March 31 will be Melbourne’s first million-plus super Saturday, but record prices still rare

At 6pm on Saturday, the James clearance rate for $1 million-plus Melbourne properties was 57% from the 23 auctions we attended. That figure represented a dip down from last week, but the stock quality was not up to what we have been seeing lately.

The Weekly Review Bidderman, our demand indicator, was 1.3 bidders per auction. One in three homes were ducks (no-bidder auctions) – a substantial change from two weeks ago. However, again this may have been simply a reflection of this weekend’s overall lower quality.

The market away from auctions is not as quiet as these stats may indicate. As a company we have bought six homes in the last fortnight (Kew, Brighton, GLEN IRIS, Black Rock, Balwyn and St Kilda), and the overall $3 million-plus market has had a number of substantial sales.

Next weekend is a solid one, stock-wise, with double the number of this weekend’s scheduled auctions at around 100. The pre-Easter weekend of March 31 will be our first super Saturday for 2012, with the number of $1 million-plus auctions approaching the magic 150 mark. The hallmark for a "super Saturday" is usually more than 1,000 properties overall.

Many parts of the market are still clearly operating at lower price levels than in previous years. The land only segment is a case in point. For instance, we saw 19 Ebden Black Rock pass in this weekend for $1,525,000 after having changed hands for almost $2 million a few years ago.  This is a good spot. But Black Rock, like Balwyn North and BENTLEIGH East are fringe suburbs, and fringe suburbs are seeing top-end land prices drop and drop at faster rates than Melbourne’s jewels such as Brighton, HAWTHORN and Toorak. This is a normal market cyclical phenomenon where fringe land prices increase more dramatically (percentage wise) in rising markets but also fall at a faster percentage rate in tougher markets.

So despite the uplift in activity in the last month – and there really has been an uplift in activity – the “record price” is still clearly the  exception rather than the norm in early 2012.

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.