One reason why Melbourne property is doing OK now

[Twitch]

This article from the Age this morning goes part of the way towards explaining why the market (particularly inner and middle) in Melbourne is healthy - strong population growth.

Auction clearance rates have been over 80% the past few weeks, and this on the back of good growth last year, particularly late last year.

 

[jazzlobber]

wow, i thought perth and brissy were still going gangbusters, well i never.

Nice image of Caroline Springs with the City in the background.

We are noticing very strong prices and sales in the inner west that's for sure.

If population continues like this we are very likely in the growth phase of the cycle for melly.

 

[Aimjoy]

I was just looking at Knoxville in Vic for a possible next IP purchase as I know the area reasonably.

On realestate.com.au I was surprised to see about 1/3 of all the listings are "under offer or contract"

Looks like its moving.

Cheers,

 

[gerd.]

Twitch

Auction clearance rates have been over 80% the past few weeks, and this on the back of good growth last year, particularly late last year.

Are these auction results based on total turnover of property's auctioned, or based on auction results reported by Real estate Agents only?

Gerd

 

[ozi]

I've been actively looking in Melbourne's inner-west for some time now. The market has been really strong since about October-November last year and the past few weeks alone have been crazy. Most properties are either selling before auction or end up going to auction and selling for ridiculous figures. Stock levels have been low for some time now and more and more buyers are coming into the market. I've noticed an increase in buyers since the end of last year.

I managed to buy one today which was meant to go to auction in about 4 weeks. I got in early so was lucky, but I still had to fight it out with 2 other bidders! What I've noticed lately is that unless your making unconditional offers you have little chance securing anything. I was lucky enough to slip in a building/pest inspection clause and only got it because my offer was higher than the others.

A couple of the agents I know are now insisting that all properties must go to auction and aren't even taking offers prior, unless its some ridiculous amount way over reserve. The only properties which are sitting there un-sold are the ones where the vendors have an un-realistic price set.

Unless stock levels increase, I can't see the market easing off any time soon.

Regards,
Ozi

 

[BayView]

This article from the Age this morning goes part of the way towards explaining why the market (particularly inner and middle) in Melbourne is healthy - strong population growth.

Auction clearance rates have been over 80% the past few weeks, and this on the back of good growth last year, particularly late last year.

Keep in mind the HUGE vested interest that major newspapers have with the r/e industry. The industry spends several tens of millions per year on advertising with the papers.

It is in the r/e and paper's interests to sugar coat the reality to keep the 'machine' rolling. Bad news means less sales of homes, less commissions for r/e agents, less ad dollars for papers etc.

A common 'figure fudge' is auction clearance rates. They usually quote all sales from an auction - sold before, after and on the day of auction. This makes the figures look good.

A property sold other than on the day of the auction is a private sale. The real figure is more like 50% (or less). A more accurate stat is how long the houses stay on the market before selling and what the resale price is compared to last sale.

Strong population growth won't sell more houses if the affordability is still very low (which it is).

Do your own research - never trust an agent or his bed partners.

 

[alexlee]

While I also agree Melbourne is one of the best cities to buy in right now, I also noticed the article was skewed towards supporting the market.
e.g.

Melbourne added about 49,000 people in the year to June 2006 — far more than Sydney (37,000), Brisbane (29,500) or Perth (30,000), according to the latest figures from the Australian Bureau of Statistics.

Sure Melbourne added the most people, but as a %, Melbourne added 1.3% (based on 3.6m people), while Brisbane actually added 1.8% (based on 1.6m people) and Perth added 2.3% (based on 1.3m people). Using numbers instead of % is misleading.
Alex

 

[jazzlobber]

Alex the % comparison reveals a more accurate picture,

Ozi, we too have been looking in the inner west for a few months; yarraville/seddon/footscray etc

I've had RE agents telling us not to put any clauses in the contract that may harm our cause!!!

other time the RE agent saying - ahh your building inspector will have to check for access to the subfloor;

it seems if you ask about access to subfloor/attic for checking stumps and doing pest inspection they dont want to deal with you.

The older houses with the sloping floors and spongy floors, some even creaking when you walk on them; i think alot of people must be buying these homes without checking stumps etc.

It appears now you are only getting a slightly better house in the inner west for the equivalent of some areas on the other side of the bay.

for example a 600K house in yarraville in a good spot is perhaps only slightly better than a 600K house you would get in brunswick/ richmond or prahan without having the advantages of the better infrastructure on the east/north; whilst in the inner west you have the issue of living amoungst alot of industry.

footscray and west footscray - there is still alot of value there; but the issues; yarraville/seddon is quite expensive now.

 

[Twitch]

Twitch

Auction clearance rates have been over 80% the past few weeks, and this on the back of good growth last year, particularly late last year.

Are these auction results based on total turnover of property's auctioned, or based on auction results reported by Real estate Agents only?

Gerd

According to Monday Age. Probably reported by agents.

 

[Twitch]

Keep in mind the HUGE vested interest that major newspapers have with the r/e industry. The industry spends several tens of millions per year on advertising with the papers.

It is in the r/e and paper's interests to sugar coat the reality to keep the 'machine' rolling. Bad news means less sales of homes, less commissions for r/e agents, less ad dollars for papers etc.

A common 'figure fudge' is auction clearance rates. They usually quote all sales from an auction - sold before, after and on the day of auction. This makes the figures look good.

A property sold other than on the day of the auction is a private sale. The real figure is more like 50% (or less). A more accurate stat is how long the houses stay on the market before selling and what the resale price is compared to last sale.

Strong population growth won't sell more houses if the affordability is still very low (which it is).

Do your own research - never trust an agent or his bed partners.

What information do you use?

 

[Twitch]

While I also agree Melbourne is one of the best cities to buy in right now, I also noticed the article was skewed towards supporting the market.
e.g.

Melbourne added about 49,000 people in the year to June 2006 — far more than Sydney (37,000), Brisbane (29,500) or Perth (30,000), according to the latest figures from the Australian Bureau of Statistics.

Sure Melbourne added the most people, but as a %, Melbourne added 1.3% (based on 3.6m people), while Brisbane actually added 1.8% (based on 1.6m people) and Perth added 2.3% (based on 1.3m people). Using numbers instead of % is misleading.
Alex

Excellent point Alex.

 

[ozi]

jizzlobber,

I too have been focussing on the same ares as yourself. I'm sure I would have seen you at an open home or two I agree with you totally about Seddon and Yarraville. These areas are way too hot at the moment. Its very difficult buying anything in these areas for a reasonable price, especially at the lower end of the market.

Agents are being difficult and not allowing conditions to be added to contracts because they know the strength in the market and are confident the properties will most likely sell if they go to auction.

Most people are buying blindly, not doing proper due dilligence.

I think more and more people are starting to see value in the inner-west, but the gap between west and east is narrowing.

Regards,
Ozi

 

[Twitch]

Clearance rate last weekend(3rd, 4th March): 81%

Lowest clearance rate was 63% in the under $200k bracket.
Clearance rate was 85% in the $500k to $1mil bracket.
82% in the 1-2 mill bracket.
89% in the undisclosed bracket.

Opening sentances from The Age report (not available online)

Almost everything put to auction at the weekend sold, prompting glee from the agents and despair from the many underbidders who missed out.

Inner Eastern agency Jellis Craig reported 37 ot 38 sold, with multiple bidders at everything from villa units in Surrey Hills to large homes in Kew. Director [of Jellis Craig] Richard Earle had not seen a market like this in 25 years, and most auctions now had six or seven bidders.

......

 

[meggala]

its an interesting market with the tightening rental market pushing people into buying. I feel the inner west has too many negatives, re industry to warrant some of the skyhigh prices when you compare it with the other offerings.I have lived in the west of melbourne for 15 years plus. I wouldn't move to the other side of town. in any great hurry. i live 40 klms from melb in melton eek hear you say but to get to south melbourne I have to go through only one traffic light. I looked pretty hard in the sunshine and surrounding area's there was some value there but the houses weren't of the quality I wanted to live in. good luck in the hunt its always interesting.
meggala

 

[jazzmoo]

What information do you use?

Twitch, trust me when I tell that assessment is 100% correct.

 

[chan]

Don't you think it is just seaonal adjusted? There is no auction during the Chrismas break and Jan. People are forced to buy in the first auction day in the year? What are the clearance rate like this time last year? Let see what will happen in the next few week.

http://www.homepriceguide.com.au/auction_results/index.cfm?source=apm&cb=0107224413

24 Feb 72%
3 Mar 62%

 

[Twitch]

Chan, that's a great link, thanks.

The % figures you've quoted are national clearance figures.

The off-season is the same nationally, however Melbourne clearance rate was well above Brisbane and Sydney. Adelaide had 88% but on only 14 sales (as opposed to 494 in Melb).

cheers

 

[pieman]

Anectdotally i have seen properties go 30% over reserve in bayside

 

[Twitch]

Clearance rate the last weekend (10,11 March) was 82% on light volumes due to the long weekend.

Lowest clearance rate was 50% in the under $200k bracket.

Rate was 80+% in all other brackets.

 

[Rodney]

Go Melbourne Go