The Melbourne property market continues to heat up, with the Victorian capital smashing a number of new records in March as sentiment and demand intensify.
The market for both houses and units also continue to show strong momentum in line with the uptick in pace seen all around the country.
Auction clearance rates above 70% again
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The monthly result rose 1.8 percentage points on February’s revised clearance rate and remains 24.6 percentage points higher than last year.
In fact, Domain research shows that monthly clearance rates have remained steadily above 70% for the past two consecutive months.
The results also show signs of further market momentum building following six consecutive months of clearance-rate improvement after Victoria’s strict 112-day lockdown in the latter half of last year.
Overall, auctions listed reached the highest level in March since 2018.
Homes listed to go under the hammer in March surged 32%from February and lifted 6.2% higher compared with last year.
Pre-auction sales above decade-long average
And it’s not just the volume of properties clearing at auction which has made headlines for Melbourne’s property market in March, the number of pre-auction sales has also set new records.
The Domain report reveals that the number of sellers accepting a price offer before the auction date rolls around is sitting at almost 1-in-5.
This is almost 7% above the decade-long average for Melbourne.
Meanwhile, a smaller proportion of Melbourne’s sellers chose to withdraw their home before the scheduled auction in March – just 8.3% of vendors fitted into the category according to Domain, taking the numbers back in line with the decade-long average.
This has trended down from the two Covid-19 induced bounces which Melbourne saw in 2020 when the outbreak first reached our shores.
By comparison, the property withdraw rate sat at 63.7% in April 2020 and 55.6% in September 2020. “[This is] another sign the property market is heating up and recovering from the COVID shock,” Domain’s senior research analyst Nicola Powell says.
Property auction prices reach new highs
Melbourne’s property auction prices have also managed to exceed previous record highs for the month of March, further demonstrating the robustness of the market.
Domain’s report reveals that the median auction price for Melbourne houses jumped an impressive 17.9% since March last year to $1.15 million after rising steadily annually since October 2020.
This is the highest monthly house auction price on record for the city.
Meanwhile, the median auction price for Melbourne’s units also increased 9% to $724,000 over the course of the year.
This is the first time in history that Melbourne’s monthly unit auction prices have surpassed $700,000 after rising steadily since December 2020.
Melbourne’s record-high property auction prices
Notes: The month of January has been excluded from time series analysis due to low volumes.
No sign of slowing down just yet
With auction clearance rates holding firm above 70 per cent on higher auction numbers, Powell is confident that the Melbourne property market can expect to continue to remain competitive throughout late autumn, and could provide unseasonable winter conditions.
“Buyer appetite remains even when tested on higher volumes of scheduled auctions,” she says.
Meanwhile the lift in market sentiment has also started to encourage sellers to Melbourne’s property market, with the number of auction listings rising.
“For buyers, the combination of low mortgage rates, high household saving rates and relaxed serviceability assessment has allowed buyers to take advantage of higher-price expectations and post-lockdown housing preference changes,” Powell says.
Low interest rates in particular are pushing buyers to make the move as home-buyers have quickly realised that their hard-earned money is much more worthwhile being used to invest in property rather than sit idly in a bank collecting near-zero returns.
Plus there are a range of incentives and grants currently available from both federal and state governments, such as a Victoria’s first home owner grant or the nationwide halt on stamp duty requirements on homes valued under $800,000.
If historically low cash rates and restricted supply weren’t enough, there also seems to be a buyer ‘FOMO’ or fear of missing out which is making wannabe homeowners spend their money.