Market Wrap & The latest trend in Property Acquisition
Saturday's auction market was again strong in Melbourne with a clearance rate of 79 per cent. There were 782 auctions with 621 properties selling and 161 being passed in of which 62 were on a vendor bid.
There have been around 14,000 sales in Melbourne, this, a new record with outer areas experiencing a 20% increase in auction sales this year.
As is to be expected, Winter has bought fewer properties onto the market creating the corresponding higher demand that has sustained healthy prices and boosted clearance rates.
Melbourne property prices grew by 0.6 per cent in the March quarter, down from 1.3 per cent in the previous quarter indicating robust but slowing price growth and giving future buyers new hope of purchasing success in the coming months before it hots up again in Spring.
Melbourne's rental increase slowed a little to 2.3%. While some commentators are using the slower rental growth as a signal Melbourne's property boom is coming to an end, investors remain attracted to negative gearing tax breaks and discounted capital gains tax. Investors are still enjoying Melbourne's very low vacancy rate, at 2.3%; 3% is seen as balanced, so at current rates the balance is tipped in land lords’ favour.
It is well known in business circles that 70% of jobs are never advertised, it seems the trend is making its way into the real estate market with more properties being sold without advertising, in real estate circles it called “off market”.
“Off market” selling was originally adopted by the top end of town to keep the sale of exclusive properties “quiet”. A few years ago it was extended to other lesser properties where the vendor didn’t want the stress/inconvenience/expense of a public marketing campaign, but now it’s use has spread across the market creating hidden dangers for the unwary.
Frustrated buyers seeking new ways to secure a “dream” deal are going direct to real estate agents for “help” to find a property leading to agents creating databases of buyers and cross matching them to available properties.
The agent contacts the buyers to advise them of the “off market” property he has ‘just listed’ creating the illusion of limited competition but often resulting in keen bidding and counter bidding between the (albeit limited) competing buyers. Remember, the agent only needs two keen buyers and he can create a bidding war between them pushing the price up… and up.
Forgetting real estate agents are mandated to get the best possible price for the “seller”, some buyers fall into the trap of believing the agent is acting in their best interests and are vulnerable to exploitation, that is, paying too much.
Sometimes it can be better to invest in a skilled negotiator to act on your behalf. Buyer beware!!