BUYERS at Melbourne auctions continue to be hesitant and cautious, but recent predictions of interest rate cuts are tipped to inject some confidence.
Over the weekend, Melbourne recorded its 12th consecutive weekly clearance rate below 60 per cent.
From 377 reported auctions, the clearance was 56 per cent, according to the REIV.
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This time last year the clearance rate was 70 per cent from 584 reported auctions.
The release of the REIV's June quarter median prices shows there has been little difference between demand at auctions compared with private sales in the past three months. The median price of houses sold at auction increased 1.2 per cent to a $730,000 median, while those sold at private sale rose 1 per cent to a $500,000 median.
However, over the year the median of private sales increased by 8 per cent, compared to 2.5 per cent for sales at auction.
Many in the real estate industry see Westpac's forecast of interest rate cuts as positive
Advantage Property Consulting's Frank Valentic said it was ''fantastic news'' and combined with the first home buyer stamp duty reduction could mean a positive ''double whammy''.
''If that happens, historically, we've seen prices start to go up and confidence return to the marketplace,'' he said.
Mr Valentic said that in most instances, buyers were now paying ''substantially less than 12 months ago and getting better value for money''.
He said that at the weekend Advantage Property Consulting bought at auction a two-bedroom warehouse conversion at 10/156 Rose Street in Fitzroy for a client for $521,000.
Mr Valentic said that near the end of last year three comparable apartments in the complex sold for an average $590,000. Buxton Brighton director Leigh Hallamore said interest rate cuts and rises did not have an immediate effect on the market and were ''just one of the symptoms of confidence''.
''More discussion regarding lower interest rates will mean gradually a higher level of buyers will be prepared to make a commitment and there will be a gradual increase in bidding at auctions,'' he said.
Mr Hallamore said the ''strong sense of negativity'' in the past few months really had been compounded by winter, ''which traditionally sees the marketplace naturally get quieter''.
''The main ingredient for success at auctions is to be able to communicate a realistic price range that the property can be sold in,'' he said.
''If the public think we're out to break records, we will be deafened by silence, whereas, if the public see we've got our feet on ground - and that's reflected in where we think the price may fall - the public responds accordingly.''
Adrian Jones from Noel Jones said interest rate cuts would ''take a lot of people by surprise''.
''It will be good for borrowers and home buyers, but it probably means the market will be flat for a while,'' he
said.
Mr Jones said his agency had only three auctions scheduled for the weekend, with one property selling before auction.
The two properties auctioned were both ''modestly priced'' around $500,000-to-$700,000.
The two-bedroom villa unit at 3/59 Edgar Street in Glen Iris sold for $595,500.
''It's presentation was absolutely outstanding - the public will step up and bid for something that doesn't need another cent spent on it, '' Mr Jones said.
The other property, a state trustee auction at 3 Mile End Road in Carnegie, was in need of some work.
Nevertheless, there were multiple bidders and ut sold for $692,000, above a $620,000-to-$640,000 quote.
''Buyers are looking for value and when they meet vendors who are prepared to sell, they get good auction,'' Mr Jones said.
Source http://www.theage.com.au/
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