Sellers had the upper hand on Saturday with a significant drop in auction numbers in Melbourne forcing buyers to compete for fewer offerings.
About 730 properties went under the hammer, well below the 995 auctions held on the same weekend last year. But the slide in listings on Saturday did not result in a big improvement in the clearance rate.
The Domain Group reported a clearance rate of 74 per cent from 582 reported auction results, which suggests that a solid contingent of buyers are sticking to their price limits and walking away from over-priced properties. Agents did not report the results of a further 149 auctions.
Some agents and market watchers claim there are pronounced shortages and gaps in the market, especially for family homes and single-level residences. This, in turn, is leading to above-reserve returns for vendors of quality “move straight in” properties.
But others believe the slight fall in overall auction listings simply reflects a steadying market that is not displaying the boom qualities and runaway prices of last year.
Domain Group data shows that between February 1 and this weekend, 12,109 auctions were held in Melbourne. In the same period last year, 12,314 properties were auctioned.
This gap is likely to widen going into winter. The market also appears to be benefiting from buyer expectations that further interest rate cuts will follow the Reserve Bank’s quarter-point cut to official rates earlier this month.
Advantage Property Consulting’s Frank Valentic said many house buyers were getting trumped at auctions and this, coupled with the prospect of more rate cuts, was stimulating sales.
Since Easter, clearance rates have dropped from an average of 75.6 per cent to 74.6 per cent. By contrast, clearance rates were well above 80 per cent at this time last year.
Domain Group chief economist Andrew Wilson said the 2016 market wasn’t experiencing the late-autumn surge surge seen last year when clearances were very high and hundreds of speculative vendors entered the market.
Another factor making Melbourne’s market shift gears is the flattening of buyer activity in the higher-priced inner suburbs, but intensification in budget and mid-priced areas.
“The eastern suburbs are certainly tracking lower than the lower- and mid-priced areas in the west, north and south-east,” Dr Wilson said.
“This is all part of an affordability pause – a lot of the demand and the supply in the eastern suburbs was brought forward last year. The dramatic drop in stock levels today is showing the difference between the boom market last year, when a lot of action came into the market in late autumn and encouraged sellers, and the steady market we’re seeing this year.”
Inner-west agent Craig Stephens, of Jas Stephens, said buyers had been motivated by commentary about likely future rate cuts after the surprise interest rate easing two weeks ago.
“People are bidding with confidence at our auctions,” he said. “They think mortgage rates are on their way down yet again and if you don’t get in now, you are going to miss out.”
Jellis Craig, best known for its eastern suburbs sales, saw its strongest activity in the city’s north on Saturday.
“The Brunswick area has gone from $700,000 to $900,000 for period cottages almost overnight,” said director Andrew Keleher. “But it’s still affordable and the next best choice for many inner-city buyers. All our auctions through that area today attracted prices 10 per cent above the reserve.”
Melbourne’s property supply line will be tested again next weekend when 1008 auctions are scheduled, 100 fewer than the auction listings offered at the same time last year.