Melbourne’s searing property market is set for its biggest test this spring, with two Super Saturdays of auctions scheduled this week and next.

A whopping 1250 properties across Melbourne are being auctioned on Saturday, with another 1357 already booked for the next Saturday, November 27, Domain data shows.

The property market has boomed on the back of low interest rates and a shift to remote work that prompted a desire for more space. But as the number of homes for sale rises, price growth could slow.

“Melbourne is the auction capital of Australia,” said Nicola Powell, Domain’s chief of research and economics.

“The increased level of listings is in line with what we would expect – that reaction to coming out of lockdown, the reaction to having the theatre of on-site auctions again.

“So I think what we’re going to see over the next couple of weekends is a real test of seller pricing, as well as the depths of buyer activity and whether there are enough buyers out there to really absorb this level of auctions going to market over the coming two Saturdays.”

Dr Powell said the intensified level of auction listings was commensurate with this time of year, as buyers and sellers want to get their deals done before the Christmas holidays.

Despite this October exhibiting Melbourne’s strongest auction clearance rates since April 2017, there are early signs the city’s real estate sector could be starting to plateau.

The average number of active bidders at auction across Victoria has dropped from four people in September to 3.1 in the first half of November, recent figures from Ray White show, suggesting competition is still healthy but less frenetic.

Commonwealth Bank head of Australian economics Gareth Aird said the proportion of homes selling in the last few weeks had softened.

“[Auction clearance rates are] still very strong, albeit they have moderated a little bit in recent weeks,” he said.

“At some point, things start to slow a bit, and we’re probably at that point now. I think the other thing that’s important to note is that in recent weeks banks have been lifting interest rates on fixed-rate mortgages, which will exert a cooling effect on property prices.”

Mr Aird was quick to caution, though, that there was a difference between a market starting to level out and one that’s declining.

“The monthly growth rates of prices have been slowing, but they’re still strong. They’re coming off very high levels earlier in the year, and they’re still running at over one per cent a month, which, during normal times, is a very strong outcome,” he said.

Mr Aird’s viewpoint has been backed up by a forecast this week from ANZ economists Felicity Emmett and Adelaide Timbrell, who expect capital city housing prices to rise 6 per cent next year and fall about 4 per cent in 2023.

Barry Plant executive director Mike McCarthy said although certain metrics did support the notion of a cooling market, anecdotally, demand was still very positive, and prices still had plenty of headroom to rise next year.

“If we’re at a 70 per cent-plus clearance rate, we’re in a strong market. Eighty per cent-plus is really hot, and 90 per cent is white-hot,” Mr McCarthy said.

“We achieved a 92 per cent clearance rate on 100-plus auctions just last weekend, so it’s still white-hot, as far as we can see.”

One individual hoping today is a particularly super Saturday is Josie Petrolo, who is expecting to sell her two-bedroom Pascoe Vale unit at auction.

Ms Petrolo, who purchased a larger home in the same suburb just a few weeks ago, said the pandemic had necessitated an upgraded residence.

“It’s just myself and my son in the house, and he’s getting a bit older, and everyone needs their space now, and we needed more separation with the living areas,” she said.

“And also with COVID, like most people, I’m working more from home now, and I don’t have a separate office.

“So as a result of COVID, the lounge room has been converted into my office, and that just makes it really hard with home-schooling my son and working professionally.”

Anthony Monteleone of Jellis Craig Brunswick, who is handling the sale of Ms Petrolo’s home, said he was confident there was still enough demand in the market for a positive result.

“The market is still performing pretty strongly at the moment, and there’s still a lot of buyer activity out there, so we should continue to see strong results at least to the end of the year,” Mr Monteleone said.

Ref: JAMES ROBINSON (on 20 Nov 2021). Melbourne’s real estate market readies itself for Super Saturday double-header. Retrieved from  https://www.domain.com.au/news/melbournes-real-estate-market-readies-itself-for-super-saturday-double-header-1105797/.

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