The Melbourne auctions market is beginning to slow as the Spring selling season heats up, and inner-city Sydney is now becoming one of the best-performing markets in the country, real estate experts say.
The Real Estate Institute of Victoria claims Melbourne recorded a 68% clearance rate this past weekend, with 708 properties on the market. The median auction price for houses was over $700,000, it says, well above RP Data’s median for the city at $470,000.
SQM Research founder Louis Christopher says he is cautious of the REIV’s results, and suggests Australian Property Monitors figures are “more conservative”.
“I wouldn’t read too much into the median price – that could mean anything. But apart from that, I’m very cautious of the REIV’s results and think APM results are far more conservative.”
The APM figures show a clearance rate of 62.5%, with total sales reaching $120.7 million. Christopher says the figures tell a different story from earlier this year when clearance rates were in the 80s, with the auctions market now slowing as demand pulls back and listings increase.
“The market is continuing to slow. It’s not collapsing, but it’s a slower market than Sydney. I think house prices in Melbourne have come to a halt, and they have basically been flat for awhile.”
“The only thing we can all agree on is that listings have increased, jumping up from the football period. I expect listings to increase from this point forward, and we can expect this type of sales activity over the next few months to December.”
The REIV also notes that increase, saying that, “the current performance of the market is in stark contrast to this time last year when there was 598 auctions and a clearance rate of 82%.”
“A year ago interest rates were still at record lows which highlights the importance of monetary policy on the real estate market.”
But these experts say the recent slowdown in Melbourne activity has put the spotlight on Sydney, where undersupply is keeping prices high in the inner-city. The city recorded a 61% clearance rate, with 348 properties selling out of a total 533 on the market, according to APM. Total sales came to $173.6 million.
“Melbourne isn’t doing as well as Sydney,” Christopher says. “This type of activity can be expected in Sydney from here until the end of the year. Melbourne isn’t as doing as well as Sydney at all, but is doing better than Brisbane. Activity there is deteriorating due to over-supply.”
“Sydney has performed pretty well,” APM general manager Anthony Ishaac says. “It’s typically the inner-west in Sydney that is doing well, that is driving the auctions.”
However, activity continues to deteriorate in Brisbane due to oversupply. The city recorded only four sales out of 22, according to APM, with sales reaching just $684,000, while Adelaide recorded a 68% clearance rate, with 19 properties sold, with total sales at $5.1 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
