’s one outstanding problem – the type of accommodation largely being built to absorb the need is unlikely to hold the future capital growth investors have been used to experiencing previously. At the moment Australia’s level of home ownership is high, at roughly 70%. It’s been the desire to own a property along with our robust growing economy and population growth, which has underpinned house prices throughout the decades producing (even in the worst of times) healthy capital returns over a complete 10-year property cycle.

Considering our lucky economic stance in comparison to the rest of the world’s developed counties, along with a smaller pool of competitive buyers in the marketplace, generous tax deductions and the ease of restrictions enabling investors to tap into their self-managed super to purchase residential real estate, there’s more to encourage this demographic than ever before. However while some property prices will continue to attract genuine owner-occupier demand and therefore maintain the long-term upward curve on capital appreciation, it’s important all property buyers understand the changes our town planners envisage if they’re going to avoid what could be a dangerous and speculative bubble.

Most renters are singles or young professional couples. As has been demonstrated on numerous occasions by the ABS, the fastest-growing household statistic is the single person model. The challenge of housing this demographic is providing our state governments with the perfect excuse to begin redesigning our capital cities into a potential (at least in the short term) graveyard of residential real estate.  What’s missed by the data is the type of property single home buyers really desire to own – and in many respects, long-term tenants want to rent – and I can assure you it’s not the accommodation currently undergoing mass construction.

If you take a look at an aerial shot of Australia’s “most liveable” city, Melbourne, it’s easy to see why it stays at the top of the yearly survey. It’s largely a low-rise city that contains a wonderful feeling of human scale. Streets surrounding the border of the CBD and running directly across it are lined with buildings of character and charm representing different eras and styles thereby giving the sense, not of urban sprawl, but of a wonderful liveable and personable nature.

Australia's New "Mega City"?

However, instead of embracing this low-rise advantage and expanding the transport systems to enable the growing populous to move outward’s and commute, the local government is set to embark on an ambitious “mega city” of skyscrapers “stretching from the MCG to the West Gate Bridge and north to the University of Melbourne”. One in which the Eureka tower (the second tallest residential building in the world) could be dwarfed. As I’ve pointed out numerous times before, this style of accommodation is designed, marketed and limited (due to lending restrictions) to a predominantly investor-based market – a market that attracts a large demographic of foreign investment from those buoyed up on Australia’s speculative growth.

As any astute property professional understands, these buildings can be poorly designed, have a tremendously high turnover of sales (and tenants), extortionate owner corporation fees and a lifestyle that often feels akin to living in holiday accommodation. Furthermore, when you have a market dominated by investors, should there ever be an unforseen event to tip us over the brink, (something has simple as a sudden decline in demand for our underground resources, for example) we could be looking at a mass of sales, and a situation in our high-rise market, akin to the worst-affected countries in Europe (for a good example, look towards Sesena in Spain).

When times are tough, owner-occupiers will hold whereas investors will bail in an attempt to liquidise their assets – and considering such large numbers of apartment sales are focused on the foreign market, there’s no telling what other international influences may affect future growth.

Plans like this aren’t limited to Melbourne; inner-city rezoning allowing for a greater density of stock is happening country-wide – for example, Brisbane, the Gold Coast and Perth. In all the high-rise markets over the course of the last 10 or so years, we’ve seen poor growth (from oversupply and low demand) and in some cases very poor rental take-up (a good example would be Melbourne’s Docklands, which currently has a vacancy of 7.9% (SQM) and has seen less than 5% capital growth over the past five years (RP Data). Considering the abundance of planned construction, investors purchasing into this market can no doubt expect more of the same. Furthermore, many of these apartments are sold based on their spectacular views of the city surrounds. This is an attractive aspect, however don’t be fooled! There’s no condition in the contract that states the view can’t be built out. The better the view, the higher the price – often by hundreds of thousands – therefore, the consequent price drop is not marginal by any means.

All in all you have to fear the future potential of this market and the consequence any drops would have on the economy as a whole. Make your own conclusions and assumptions, but I for one will not be placing my hard-earned dollars in this direction. I maintain that good property that falls under consistent solid owner-occupier demand will continue to outperform throughout the foreseeable future. Just be warned however, that without plenty of due diligence, the risks of making expensive errors are more prevalent than ever.

A 55% clearance rate is the lowest we’ve had so far this year. However, in a weekend where only 369 auctions were scheduled, an overall sales figure combining both private sales and those sold at (or before) auction of 686, is in line with expectation. This week also saw the REIV announce Victoria’s median house price has stabilized with only a marginal increase of 0.9 per cent over the first quarter. This moves us from a revised December quarter median of $530,000 to a March quarter median of $535,000. Due to Christmas and Easter both affecting turnover in the first quarter of any year, a drop in the median house price is usually expected. Therefore, prices’ remaining stable keeps us on a level playing field signifying it’s still a ‘buyer’s market’.

The Terrain ahead may be full of unknowns as far as Victoria is concerned, with news this week that we’re facing a rise in unemployment state wide, as well as further worries concerning interest rate rises as the ANZ push up rates independent of the RBA – (we fully expect the others to follow suit.) However, for those looking to purchase property, a flattening in demand is an opportunity not to miss. Waiting for the market to turn towards an upward cycle of the property clock is not wise for those wanting to secure an ‘investment’ at the best possible price thereby making the most of any capital gains when they do eventuate.

It’s also important from a negotiation stand point to understand the dynamics of who sells in a terrain where there’s little growth occurring. At the moment we’re seeing a split between those who need to sell – either downsizing into more affordable accommodation or moving due to a change of job or financial situation – and those who are just ‘testing’ the market for some hapless home buyer to materialize prepared to pay the vendor’s ‘wish price’. Sourcing the ‘need to sell’ vendors is the key to securing a good price however, expect negotiations to take a longer period of time as both sides come to an ‘agreement’.

As is always the case in times of uncertainty buyers and sellers act with caution – and in many a case, vendors will delay a move until the waters have calmed. Every agent I’ve spoken to over the last few weeks has been reporting lower stock levels than this time last year. Certainly – if you do a search through just those listings advertised – there isn’t an abundance of choice available, at least not quality stock. If we see a substantial drop in listings, the continual rise in Melbourne’s population will dictate a movement into the next phase of the oft-quoted ‘property clock’ in the inner and middle ring suburbs where land is scarce. However, it would take a period of time before this is evidenced in the official statistics.

Overall, it’s a good time for buyers and judging from the numbers attending opens and auctions each weekend – prospective purchasers are not short on the ground. For the investors out there, yields have increased and in our property management department alone, we’ve fielded numerous offers for some listings far above the advertised weekly rental. Finding a tenant for good property isn’t a difficult task in the current climate. For the homebuyer, today’s market promises stability, little movement, and a chance to negotiate favourably.

There are approximately 610 auctions expected next weekend.

The NPB clearance rate has dropped from last week, which is largely in line with results published by the REIV. This is no surprise considering the low number of auctions scheduled over the weekend and Victoria’s economic prospectus as explained in our market wrap. With fewer quality listings coming onto the market, we expect the clearance rate to remain stable over the coming weeks and perhaps rise as competition around existing ‘good’ property increases.

The full list of the 38 properties reviewed by NPB this weekend:

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

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Email Catherine

by Antony Bucello & Catherine Cashmore

Selling Agents are buoyed up on the current uplift in buyer demand which has been palatable across the industry. It’s evident not only in buyer enquiry rates which have been seasonably strong, but also in the numbers attending open homes, numbers which have been substantially larger than previous months. For this reason, there’s been a few stand out results which will no doubt bear effect on median prices when published at the end of the first quarter.

Neither is this demand limited to the blue chip inner city suburbs, in many respects it’s been stronger in outer regional growth locations some 40km from the CBD. Recent releases from the ABS show during 2011, Victoria experienced the highest population growth country wide. Top of the list was Wyndham which increased by 12,200 people between 2010, and 2011. This signifies that overall, affordability is still a concern, however in this instance as an investor you don’t want to be ‘following the population’. With land releases still occurring, capital growth will be limited in comparison to middle and inner ring localities.

There was a record number of auctions this weekend, a total of 1006 of which 929 results were reported. Although this spreads out the number of interested and potential bidders around each listing – thereby reducing numbers and in some cases competition – most of the auctions we attended attracted enough interest to get the ball rolling and the 60% clearance rate is higher than expected. Having said this, the real key to upward movement in prices lies in those that sell under the hammer and at present, many are selling via negotiation. Therefore caution still prevails – we’re not seeing the same reckless degree of competition which can be witnessed in a boom market, however we are entering a new phase of the property cycle.

In a market like this, where negotiation is the key strategy, for the best results, it’s important to ascertain the property’s ‘real value’ as well as employing a skilled negotiator to act on your behalf.

Yesterday 1118 properties – both private and auction – were recorded as sold for the week 26th March to 1st April 2012. This is a healthy number and falls in line with expectation. But if you look at the year to date total turnover, we’re still treading water comparatively to the last three years. So far this year, there’s been a recorded 10,173 sales; however last year at this time, there were 13,210 recorded sales. Therefore it is not unexpected that at some point we will enter an upward cycle of the property clock and this is positive for buyers wanting to take advantage of current conditions.

Most areas where auction is the preferred method of sale and the number of auctions has exceeded 30, clearance rates are in the 50′s and 60 percentile. However there are a few stand-out locations ‘outperforming’. Elsternwick is one such example, from a recorded 38 sales, the clearance rate is currently 84%. It will be interesting to see if this is replicated across the market as the year progresses.

The NPB Clearance Rate for the week was 75% – which falling in line with the REIV results, is slightly higher than last week’s clearance rate. We reviewed a total of 40 properties of which 28 properties sold and 12 passed in.

Once again, the NPB clearance rate is reflective of the uplift in market sentiment. Whilst demand is still strong for quality listings, agents are still pushing for pre-auction offers in most localities which is understandable as many auctions are passing in for post auction negotiation, particularly when vendors have unrealistic expectations about the ‘real’ value of their property.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 40 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

Market activity lifts

We’ve been used to seeing weekly clearance rates languish in the 50 percentile throughout the latter half of 2011; therefore this weeks 61 per cent clearance rate is something to take note of.

According to NAB’s Quarterly Australian Residential Property Survey, market sentiment is improving. Consumer confidence was the primary reason for last year’s downturn; therefore an uplift in sentiment is a significant change. A full breakdown of their results can be found here.

There are a few interesting aspects to the current market. Whilst a higher clearance rate is a positive indication of increased market activity, there’s still a fair distance between the number of properties selling ‘under the hammer’ and those being negotiated after a pass in.

One of the bugbears of the industry resides around the lack of transparency that distinguishes the difference. Agents aren’t required to disclose which sell under the hammer and which are negotiated after passing in – all results are reported as ‘Sold at Auction’.

However, noting the distinction is an important piece of information we need to accurately ascertain market sentiment. If an increased number of properties are selling under the hammer, there’s every indication we’ve moved into an upward trajectory of the property cycle that will eventually translate into higher property prices.

However, if the numbers selling are generally ‘via negotiation’, it signifies there are still good options available for those ‘astute’ in price assessment and negotiation. It’s certainly advantageous for those using a ‘buyer advocate‘ to negotiate on their behalf.

The other important indicator that we’ve not entered an upward trajectory ‘just yet’, are the numbers selling prior to auction. Agents will generally only negotiate ‘prior’ to the date if they’re confident there’s not enough competition to achieve the sale price ‘desired’ by the vendor ‘under the hammer’. It’s also interesting to note that the number of properties sold prior has not diminished on the back of the changes to the ‘cooling off’ rules.

It’s now impossible to wave cooling off rights three business days out from an auction – (which has – until now – been a usual requirement by sales agents when negotiating pre auction sales). In other words, if an agent gets an offer prior to auction that’s accepted by the vendor, there’s a three business day wait before they can confidently announce the property as ‘SOLD’. It complicates the process for many reasons – however at this point in time, agents are keen to wrap up deals quickly.

Again, those experienced in the art of property negotiation will benefit in this market.

Finally, do a property search through the Internet and you’ll see a dearth of quality listings available on the ‘open’ market and an abundance of poorly located (or undesirable) properties ‘hanging around.’ We buy a large percentage of properties ‘off market’, however in a ‘boom’ market, all properties tend to sell and ‘time on the market’ is reduced. We haven’t reached this stage yet and only the quality listings are attracting this ‘increased’ activity represented in the 61 per cent clearance rate.

So the conclusion we can draw from the above is a higher degree of activity in the market place will eventually translate to a lift in the median house price along with reduced opportunity to negotiate. However for the time being, the market is still proving favourable for buyers.

The NPB Clearance Rate for the week was 74% – which falling in line with the REIV results, is slightly higher than last week’s clearance rate. We reviewed a total of 42 properties of which 31 properties sold and 11 passed in.

The NPB clearance rate is reflective of the uplift in sentiment mirrored in the REIV’s clearance results. Although it’s too early to draw too many conclusions, an indication of increased activity has been perceptible at all open for inspections and auctions we’ve attended.

Demand in the sub $1m price bracket is still stronger. However in comparison to late last year, the $1m plus market is also showing signs of a potential uplift.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 42 properties reviewed by NPB this weekend:

Auctions in the Spotlight

3/4 Marma Rd, Murrumbeena

Reported by: Antony Bucello
Agent: Thomson
Quote: $470 – $520K
Crowd: 25 people (approx.)
Bidders: 2
Result: SOLD UNDER THE HAMMER

Comment: The auction opened on a vendor bid of $470K. Two bidders competed and the price reached $502k fairly quickly. After a short discussion with the vendor, the auctioneer returned to announce the property ‘on the market’. The same two bidders continued to fight it out until the property sold under the hammer for $512k.

4/30 Edgar St, Kingsville

Reported by: Catherine Cashmore
Agent: Hocking Stuart
Quote: $470 – $510K
Crowd: 30 people (approx.)
Bidders: 2
Result: SOLD AFTER PASSING IN

Comment: A crowd of around 30 attended the auction. Opening on a genuine bid of $470K, 2 bidders competed and the action was strong. By 512K the bidding had broken down to 1K increments, however it failed to advance past this number and passed in. The home was successfully negotiated post auction for $515K.

30 Crofton Dr, Williamstown

Reported by: Catherine Cashmore
Agent: Compton Green
Quote: $1Mil – $1.1Mil
Crowd: 25 people (approx.)
Bidders: 5
Result: SOLD AFTER PASSING IN

Comment: The auction opened on a vendor bid of $1Mil. However following a genuine bid of $1.025Mil, no other interest was forthcoming. The home passed in and was later negotiated for an undisclosed price in excess of the quoted range.

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony

Email Catherine

The REIV clearance rate scraped in at 60% this weekend which is an improvement on last week’s rate of 58% and more in line with the two weekends prior to Labour Day.

As we’ve pointed out previously, the clearance rate is not the best overall indicator of market health – for this it’s more important to take note of the total number of reported sales – both private treaty and Auction. Thus far, turnover rates for 2012 have been good and going on from last year, better than expected.

Historically between 800 and 1200 properties sell each week in Melbourne (as reported by the REIV) and since the last weekend in February, activity has been ripe with sales figures averaging well in excess of 1000 each week. This weekend, even though there were only 645 scheduled auctions reported (REIV); total number of properties sold came in at 971.

Other results show slightly more deals than usual are being completed prior to auction with 54 scheduled auctions recorded as ‘before auction’ sales. This is important information to take into account from a negotiation perspective and indicates selling agents are still not overly confident they have the needed buyer activity to meet vendor expectation ‘under the hammer’. Therefore it’s still a negotiators market and for experienced property buyers, there are plenty of good deals available.

State wide, agents are reporting a drop in stock in comparison to last year. This will eventuate in upward pressure on prices as we progress throughout the year. Already there’s an increase in the number of bidders attending auctions of quality property. Out of the 4 Auctions National Property Buyers attended this weekend, three attracted 3 – 5 bidders which is a definite improvement on last year’s figures.

The following two weekends will give a good indication if the current trend will continue with 820 auctions scheduled next week, and 1,070 for the week following. As far as the economy is concerned, early indications are good.

The NPB Clearance Rate for the week was 73%. We reviewed a total of 48 properties and 35 properties sold and 13 passed in.

Considering the average home loan hovers between $290,000 and $327,000 depending on which state you purchase into, it’s no surprise to see strong demand in the lower sub $600,000 price bracket. This demand is strongly represented in the middle and outer city ring suburbs where median house prices are generally lower.

However there’s been a definite uplift in the $1m+ market which is predominantly populated with ‘upgraders’ and duel income professional city workers. As overall demand improves, the top end of the market – which is understandably more volatile – will action the strongest recovery rates – (having dropped some 10-20% in various localities). Therefore if you’re thinking of upgrading, the best deals can be secured now.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 48 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

7/102 Albert St East Melbourne

Reported by: Robert Di Vita
Agent: Caine Real Estate
Quote: $500-550k
Crowd: 40 people (approx.)
Bidders: 4
Result: SOLD UNDER THE HAMMER

Comment: This original 2 bedroom apartment opposite beautiful parkland attracted a crowd of around 40-45 people. The auction started with a real opening bid of $500k, with a further 2 parties getting involved. The property was announced on the market when it reached $520k, and sold under the hammer for $540k.

142 Brighton St, Richmond

Reported by: Catherine Cashmore
Agent: Bennison Mackinnon
Quote: $800-850k
Crowd: 60 people (approx.)
Bidders: 0
Result: SOLD AFTER PASSING IN

Comment: A well located period property in the heart of Richmond. The house is fully renovated with 2 good sized bedrooms and central bathroom – however with no off street parking on title, buyer demand wasn’t quite at the level needed to attract competitive bidding. The auction passed in on a vendor bid of $825,000 however subsequent interest followed and it was successfully negotiated post auction for $865,000.

33 Tucker St West Footscray

Reported by: Antony Bucello
Agent: Sweeney
Quote: $480-520k
Crowd: 50 people (approx.)
Bidders: 5
Result: SOLD UNDER THE HAMMER

Comment: On a beautiful autumn day, around 50 people gathered to watch this well positioned un-renovated 3 bedroom weatherboard home go under the hammer. It didn’t take long for the opening bid of $490k to eventuate and that was followed by bidding from a further 4 parties. The property was announced on the market at $520k and eventually sold under the hammer for $550k.

10 Separation St Northcote

Reported by: Antony Bucello
Agent: Nelson Alexander
Quote: $550-600k
Crowd: 30 people (approx.)
Bidders: 3
Result: SOLD UNDER THE HAMMER

Comment: The agent decided to auction this 2 bedroom cottage in the rear yard due to its busy road location, however that didn’t deter 3 parties from putting their hands up to try and claim a piece of this well presented and comfortable home. The auction started with a real bid of $550k, and that followed by quick bidding until the price reached $630k. The agent had no need to refer with the vendor and announced the property as being on the market. A third bidder entered the arena but was unable to shake the opening bidder, who eventually purchased the property for $645k.

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine