Melbourne's inner city auctions bucking the trend, as Hawthorn, Camberwell and South Melbourne defy expectations

Some residential property sales in inner Melbourne are defying expectations. At the weekend, a 140-year-old former workers cottage in Richmond surpassed its reserve by $375,000, while hefty prices were paid for homes at well-attended auctions in Hawthorn, Camberwell and South Melbourne.

The inner city is going against the trend of weaker housing market growth, which was reflected in this weekend’s auction clearance rate of 53.3 per cent from the results of 586 auctions reported to the Domain Group.

The revamped Richmond property, at 4 Derby Street in the popular Richmond Hill area near the MCG, was constructed in the 1870s and is believed to be only the second house built in the suburb.

More than 70 people turned out on Saturday to see the 250-square-metre property tested in the market.

Marshall White auctioneer Nicholas Brooks kicked off the auction with a $1.6 million vendor bid and was soon fielding offers from three parties – a downsizer, a young couple and a family looking to upgrade.

Vigorous bidding quickly pushed the home beyond the quoted $1.7 million to $1.87 million range. The property sold under the hammer to the downsizer for $2.245 million, well up on the $1.87 million reserve.

Mr Brooks said the three-bedroom property drew interest because of its heritage credentials and two rear parking spaces. The fact that it had been renovated but still had the potential for further improvement was another plus.

“Because the front door was right on the fence line and there wasn’t that token five-metre offset to get to the front door, the property felt as if it was 350 square metres in size,” he noted.

He said property inspection numbers and the level of requests for sales contracts in inner Melbourne had recently been on the rise: “We are still seeing some pockets and some properties that struggle, but even when auction clearance rates were at 80 per cent, we were seeing that.”

Other auction properties in inner areas sold strongly for prices that fell within their quote ranges.

Greg Hocking Holdsworth quoted a four-bedroom, double-fronted Victorian home at 406 Coventry Street, South Melbourne at $2.3 million to $2.5 million. The property sold at auction for $2.36 million, after two bidders chased down the keys.

Selling agent John Holdsworth said quote ranges had become more relevant to prospective buyers.

“Quotes are becoming more accurate because we haven’t got a market that is jumping ahead,” he said. “And agents are falling into line with their quotes, I would hope.”

In Hawthorn, more than 100 onlookers attended the Saturday morning auction of a Spanish mission-style home, at 55 Swinburne Avenue, tightly held by one family for 65 years.

Auctioneer Paul Richards, from Bekdon Richards, told the crowd the current market was a great one in which to buy.

“Some people say it has come off a bit, which is probably true,” he said, before accepting a $1.8 million opening bid from one family.

Two other bidders then joined in and pushed the price to an on-the-market figure of $1.99 million. A few minutes later, the house sold for $2.165 million.

The most expensive house sale reported to the Domain Group was for a large inter-war villa at 14 Christowel Street, Camberwell. This property sold at auction for $3.125 million through Noel Jones.

This weekend, 834 properties were scheduled to go to auction. Of these, 324 sold, 22 were withdrawn, and 240 were passed in. A further 226 booked auctions are still to be reported by agents.

On this weekend last year, conditions were more upbeat; about 920 auctions were scheduled, and the clearance rate breezed in at 67.5 per cent.

Advantage Property Consulting reported that three Chinese-Australian families contested a four-bedroom home at 29 Gordon Street, Balwyn. “It sold for $2.265 million, which was $265,000 or 13 per cent over the reserve,” said managing director Frank Valentic. “But we are seeing more vendors sell before auction.”

Another buyer’s advocate Paul Osborne, from Secret Agent, believes Melbourne’s market has seen “the end of the easy growth across the board” because official interest rates are unlikely to go lower and banks are applying out-of-cycle rate increases.

He said if the banks kept on reducing the amounts they were prepared to lend home mortgage customers it would dampen house prices, but more so in the middle and outer suburbs than in the inner suburbs.

“The inner-city will be affected because that market has been very frothy,” Mr Osborne said. “But it will perhaps find a floor in the values more easily than the middle and outer rings of Melbourne.”