Victoria’s auction market has taken a hit after the biggest interest rate hike in 22 years, but it hasn’t stopped some properties selling up to $850,000 above reserve.
More than 1300 properties were scheduled to tackle the market this week with the first Super Saturday since the Reserve Bank of Australia raised interest rates by 0.5 per cent on June 7.
The state yesterday notched a 65 per cent preliminary clearance rate from 755 results, according to the Real Estate Institute of Victoria.
The REIV recorded the clearance rate at 73 per cent on May 1, just before the first rate rise, and at 69 per cent on June 5, just before the latest hike.
But respected real estate expert Greville Pabst said even the modest fall might not be enough to stop Melbourne’s market in its tracks, with a 70 per cent clearance rate usually translating to about 5 per cent growth across a year.
The rate rise certainly didn’t dampen confidence in the market’s upper echelons, with the Victoria Police Legacy office at 71 Drummond St, Carlton, soaring an incredible $850,000 past expectations yesterday.
HockingStuart Belle Property’s Scott McElroy said the unusual building with frontages to both Drummond St and Queensbury St in Carlton was “hard to pin point a value on” and surged past the property’s $2.525m reserve to a $3.375m sale after “the stars aligned”.
WBP Property Advisory founder and real estate guru Greville Pabst watched the sale and said the result reminded him of the “heady days” of the market boom.
But Mr Pabst said there was a two-speed market at the moment, with first-home buyer properties already being hit by rate hikes while those higher up the chain would need “considerably more” to cause them any concern.
“At the moment we have an about 70 per cent clearance rate, if that continues that’s a 5 per cent capital growth year,” he said.
REIV president Richard Simpson said the market was balanced, but agreed quality homes in the $2m-$5m range were less likely to suffer from rate rises so far.
Mr Simpson said he didn’t think a “massive fall” in prices was likely and spring would be the market’s next big test, with auction numbers to fall to 1100 next week and into the hundreds for the first two weeks of July.
High-profile millionaire and IT guru Danny Wallis was among those thinking yesterday was the time to buy, spotted casting the first bid for 203 Station St, Port Melbourne.
While Mr Wallis, who regularly buys on The Block, tapped out well before the home sold for $2.9m, six more bidders carried it $300,000 past its reserve.
Jellis Craig’s Warwick Gardiner said the auction had been “crazy”.
A Toorak house sold for $9.05m under the hammer in the week’s highest-priced auction.
Abercromby’s auctioneer Hugh Hardy brought the hammer down on the exceptional price for 23 St Georges Rd, despite the dated home largely being eyed for its land value.
Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
The post Melbourne auctions: market loses ground in major test, but big wins abound appeared first on realestate.com.au.