Buyers are being urged to deploy bidding plans and smarter tactics at auctions amid signs that house prices in some Melbourne areas are starting to pull back.
Few property watchers believe much heat has gone out of the market.
However, there’s an expectation that buying by property investors won’t be as strong in the second half of the year as it was in the first half.
Investors have dominated sales below $1.5 million in Melbourne’s inner-east as well as sub-$800,000 sales in many other areas this year.
If investors reduce activity, the advantage could swing to owner-occupiers.
Despite the buoyant sales conditions in the eastern suburbs, it’s still hard to forecast sales results for some properties.
There is a patchy quality to the market, with some auction properties producing exceptional results, while others just make their price target.
Melbourne property prices grew by 0.6 per cent over the March quarter, according to Australian Bureau of Statistics’ price index figures released last week. The modest growth rate, down from 1.3 per cent over the previous quarter, reflects the pressure banks now face from the Australian Prudential Regulation Authority to slow lending to property investors.
Buyer Solutions managing director Janet Spencer said with the variation and the randomness in the market, buyers needed to undertake more research.
“They need to set the limit and be prepared to walk away if the price moves into the emotional side,” she said.
Ms Spencer said the market experienced a “weird April” with school holidays and the centenary of Anzac Day disrupting sales. The strong market in May had been bolstered by the difficulties buyers had in finding properties to purchase in April, she added.
Other buyer advocates say “wounded underbidders,” who miss out at auctions and then increase their budgets, have spurred this year’s higher clearance rates and strong prices in the inner suburbs.
Melbourne-based auctioneer trainer Phil de F???????????????(C)gely said few auction buyers implemented a bidding plan that detailed a starting price and the bid increments a buyer intended to use.
“When you have a plan you know what you are going to do when the property gets to this price and how you will react when it gets to that price,” he said.
He said buyers should gather intelligence about whether a lot or a little bidding was expected. Three price points also needed to be considered before an auction.
“One is a price you would love to pay,” Mr de F???????????????(C)gely said. “Then there is a price you are happy to pay and a price that will hurt.”
Price variations at auctions are being seen by many agents.
Collins Simms’ Nicholas Corby said some inner-city properties were selling for $200,000 or more above reserve simply because a late, unexpected bidder had bid.
“You can’t tell which auctions are going to run or whether the property will stay within the price range,” he said.
Saturday’s auction market was again strong, with the city-wide agents Hocking Stuart reporting an 81 per cent clearance rate for the third week in a row. Barry Plant, another geographically-spread group, sold 63 from 71 auction properties to notch up an 89 per cent clearance.
The Domain Group posted a clearance rate of 80 per cent from 683 metropolitan auctions.
A considerable number of off-market deals also took place last week.
Marshall White’s John Bongiorno said his company last week sold a property in the Boroondara council precinct for more than $13 million.
“That’s what has been happening with a lot of properties that are scheduled to go to auction,” he said. “With the demand out there, we are creeping people through properties that are yet to come on to the market and placing them before auction.”
Mr Bongiorno said there were signs the market was reaching a peak.
He said most of the prices his company achieved on Saturday were “around the reserve”
“Nothing has run away and people haven’t got silly,” he said.
Mr de F???????????????(C)gely said it was usually a mistake to wait until the end to bid at auctions because in most cases the first or second bidder bought the property.
“A lot of the time you are able to influence other bidders by showing your strength,” he said.
“You eliminate some of the opportunist buyers and you flush out your competition.”