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Melbourne auctions are dismal
Australian Financial Review Aug 12 2018 4:18 PM
Su-Lin Tan
The Melbourne auction scene is dismal with the general number of bidders now down to "one or none", buyer's agent Morrell and Koren's Emma Bloom says.
Despite being the nation's strongest auction market, Melbourne's auction volume has plunged year on year down to 718 auctions against 955 last year. Sydney too struggled for supply of homes for sales, at 459 auctions versus 798 last year.
Melbourne's preliminary auction rate at the weekend was 58.5 per cent, according to Domain. For the week, it was 61.3 per cent higher than last week's 57 per cent but still lower than last year's 69.8 per cent.
"A lot of auctions have been failing," Ms Bloom said. "What agents are now doing to protect the value of the home is to use an expressions-of-interest private treaty selling method."
Ms Bloom said they did this so they could pitch potential buyers against others sometimes "phantom buyers" in a less transparent sale process to an auction.
The only exception this past weekend was the sale of the five-bedroom family home at 8 Avenel Road in Kooyong at just over $3 million. It had a "surprising" four bidders, Ms Bloom said.
"I nearly fainted, it wasn't even that good," she said.
Ms Bloom said there was plenty of room to negotiate on properties of less than $5 million in Melbourne.
Despite growing weakness in Melbourne's housing market – which posted one of its lowest months in July with prices falling 0.9 per cent – the most expensive sold nationally over the weekend was the four-bedroom house at 5 Currajong Road in Hawthorn East at $3.1 million.
Inner city apartment building halves: Sydney hit hardest, Brisbane slips
Australian Financial Review Aug 12 2018 9:00 PM
Michael Bleby
Construction of inner city apartments nationally has nearly halved over the past year as banks have tightened credit and developers held back from starting new projects, JLL's latest Apartment Market report shows.
The slump was driven by Sydney, where the number of apartments under construction in the Sydney City and inner east, south, west and northern suburbs more than halved from 39,621 in the second quarter of 2017 to 16,143 in the three months to June this year, the commercial real estate agency said.
The same report shows Brisbane's pipeline of apartments under construction fell nearly 38 per cent from 11,048 in the second quarter of last year to 6877 this year. From a year earlier, Melbourne's total was little changed, down just 1.1 per cent to 19,696.
While the report at first glance appears to confirm expectations of a sharply deteriorating apartment-building sector – as evidenced last week by investor home loans that fell in June to their lowest level in nearly five years – a closer look shows it to be mixed.
From a year ago, the totals were down, but in Sydney and Melbourne, the two largest apartment-building cities, the number of units under construction actually rose in the second quarter of this year from the first.
"It's surprising that at this point in the cycle the number went up, rather than down, because there's a lot completing and you would expect that more would be completing than would be getting started," Mr Warner said.
"It is showing there are still some projects proceeding in all markets and it hasn't completely stopped."
In addition, the falling number of apartments under way in the inner-suburban areas of the NSW capital also reflected the greater decentralisation – as developers moved further out and focused on smaller projects with lower presales hurdles – than was happening in Melbourne and Brisbane, he said.
"The projects are moving outwards and nowhere is that more evident than Sydney," Mr Warner said. "In Sydney you have projects along transport routes. That has been a big theme."
No 'hard landing'
In Melbourne's city and inner-ring suburbs, the number of apartments under construction jumped nearly 23 per cent in the three months to June from 16,056 in the first quarter, reflecting Victoria's strong 2.3 per cent population growth.
"It's still bringing people into the state and it's also allowing developers to still tick over the sales a bit stronger than in some other markets," Mr Warner said. "But it's also the composition of the market. It is still more centralised than Sydney."
Even apartment problem child Brisbane was showing signs of stabilising and this was a likely indication of the path Sydney and Melbourne would follow, Mr Warner said.
"There were dire predictions for Brisbane [and] the market has been challenged but it certainly hasn't crashed," he said. "And we haven't had mass settlement problems by any stretch of the imagination. We've seen price declines and rents under pressure but we've probably seen the worst of that and we do expect it to stabilise over the next 12 months."
Credit curbs driven by banking regulator APRA and reinforced by lenders' own nervousness as a result of the banking royal commission had slowed developers' presales rates and created a cloud over future development, but even if it slowed the pipeline further, it would not be severe, he said.
"All that means is a slightly sharper downturn in the short term, but not a crash," Mr Warner said. "The supply-demand fundamentals are still likely to prevent a hard landing."