Less-than-ideally located Melbourne properties attract spirited competition at auction

For home buyers struggling to purchase the right property in Melbourne, life just got more challenging.

Not only do well-heeled buyers have to contend with raging levels of competition for quality homes, those on tighter budgets also have to dig deeper to buy properties in their price range.   

Across the city at the weekend, several properties with less-than-optimum locations attracted large crowds of onlookers and feisty bidder competition.

The widespread interest in unrenovated houses and apartments was reflected in a better-than-expected weekend auction clearance rate of 82.4 per cent, reported by the Domain Group on the first 1000-plus auction super Saturday of this year.

A-grade properties (renovated, in quiet streets, near transport) fare well whatever the prevailing market conditions. The true test of a super-strong or boom market is when the B- and C-grade properties also surge – and that was the headline story for buyers and sellers on Saturday.

Most high-end properties did spectacularly well at weekend auctions.

RT Edgar auctioneer Mark Wridgway fielded two bidders at the sale of an upscale contemporary residence at 17 Spring Road, Malvern, the most expensive property sold in Melbourne at the weekend.

“The opening bid was $4.4 million, which was $100,000 over reserve, and the final price – $5,075,000 – was $775,000 over reserve,” Mr Wridgway said. “There were 17 bids, most in $100,000 increments, and the bidding process was all over in about 45 seconds.”

He said 10 other parties confirmed their intention to bid before the auction but were blown away by the high first bid.

Uninhabitable properties and knock-down jobs also sold with ease on the weekend – a clear indication that the low-interest-rate-fuelled Melbourne market is on track, once again, to defy expectations of slower house price growth.

Jellis Craig Doncaster-based director Andrew Keleher said an average of three bidders put their hands up at each of the company’s 109 auctions on Saturday.

“We were a bit worried it was going to be a one- to two-bidder market this year, but it is definitely stronger than that,” he said “There is not a lot of stock around and after this weekend, there’ll be less.”

On Saturday, the late Lady Susan Renouf’s graceful home at 13 Struan Street, Toorak, sailed past its $5 million expected price after passing in for $4.55 million with two parties competing. Kay & Burton’s Andrew Baines said following negotiations with the top bidder, the house sold for “in excess of $5 million.”

“There were about 165 people there, which is a hell of a crowd for a $5 million property,” he added.

Mr Keleher said that in a quieter market, homes in the middle-ring suburbs located near power lines or on main roads would sit unsold for many months. However, in the current market, these properties were clearing quickly.

The same trend was evident in inner Melbourne at the weekend.

For example, a contemporary terrace at 166 Gipps Street, Abbotsford, drew 120 onlookers and five bidders, despite the property being located on a high-traffic thoroughfare and a stone’s throw from a rail bridge and noisy Hoddle Street.

The three-bedroom house sold to a young couple, who beat off several investors. Biggin & Scott’s Edward Hobbs said the $1.29 million sale price was more than $150,000 above reserve.

Meanwhile, four bidders pushed a run-down cottage at 32 Page Street, Albert Park, to $1.34 million after the bidding opened at $1.2 million. “That’s about as hot as it gets for an unliveable house with an outside toilet,” said Greg Hocking Holdsworth’s Warwick Gardiner.

But watch out. There’s likely to be relief for frustrated buyers in March, especially in Melbourne’s inner-eastern suburbs where agents are reporting very strong listings of quality homes.

It’s a similar story in the tightly-held suburbs of South Yarra and Prahran, where listings are on a strong upward trajectory as well.

It just might be enough to swing the market pendulum a little in buyers’ favour.