Competitive auctions are back, but not for all Melbourne properties.
Spring has arrived. We can feel it in the warm weather, see it in the blossoms on the trees, and hear it at the competitive auctions on the weekend. So, are competitive auctions the new norm? Over the weekend, we had the opportunity to witness two such auctions, and the results were rather eye-opening. In one instance, despite our confidence that our client's budget aligned with the property's value, we didn't even have the chance to place a bid. At an auction in Richmond, the Statement of Information (SOI) had indicated an upper-end quote of $3.2 million. We valued it at approximately $3.45 million, possibly even $3.5 million, amid competition. To our surprise, the bidding war concluded at a remarkable $4.3 million, leaving the vendor thrilled and neighbouring property owners reevaluating their price expectations.
What these two instances had in common was that the properties in question were turnkey gems with impeccable floor plans, requiring no additional work. This trend is seen in blue-chip locations for fully renovated homes with well-thought-out layouts.
However, the level of competition seen in these auctions over the weekend is certainly not the norm. Properties needing renovation continue to linger on the market, fetching comparatively lower prices with minimal competition. Given the continuing uncertainty in the construction industry, potential buyers remain cautious on the hole, especially when considering properties requiring renovations, no matter how small or big.
It's promising to note that more properties are entering the market, providing a broader selection for our clients. In the past four weeks, some of our specialist areas have seen record numbers of new listings, providing more signs of a buoyant spring selling market:
Stonnington West: 60 new listings, a 172% increase compared to the five-year average*.
Bayside: 93 new listings, a 115% increase compared to the five-year average*.
Port Phillip: 65 new listings, a 143% increase compared to the five-year average*.
Glen Eira: 90 new listings, a 107% increase compared to the five-year average*.
Some property market commentators are concerned that this sudden increase in listings will dilute the buyer pool and temper prices in the later months of the season. We hold a different perspective, especially for A-grade properties. With more sellers entering the market, we anticipate a corresponding increase in buyers actively seeking A-grade properties. Consequently, we expect the upcoming spring season to follow a similar pattern to what we see today: A-grade, move-in-ready properties commanding a premium and B-grade properties, especially those requiring renovations, staying on the market longer and selling for lower prices.
My parting piece of advice.
Be wary of getting caught up in the excitement of a competitive auction and paying too much. While we say that a property is worth what someone is willing to pay, it doesn't always mean that you will be able to achieve the same price in six or even 12 months. Do your due diligence and understand the actual value before participating in any auctions.
If you’re looking to buy or sell this spring or planning for a 2024 purchase, contact us today for a free 15-minute discovery call, and we can advise you on the best timing and approach to ensure your purchase is a successful one in the long and short term.
Lauren Staley
Managing Director
Infolio Property Advisors.
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