Year ends with a bang

Herald Sun - Property - - MARKET WRAP - PETER FARAGO

MEL­BOURNE’S auc­tion mar­ket is set to go out with a bang like a Christ­mas cracker, with 702 auc­tions sched­uled this week­end.

While it’s a low vol­ume com­pared to re­cent weeks, when more than 1500 prop­er­ties were of­fered, it still rep­re­sents a sig­nif­i­cant amount of property so close to Christ­mas.

The auc­tion mar­ket strength­ened last week­end, with CoreLogic RP Data record­ing a 67 per cent clear­ance rate, af­ter col­lect­ing 1384 re­ported auc­tion re­sults.

How­ever, the down­ward trend for auc­tion suc­cess is the big­gest indi­ca­tor of slow­ing price growth for Mel­bourne’s property mar­ket next year.

CoreLogic se­nior re­search an­a­lyst Cameron Kusher said auc­tion clear­ances had fallen 20 per­cent­age points from their April peak, when 86.6 per cent of prop­er­ties sold.

“You can’t see a fall in clear­ance rates of more than 20 per cent with­out it im­pact­ing on the rate of value growth in the mar­ket,” Mr Kusher said.

He said sev­eral other fac­tors also pointed to slower growth next year, in­clud­ing build­ing ap­provals and con­struc­tion of new dwellings push­ing more sup­ply into the mar­ket, while an eas­ing of pop­u­la­tion growth had re­duced de­mand.

In­vestors were also start­ing to feel the pinch, with fall­ing growth in rental rates squeez­ing yields. Tighter lend­ing re­stric­tions on in­vest­ment loans and re­cent rate hikes in­de­pen­dent of the Re­serve Bank had added to the cost of bor­row­ing.

“It is still un­clear whether val­ues will con­tinue to fall but what is clear is that the rate of value growth is slow­ing and is likely to con­tinue to do so,” Mr Kusher.

But Ray White, Man­ning­ham, di­rec­tor Frank Perri said good property in good sub­urbs re­mained a con­stant in the mar­ket.

Mr Perri auc­tioned last week­end’s top sale, the fivebed­room home on 0.5ha at 28 Ser­pells Rd, Tem­plestowe, for $4.868 mil­lion.

But he said it was hard work to coax bid­ding to­ward the $4.3 mil­lion re­serve as the auc­tion stalled at $3.9 mil­lion.

“It was prob­a­bly at least four times on the verge of pass­ing in,” he said.

Two bid­ders broke the dead­lock, tak­ing the price $568,000 above the re­serve price in a 50-minute marathon.

Last week­end’s most ex­pen­sive auc­tion sale, on Ser­pells Rd in Tem­plestowe, sold for $4.868m.

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