Interest rate cuts expected to bring property joy
PROPERTY players welcomed last week’s move by the Reserve Bank of Australia to drop the cash rate by 50 basis points but warned it could take weeks, if not months to flow into the market.
Results were patchy over the weekend with some reports of multiple bidders and prices pushed past their reserves but others reported lacklustre auctions with one or no bidders.
The Real Estate Institute of Victoria reported an auction clearance rate of 62 per cent over the weekend, up slightly from last weekend’s 60 per cent (which fell to 58 per cent when all the results were counted mid-week).
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Kay & Burton director Mike Gibson, who sold the top house in Malvern, said the interest rate cut had an impact even at the very top end of the market.
”Those seven rate rises in a row [in 2009-10] impacted people’s confidence across the demographics. To get half a percentage point in one hit, and the likelihood of more, gives the market some stimulus. A decrease in rates helps,” Mr Gibson said.
Jellis Craig director Alastair Craig, who sold 35 Broadway in Camberwell for $3.425 million on Saturday, said interest rate cuts always helped. ”But buyers are cautious, buyers are not rushing to knock my door down,” he said. ”A lot of people feel the market has levelled and that’s what I’m seeing.”
Despite those bumper results, the REIV data shows it was tough going at the top.
The clearance rate in the $1 million to $2 million price range was 38 per cent; and 54 per cent in the $2 million-plus bracket.
The market was stronger in the middle ground between $400,000 and $1 million where the REIV recorded rates in the high 60s.
Adrian Jones from Noel Jones Real Estate said ”average middle-of-the-road” properties sold better than $1 million-plus houses, which were selling a few days later after negotiations.
”Buyers want to see the whites of your eyes and where the vendors are really at,” Mr Jones said. ”The half-a-percentage-point rate cut was necessary but it will take a while to flow through.”
But buyers have many reasons for keeping their hands in their pockets. At the auction of 11 Stanley Street in Richmond, Hocking Stuart auctioneer Peter Perrignon told the 50-strong crowd the newly renovated property did not have a certificate of occupancy signed by a building surveyor.
One potential buyer asked if it was true that the house had more than 10 building defects, which could cost up to $300,000 to fix.
After a heated exchange with Mr Perrignon, he stormed off. The auctioneer made a vendor bid of $1.9 million but no one put in a bid and it was passed in on a reserve of $2.25 million.
In Richmond, seven out of the 11 reported properties were sold over the weekend. Two bidders pushed hard on an unrenovated double-fronted Victorian at 278 Lennox Street and it was sold under the hammer for $1.6 million.
Biggin & Scott director Russell Cambridge said the Richmond market was still strong, although prices had come off since last year.