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A young family secured a renovated Edwardian home in Essendon for $2.21 million, bidding $10,000 over the second-last offer. The auction, one of the first since the RBA rate rise, saw the property sell above its $2 million reserve despite challenging weather and economic concerns.
A young family made a single $10,000 bid to buy an Edwardian-style home in Essendon, paying $2.21 million under the hammer on Saturday. The property sold on the first weekend of auctions since the Reserve Bank of Australia's 0.25-point cash rate rise on Tuesday, and since new laws were introduced around the disclosure of sale prices, comparable sales and reserve prices.
Reserve Price Rules Shape Auctions
Agents will be required to advertise a vendor's reserve price at least seven days before an auction is held, albeit a two-week grace period until October 16 meant not all reserves were published this weekend. Amid pouring rain on Saturday, the Essendon home was one of 714 scheduled to go to auction in Melbourne this week.
By evening, Domain recorded a preliminary auction clearance rate of 56 per cent from 506 reported results throughout the week, while 79 auctions were withdrawn. Withdrawn auctions are counted as unsold properties when calculating the clearance rate. Agents said interest rates were top of mind for buyers, with some hoping vendors would drop their price expectations given mortgages would be more expensive, and buyers' borrowing power would be cut.
Selling agent McDonald Upton's David Mogford said the Essendon auction, held indoors, opened on a vendor bid of $2 million, quickly followed by a $50,000 offer by one of the underbidders. A flurry of mostly $20,000 bids followed until $2.1 million. Offers then dropped to mostly $10,000. The buyers, local to the area, only made the final bid.
Mogford said the property was popular since it had been renovated - though the renovation had been done some time ago.
Essendon Home Draws Strong Interest
"The vendors have owned the property since 2008 - so 18 years - and it was fully renovated when they bought it. They've maintained it really well," he said. One underbidder was interested in purchasing prior to auction and had asked about the vendor's expectations in light of the rate rise, Mogford said. In Caulfield South, a four-bedroom period home on 725 square metres passed in on Sunday morning before selling to a young couple for $2.6 million.
It sold below the $2.7 million reserve, but above the $2.4 million to $2.5 million guide. There is no legal requirement for a vendor's reserve to be in line with their property's price guide. Fletchers Bentleigh East's Tommy Hubert said agents expected two strong bidders, however one of the prospective buyers was advised by a selling agent from another company to not raise their hand.
The property, which had a pool, passed in after 10 minutes of silence from the crowd, with the sale negotiated after, Hubert said. The buyers had help from the bank of mum and dad, he added, and were considering knocking down the home and rebuilding on the 725-square-metre block.
Meanwhile, the party who hadn't raised their hands had been hoping the home would pass in so they could make an offer.
Rate Rise Impacts Buyer Enthusiasm
"It's a good sale all things considered in Caulfield South because similar houses in original condition have been selling for around $2.3 million," he said. The latest interest rate rise has had an impact, Hubert said, with one potential buyer pulling out as they felt they would be too stretched. In Brighton East, a three-bedroom art deco home owned by the same vendor for 42 years, sold for $1,406,000 after five bidders competed.
Jellis Craig Brighton's Nick Sinclair said the auction was held under a carport, given the weather. While interest rates weren't top of mind at the Hodder Street sale, Sinclair said buyers looking for a bargain had been trying to use the rate rise as a bargaining chip elsewhere.
"For those types of buyers it's the only thing they can really negotiate with," Sinclair said. "Nine times out of 10, they're not the best buyer anyway. " A four-bedroom family home in Richmond sold under the hammer for $1,821,000, above the $1.5 million advertised reserve. The house, owned by the same family for 60 years, was snapped up by an investor, one of two bidders.
"There were two others in the crowd that didn't get a shot because those two kept going and going," Biggin Scott's Andrew Crotty said. An opening bid of $1.5 million was sought; however, no-one made that offer, with an opening bid of $1.45 million made instead. Offers of $20,000 and $5000 followed, with more erratic $3000, $10,000 or $1000 bids following.
"Vendors are certainly aware of it and are asking how that affects the market," he said. "It doesn't feel like much has changed," Crotty said. "It means really having the conversation we'd have on the Thursday or Friday before an auction, a week earlier. "
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