Melbourne’s property market put on a powerful display on Saturday, with many buyers paying prices significantly above reserve.
The Domain Group reported a clearance rate of 82 per cent from 891 metropolitan auctions.
There were 184 unreported results.
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Agents across the city said scores of properties in the $1 million to $2 million bracket exceeded their reserves, sometimes by as much as $450,000.
Hockingstuart posted an 87 per cent clearance from 90 auctions. Director Toby Parker said there was very strong demand for single-level properties.
“A lot of people are capitalising on the state of the market by selling their big homes and scaling down to a single-level property,” he said.
The market’s strength defied expectations although auction numbers in the eastern suburbs, the strongest segment of the market, were down this weekend because of interruptions caused by school holidays.
About 200 western suburbs properties went under the hammer compared to 118 in the inner east.
Domain Group senior economist Andrew Wilson said the high city-wide clearance rate was a “wow result” that probably reflected strong sales in the outer east.
Auctions work best in competitive environments where demand exceeds supply. They are a popular way to sell property in gentrified areas and are now being used more in outlying areas.
But private treaty sales still overwhelmingly dominate sales in Melbourne’s fringe suburbs.
That’s because outer areas have more properties for sale than there are buyers. In the inner and middle-ring suburbs, it’s usually the reverse situation, with many buyers targeting a limited pool of properties.
The cost of an auction is easier to absorb with a high priced property, so it’s a sign of greater buyer depth when auctions spread to budget areas.
Jas Stephens managing director Craig Stephens said his company sold nine from 10 properties it auctioned on Saturday in the inner west.
Two investors bought houses from Mr Stephens an hour after first inspecting them. One was a brick-veneer two-bedroom house on a corner at 13 George Street, Spotswood, on the market at $575,000.
The buyer was a Self-Managed Super Fund owner who paid $640,000. The same thing happened at Yarraville.
“First home buyers are being pushed out of the inner west market,” Mr Stephens said. “Investors are very strong.”
The underlying story of Melbourne’s property market is the next-best suburb. Buyers get priced out of one suburb and target an adjoining cheaper area.
Barry Plant director James Hatzimoisis said the outer suburbs were attracting much interstate migration.
“People tend to move for one of three reasons: education and schooling needs, work reasons or for family reasons,” he said. “But in the last six months we have seen a lot more people from Sydney coming down here and saying, ‘It is just too dear in Sydney and we’re moving our lives to Melbourne’.”
Affordability constraints are clearly coming to the fore and making the ripple effect more pronounced.
The Real Estate Institute of Victoria released figures last week showing that prices in Melbourne’s inner-ring suburbs have increased to a $1,164,500 median.
REIV chief executive Enzo Raimondo said in the three months to the end of December last year there were 15,127 house sales in Victoria, with 2769 of those at or above $1 million.
This represents 18 per cent of sales.
Due to the 100th Anzac Day commemorations, only 81 auctions are scheduled next weekend.
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