Hot Melbourne market settles after holiday pause as rents surge

The strong Melbourne auction market is back in full swing this weekend following the lengthy holiday distractions of the past few weeks.

More than 1000 homes are scheduled to go under the hammer this Saturday which will be well ahead of the 705 conducted last weekend but lower than the 1270 listed over the same weekend last year.

Melbourne’s west will again be the most popular region for auctions on Saturday with 199 followed by the north east 145, the outer east 137, the north 121, the inner city 117, the inner south 114, the south east 90, the north 68 and the inner east with 87 auctions listed this weekend.

Craigieburn will again host the most suburban auctions this weekend with 22 followed by Glen Waverley 18, Epping 15, Mount Waverley 14, Hopper Crossing and East Bentleigh each with 13 and a number of suburbs with 12 auctions scheduled including St Albans, Richmond, Rowville and Coburg.

The Melbourne home auction market returned last Saturday following the Easter holiday pause the previous weekend with yet another strong and remarkably consistent clearance rate for sellers.

Melbourne recorded a clearance rate of 79.5 percent last weekend which was well ahead of the holiday impacted 61.1 per cent recorded the previous  weekend and well ahead of the 74.7 per cent recorded over the same weekend last year.

Although last Saturdays result was marginally lower than the clearance rates recorded over the two weekends prior to Easter, it remained close to the 79.8 per cent average rate reported over the season so far.

Melbourne’s eastern suburban regions recorded the highest clearance rates last weekend although most areas and suburbs continue to secure positive results for sellers.

Surging demand driven by record levels of migration continues to impact Melbourne’s rental market with rents increasing sharply. The median weekly asking rent for a house increased by 2.4 per cent over the March quarter to a record high $420. Unit rents also increased  over the quarter – up by 3.9 per cent to $395 per week and a new record high.

Despite significant levels of recent new development, Melbourne  residential rental vacancy rates have tightened over March to just 1.2 per cent for houses and 1.5 per cent for units indicating a clear shortage of vacant rental properties.

Recent actions by banks and policymakers to reduce investor activity will not be welcomed by tenants in Melbourne’s tight rental market if it results in yet higher rents.

Dr Andrew Wilson is Domain Group Chief Economist Twitter@DocAndrewWilson join on LinkedIn and Facebook at MyHousingMarket.