Market spurred by low supply

Melbourne's property market surged at the weekend, overtaking Sydney for the first time this year, as low stock levels and interest rates spurred buyers to action.

Melbourne's property market surged at the weekend, overtaking Sydney for the first time this year, as low stock levels and interest rates spurred buyers to action.

Sydney posted an auction clearance rate of 79 per cent from 310 results, according to data from Australian Property Monitors (owned by Fairfax Media), slightly below the 80-plus per cent figures recorded in the past seven weeks.

Melbourne turned in its best performance since the last boom of 2010 with an 82 per cent clearance rate from 573 results, according to the Real Estate Institute of Victoria. Of the 106 properties that passed in, 60 did so on a vendor bid.

However, there were no results for 108 auctions, about 18 per cent, which could reduce the overall clearance rate. The clearance rates for the last two weekends - 74 per cent - came down a point or two from the original weekend reports.

Nonetheless, the result is wildly improved on last year, when the same weekend yielded 57 per cent.

Agents and buyer advocates have reported multiple bidders at most auctions, with scarcity of stock and low interest rates cited as driving factors in their success.

In Sydney, the biggest deals happened before auction date. A terrace at 22 Windsor Street Paddington sold before auction through McGrath for $2.3 million and a house at 5 Badham Avenue in Mosman was purchased for $2 million ahead of the auction.

But one of the highest sales, done under the hammer, was in the south at 3 Como Street Blakehurst, which fetched $70,000 above its reserve to sell for $1.8 million.

Professionals Montgomery Real Estate agent Mark Somboli said the large property on 1170 square metres of land fell just short of the size the Kogarah Council would allow to subdivide. "It had a 29-metre frontage. If it had been 30 metres, it would have neatly subdivided into two blocks. This knocked out about 100 buyers," Mr Somboli said.

The southern suburbs around Carlton and Kogarah were starting to attract buyers from the northern beaches, the eastern suburbs and the inner west, and prices were starting to reflect the increased competition, he said.

"They are bringing a different currency with them," he said.

In Melbourne, three bidders competed strongly for the Sheridan Close penthouse at 77-78/487 St Kilda Road owned by the late Queenie Cantwell, who died last year.

Williams Batters director Philippe Batters said Mrs Cantwell and her late husband Hillaire, a former Melbourne City Councillor, were former owners of the Stork Hotel and bought the apartment in 1973.

"The auction was long and slow; it started at $1.1 million and when I went inside at $1.2 million nothing much was happening. When I came back three people started and we were off and running," Mr Batters said. The property, owned by company share, fetched $1.56 million, well over its $1.3 million reserve.

Despite the strength in the market, Mr Batters hosed down any suggestion that Melbourne was at the start of a boom.

"People have to be very confident in the business or their employment but this market needs some repair to the economy before we see that," he said.

"We have an under-supplied market which is performing well. The investment market is very strong in the inner ring about five kilometres from the CBD but beyond that they tail off and you're in a normal market."

Nine young couples - first home buyers - vied for a freestanding two-bedroom brick art deco-style house at 43 Kellett Street in Northcote, on a 481-square-metre lot.

On the market at $730,000, Hodges agent Simon Radolnik (operating well out of his Caulfield territory) sold it under the hammer at $837,000.

First home buyers were knocked out early at an auction in Heathmont in the outer east, where "mum and dad investors", who had only just seen the property, beat three other bidders.

Barry Plant Heathmont agent Louise Carrigg said the reserve on 17 Frances Street was $500,000 and the buyers paid $532,000.

The three-bedroom house is on an 881-square-metre corner block and attracted a few developers but they withdrew early, she said.

There was only one bidder for the top sale of the day in Melbourne and 27 Kinkora Road Hawthorn sold after auction through Marshall White for an undisclosed sum above $4 million.

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