Get ready for a surprise. Despite the appearance of a market on fire, new figures from Residex show that property prices may have lost ground for the first time in six months.
Residex reports median house values dropped 0.91 per cent nation-wide and 1.15 per cent in Melbourne in October, a sharp reversal on the moderate to strong growth witnessed every month since April.
What? Given the near-record auction clearance rate and bumper private sale market — not to mention consistent coalface reports of frantic competition and well-above-reserve sale prices — this just seems impossible to believe.
Residex has placed responsibility squarely on the blunt weapon of RBA interest rate increases and the fear-inducing spectre of their use.
“The slowing of values occurred almost immediately that the threat of rising rates began to surface . . . you can’t escape the evident relationship between the adjustment in growth rate and the RBA rhetoric and actions,” said chief executive John Edwards.
If these numbers aren’t an aberration — and market watchers will be looking for confirmation in RP Data-Rismark’s price data, released at the end of November — it raises serious questions about the wisdom of the Reserve Bank’s aggressive stance on interest rates.
Seeking to ease surging buyer demand and the potentially unsustainable pressure it puts on home prices is one thing — reversing them is something else altogether.
The Real Estate Institute of Victoria says that 80 per cent of the 705 properties up for auction this week sold.
In Moonee Ponds, the fall of the hammer on 32 Athol Street was greeted with disbelief after the unrenovated, two-bedroom house blew past its $940,000 reserve to sell for $1.37 million. The 705-square-metre property attracted five bidders, but competition narrowed to just two above $1.2 million.
Another bold would-be buyer kicked off the auction of 40 Black Street in Brighton, quoted at $1.55 million to $1.75 million, with an opening bid of $2 million. Buxton said that after the near-knockout start, the three-bedroom Victorian, which had a reserve of $1.7 million, attracted just two more bids and sold for $2.05 million to the original bidder.
An “unliveable” two bedroom Edwardian at 12 Hope Street in Glen Iris sold for $953,000 after being declared on the market at $855,000. Buyer Solutions said four bidders competed for the 468-square-metre property.
A last-minute entry trumped at least six bidders at the auction of 12 Leon Street in Cheltenham, with the winner only making their move on the third call, and taking the property in two bids, for $759,000.
Advantage Property Consulting said the four-bedroom brick house was declared on the market at $700,000.
The highest price result reported to The Sunday Age yesterday was for 24-26 Dean Street, Kew: a five-bedroom Victorian on a double allotment that sold for $3.99 million thanks to at least six bidders. After Jellis Craig declared the property on the market at $3.12 million, several parties tried unsuccessful knockout bids in $100,000 rises, according to an observer.
RT Edgar, who published the $475,000 reserve of 1/39 Holyrood Street, Hampton, in advance, received over 100 bids from four bidders, and sold the two-bedroom villa for $551,000. The pricing system, suggested as a way to stamp out underquoting and misleading price advertising, has been criticised as ineffective and anti-competitive. The result suggests otherwise.
There are more than 1060 auctions scheduled next weekend, with more than 3000 set to occur before the Christmas hiatus.