Melbourne’s north to run hot in 2017

As Melbourne’s property market heads into 2017, the north of the city is cranking up a gear with record high auction volumes, sales and prices growth.

New Real Estate Institute of Victoria data shows that Melbourne’s northern real estate markets are especially solid, with auction volumes increasing sharply. Overall sales activity through 2016, including private sales, is also well up on 2015 figures.

In Coburg, there were 288 auctions held last year, of which 235 properties sold to produce an 81.6 per cent clearance rate, according to the REIV.

Northcote also did well, notching up a year-round auction clearance rate of 80.1 per cent. Meanwhile, Preston delivered for the vast majority of vendors, with the suburb generating a clearance rate of 75.7 per cent from a very large roll call of 378 auctions in 2016.

Hot on their heels, Brunswick East had a clearance rate of 73.8 per cent. Brunswick also scored 77.4 per cent.

These results augur well for prospective vendors in the New Year. But they also point to opportunities for well-researched buyers who are prepared to be flexible about their selections.

When clearance rates move above 70 per cent, the market favours sellers. But clearance rates generally have to shoot above 85 per cent for a market to be defined as a boom. Importantly, buyers can still exercise significant market power when clearances sit in the 70-80 per cent range.

Property types remain an important factor in driving sales.  Single-fronted cottages, for example, are attracting plenty of buyer interest and are set to be strongly sought-after in the north this year.

In a pointer to the likely shape of this year’s market, Nelson Alexander fielded a large number of bidders and prospective buyers at three auctions of inner-north cottages on December 10th last year.

Each attracted at least 80 onlookers and between four and six bidders.  Several underbidders who missed out on one auction property, then moved onto the next cottage sale to bid again.

Buyer depth was readily evident at Nelson Alexander’s auction of 173 Macpherson Street, Carlton North.

The two-bedroom house was quoted at $900,000 to $950,000, but six bidders pushed the figure considerably higher. The property, declared on the market at $1 million, sold for $1,301,000, more than 30 per cent above reserve.

Another cottage – at 11 Freeman Street, Fitzroy North – also performed strongly The three-bedroom house was quoted at about $1.3 million. However, competition from four bidders saw it go on the market at $1.45 million and sell for $1,655,000.

REIV chief executive officer, Geoff White, says growth in Melbourne’s north is being driven by buyers seeking affordability.

“Up-and-coming suburbs in the city’s north are relatively affordable and offer buyers great value for money,” he says.

“While Melbourne’s south-eastern suburbs saw some of the strongest auction volumes and price growth in 2015, buyers are now looking at alternative areas of Melbourne.”

According to the REIV, on average house prices in metropolitan Melbourne increased by 4.5 per cent to $740,000 in the 12 months to September 2016, with units increasing by 3.5 per cent to $545,500. During the period, the greatest growth occurred among inner city houses at 8.8 per cent to clearly exceed the $1 million price barrier.

In recent months, period homes in inner Melbourne have sold for as much as $10,000 per square metre as buyers focus on securing small, character homes in good locations.

The most sought-after area for these smaller – one and two bedroom – homes is in Melbourne’s north, where buyers continue to look for value.

Northcote achieved a $200,000 rise in the prices paid for cottages between June and August compared to the same period in 2015, according to REIV data.

Mr White says that the market is currently “ripe” for this sector of the market.

Contact your local Nelson Alexander office if you would like more information on the current property market in the inner north.