Ignore The Block 2014 warehouse auction results: Melburnians increasingly thinking now is not the time to buy
Today's Westpac Melbourne Institute index that tracks sentiment on ‘time to buy a dwelling’ indicates it is falling among the public, as wiser buyers seemingly await the Sydney and Melbourne markets to cool or pause a little.
No winner reveal - so mild spoiler alert from Property Observer - but don't expect tonight's The Block 2014 Albert Park Fans V Faves results to reflect that trend as all four O'Grady Street warehouse properties have sold at auction within quite a bullish narrow price band.
No tearaway winner in this inverted renovation auction sweepstakes countdown. Though it was such a unique opportunity, there had to be a couple of bidders who at one key point during the four offerings, went mildly silly relative to what was on offer and on the unfolding comparative prices for the approximate 250 square metre apartments. The auction order appeared almost to dictate the outcome.
Ofcourse a fit out can always be discarded, where as location and aspect, which is especially misunderstood, are harder to shift and also to value. We know The Block is not the real world of property, but for many viewers it's a rare insight used by the foolhardy to gauge the market temperature. It does however realistically show auction desperation.
The Channel 9 series certainly secured what the viewing public wanted. Huge over reserve prices given waywardly adjusted, already conservative asking prices set by nervous producers wanting to avoid a repeat of the 2011 Cameron Street, Richmond auction disaster.
Huge over reserve prices given waywardly adjusted, already conservative asking prices set by nervous producers wanting to avoid a repeat of the 2011 Cameron Street, Richmond auction disaster.
So at 47 O'Grady Street healthy auction prices paid by $2 million plus owner occupiers seeking over-capitalised warehouse offerings complete with double rainhead showers.
Quite a remarkable residential transformation of former Mushroom Record offices that replaced the former silent movie hall that closed in 1929. To think something sold at $66,250 in 1979 could now reap in around $9.6 million, having been bought by the Watercress production company from Lloyd Williams for $5.85 million last year.
Back to the Westpac index time to buy dwelling which fell by a further 3.9% during April to now be down by 20% nationally from the recent peak in September last year.
It is significant that the fall has been particularly acute in Victoria where the peak to trough slump has been 39%.
That came because of a particularly sharp 19% fall in April. And I would suggest it's highly likely that the Melbourne market is also making a call - differentiating between houses and units.
Last weekend Robert Larocca at RP Data noted Melbourne’s preliminary clearance rate had fallen to the lowest reading so far this year.
In the private treaty Melbourne market, Larocca says new listings are almost one third higher than this time last year, and he says the current numbers "paint a picture of a remarkably healthy market."
He noted vendor discounting is lower at 6.1% for houses compared to 6.7% a year ago and 5.8% compared to 6.5% for units, in the most recent data.
But have a look at the the time on market data for the month of February showing that the average time between advertising and the contract of sale being signed was 57 days for houses and 65 for units in Melbourne.
For the housing market, this is considerably stronger than last year when it was 72 days, however, the unit market is showing the impact of high levels of new supply as it is now longer than a year ago when it was 60 days.
The overall Westpac Melbourne Institute Index of Consumer Sentiment actually increased by 0.3% in April, though Westpac's chief economist, Bill Evans, commented while the overall index hardly moved, the components were quite volatile.
“While the Reserve Bank did not lower rates further at its April meeting there was minimal speculation around a move and therefore Reserve Bank policy is likely to have been a neutral for this month," Bill Evan said.
"In fact the confidence of those folks with a mortgage fell by just 0.7%," he noted.
POSTSCRIPT ON THE ACTUAL BLOCK 2014 RECORD SMASHING AUCTION RESULTS
The results were as follows:
- Steve and Chantelle, 1/47 O’Grady: $2.47 million ($636,000 above the adjusted reserve)
- Alisa and Lysandra, 3/47 O’Grady: $2.375 million ($616,000 above the adjusted reserve)
- Kyal and Kara, 2/47 O’Grady: $2.44 million ($567,250 above the adjusted reserve)
- Brad and Dale, 4/47 O’Grady: $2.31 million ($507,250 above the adjusted reserve)
- Good luck for anyone embarking on a property flipping venture on the back of what they've just witnessed!