Banks Still Frightening Off Bidders

The Sunday Age

Sunday July 13, 2008

Chris Vedelago

THE hits just keep on coming. With barely a pause for mortgage holders and buyers to catch their breath from the last round of official and market-driven interest rises, four more banks chose this week to raise lending rates - with another three expected to follow suit shortly.

While it may take weeks or months for the full effects to be felt, there was talk at the coalface yesterday that the rises would do plenty of immediate damage to a market already struggling under a succession of bad economic news.

Yesterday's clearance rate was 62% for 370 auctions, a drop of 4 percentage points on last weekend.

Enzo Raimondo, chief executive of the Real Estate Institute of Victoria, said the week on week slide was linked to the independent rises.

"Confidence in an already fragile market took another hit, thanks to the banks' decisions," Mr Raimondo said.

"While it's important not to make too much of it, this kind of news is always going to have some kind of impact."

Barry Plant Real Estate returned a clearance rate of 51% for the 41 properties the group auctioned yesterday, a significant drop from its typical result in the mid-60% range.

"The (network) reported that crowds and the number of bidders were down," said director James Hatzimoisis.

"It could be just the quality of properties on offer, or price expectations might still be too high given the circumstances of the market. Whatever the reason, it's well below where we would like it to be."

While the overall picture for the group wasn't great, Barry Plant reported yesterday's strongest sale result was its auction of 148 Brunswick Road, Brunswick. The derelict house on a 500-square-metre block sold for $794,000, or 22% more than its reserve, thanks to competition from five bidders. "They were basically buying it for the dirt with a development chance like this on the city fringe being pretty rare," Mr Hatzimoisis said.

It was a nostalgic but very motivated buyer who took 25 Mayston Street in Hawthorn East. The buyer had reportedly waited more than 20 years for the chance to buy back his childhood home. Through Hocking Stuart, three other bidders went for the restored three-bedroom Victorian, pushing the price $40,000 above the reserve to a sale at $820,000.

While the market is softening, prices haven't fallen nearly as far as one bidder hoped at the auction of 1/1A Stanley Street, Collingwood. The three-bedroom apartment had been quoted at $800,000-plus, but the bidder opened at just $500,000. "He did have a wry grin on his face and I do enjoy an optimist, but it was just far too optimistic," said Nelson Alexander agent Arch Staver. A vendor bid took the price up to $790,000 where it passed in after attracting no further bids. Negotiations are continuing with one party at the reserve price of $815,000.

Two hours' worth of after-negotiations led to an eventual sale for the single-fronted Edwardian at 52 South Street, Ascot Vale, which passed in for $757,000 but sold for $783,000. There was certainly no shortage of negotiators for the three-bedroom property, with Thomson Real Estate and VIP Vendor Advocates squaring off against Wakelin Property Advisory.

The highest sale price reported to The Sunday Age yesterday was for 39 Murrumbeena Road, Murrumbeena - a 1920s four-bedroom family home that sold for $1.3 million through Marshall White. Three bidders competed for the property, which had no set reserve.

There are 460 auctions scheduled next weekend, which is just slightly lower than for the same period last year.

Call Market Wrap on 9604 1188 between 3pm and 6pm, Saturday, with your auction results, tips and comments.

© 2008 The Sunday Age

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