Finance advice
Antony Bucello

What does a lower clearance rate mean for buyers?

By Antony Bucello

Stock levels have gone through the roof over the last month. The REIV released its December Research Bulletin last week and the numbers are something to behold.

Blogger: Antony Bucello, state manager, National Property Buyers

According to the report, Melbourne had a staggering 5,700 auctions over November, averaging a massive 1,425 auctions across the four Saturdays in the month.

The weekend of 28 and 29 November saw a new national record set for the highest number of auctions held – 1,749. Saturday 28 November broke the record for the highest number of auctions on a single day, with 1,648.

Sydney was well and truly in on the action on the 28 November, when 1,065 auctions were listed.

The market has moved to become more balanced overall, which is good news for buyers. Clearance rates reached 67 per cent in Melbourne over November, dipping when compared to the highs of the mid to high 80s recorded earlier in the year. With far more stock to choose from auction crowds tend to thin out, meaning less competition to drive bidding and push the sale price upwards. Months with traditionally more stock such as October and November, and February and March, can be generally more favourable for buyers for this reason.

However, buyers shouldn’t get too complacent during these periods. An increase in stock does assist buyers in spreading the competition, but it also brings an increase of less desirable stock onto the market.

Quantity of stock shouldn’t lull buyers into a false sense of security. Quality of stock is still just as important.

The reality is that highly-regarded property is still very likely to attract significant interest from buyers, and competition will still be strong.

National Property Buyers advocate Rob Di Vita assessed a four-bedroom, one-bathroom home in Murrumbeena for a client. Situated in a good location, Mr Di Vita anticipated the property to reach the vicinity of $1.25 million at the 5 December auction.

The property was announced on the market at $1.25 million and emotional bidding amongst five parties pushed the price up to a touch under $1.37 million – more than Mr Di Vita was willing to pay, and arguably more than the property may have been worth.

Late Saturday afternoon, Mr Di Vita discovered another property that his client had significant interest in, located just around the corner from the property that was missed earlier.

The property had passed in and immediately attracted interest from under bidders who had missed out on other properties. Submitting an unconditional offer to the selling agent on Monday afternoon, Mr Di Vita successfully secured the property for $1.203 million.

As this example illustrates, just because there is more stock on the market doesn’t mean there will be thinner competition at auction. It also shows there can still be competition to pick up passed in properties.

On the weekend of the 5 December, there were 1,447 auctions listed with a clearance rate of 63 per cent, according to Domain data.

Looking at the stock numbers and lower clearance rate would suggest buyers could be in with a stronger chance of getting their desired property. But that isn’t necessarily the case.

Buyers should still do as much research as they can on the property or properties they wish to purchase in order to anticipate what the market might do on the day. There can be surprises of course, but being armed with the research and expert insight will only serve to assist buyers and prepare them for auction day.

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About the Blogger

Antony Bucello

Antony Bucello

A Licensed Estate Agent and a member of the Real Estate Institute of Victoria, Antony has a passion for property and has bought for both investors and homebuyers all over Melbourne, ranging from $300,000 to multi-million dollar properties. He commenced with National Property Buyers in 2011 as State Manager and Officer in Effective Control.

His meticulous approach and sound negotiation skills ensures he leaves no stone unturned in his quest to purchase the right property at the right price. With his extensive knowledge, vast network of contacts and overall determination, he is able to achieve the best possible results for his clients.

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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1204 (52) {
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  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
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  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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