FALLING property prices, ironically, are proving to be a boon for vendors in Melbourne’s inner north and east, as buyers are lured back into the auction market in the hope of scoring a bargain.
While 40 per cent of properties are still being passed in city-wide, home owners in Collingwood, Fitzroy North, Hawthorn, Carlton, Armadale and Abbotsford still stand a 75 to 80 per cent chance of making a sale.
Defying perceptions of a stagnant market, a dozen suburbs have posted boom-level clearance rates, thanks to eager buyers snapping up properties after prices fell by up to 16 per cent in the past 12 months.
Industry insiders say buyer demand is rising as the property slump has improved affordability in popular gentrified or blue-chip pockets.
”We’re finding the northern suburbs are performing better and more consistently than other areas of Melbourne, and I think it’s mainly to do with price point,” said Hocking Stuart director Rob Elsom. ”We are getting a lot of family homes listed for sale that are in a price bracket that are still affordable to people.”
The latest trend follows a decade of soaring price growth that quickly put many of these areas out of reach of middle-class and aspirational buyers.
Median house prices have fallen by between $40,000 and $74,000 in Carlton ($587,000), Fitzroy North ($800,000) and Collingwood ($666,000) in the year to June, according to the Fairfax-owned Australian Property Monitors.
In the east, Armadale no longer belongs to the ”million-dollar suburb club”, after shedding $170,000 from its median price, now $930,000.
But rather than spooking buyers, the price falls are fuelling competition to the point where more than three in four home owners in these areas make a sale on auction day, according to the Real Estate Institute of Victoria.
Sarah and Mark Adams, who are putting their Collingwood townhouse under the hammer in fortnight, are ”pretty confident” they will find a buyer. ”It’s only been open for inspection twice and already somebody wants to come back to see it again,” Ms Adams said. ”There’s a lot of apartments in Collingwood, so our place is fairly unique.”
BIS Shrapnel analyst Angie Zigomanis said a falling market could inspire prospective buyers, especially those looking to upgrade suburbs. ”Seeing prices fall in an area where a buyer wants to live but couldn’t afford to before, can prove attractive enough for them to choose to upgrade, even though their own home might conceivably be worth less than a year ago.” But the data also shows that a steep fall in prices does not guarantee that buyers will once again flock to an area.
While Toorak’s median house price dropped by 26 per cent, the clearance rate has averaged just 56 per cent. In Maribyrnong, only 38 per cent of properties have sold under the hammer, despite prices falling by 11 per cent.
The REIV has also noted that clearance rate figures are being affected by the unusually low number of properties up for auction, 19 per cent below the 2011 level. ”In a market where volumes are low, the places where auctions work shrink to the historical auction territory of Melbourne, which is the inner city and east,” said REIV spokesman Robert Larocca.
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