Interest rate speculation sparks sales
The prospect of more interest rate cuts helped underpin the strong auction clearance rates in the Melbourne and Sydney property markets at the weekend.
Economists and property pundits suggest the Reserve Bank of Australia could cut interest rates further in November partly because of the likely effects on Australia created by US fiscal policy.
Sydney reported an 86 per cent clearance rate from 363 auctions reported to Australian Property Monitors (owned by Fairfax Media), driven by a severe lack of stock.
In Melbourne, a clearance rate of 78 per cent was recorded from 837 auctions, according to data collected by the Real Estate Institute of Victoria (APM reported 80 per cent from 553 Melbourne auctions).
This is the eighth weekend in a row of higher than 70 per cent clearance rates, and compares well with last weekend's 74 per cent and last year's 58 per cent.
The REIV is awaiting the results of 72 auctions and, of the 181 properties that were passed in, 98 did so on a vendor bid.
The top auctions took place in Malvern, where 116 Stanhope Street fetched $3.475 million through Jellis Craig, and 89 Claremont Avenue sold for $3.22 million through Marshall White. Not everything was sold as expected. A house on 405 square metres in William Street, Abbotsford, with two street frontages, was passed in at $1.05 million after desultory bidding by two developers.
Jellis Craig Bennison Mackinnon agent Gordon Hope said the vendors had a reserve of $1.275 million for the four-bedroom property that had been marketed as a "development opportunity".
In Kew, a boardroom auction for 41 Campbell Street last week came well ahead of Saturday's scheduled auction day.
Four bidders pushed the price of the five-bedroom Californian bungalow $420,000 (35 per cent) above its reserve and it was sold for $1.52 million.
Marshall White agent Chris Barrett said the house, on 572 square metres, would likely be demolished for a new home.
Advantage Property buyer advocate Frank Valentic bid on the property for one of his clients, who is looking for a bigger family home.
"The upsizing market is very tough at the moment. People with young families have to move because they're bursting at the seams," Mr Valentic said.
The number of investors on his books looking to buy property had doubled in the past year and were competing with first home buyers, he said.
Jas H. Stephens director Craig Stephens said people had become even more confident since the election two weeks ago."There's been a real spike in activity. Some people were sitting on their hands for the past five weeks," Mr Stephens said.
His firm auctioned a new three-bedroom townhouse at 12 Beame Street, Footscray, that attracted four bidders and sold for $680,000 - $70,000 above its $610,000 reserve.
"To get four bidders was great because we haven't had four for a while and certainly not last year," he said.
Next week, the market will pause for the AFL's grand final and 60 auctions are scheduled.