A record number of homes went under the hammer in Melbourne last week, the second week of December, with the city recording a clearance rate of 65.3 per cent based on 1922 reported results.
That performance was stronger than Sydney’s clearance rate but still marked a decrease from the weeks prior.
There were 2,309 homes taken to auction across Melbourne, according to CoreLogic. The previous record was set in the week ending March 25, 2018, when 2071 properties were taken to auction.
Woodards Blackburn director Cameron Way said that the uptick in auction numbers was likely a result of delayed sales activity during Melbourne’s most recent lockdown.
“I think it would be post lockdown activity and just trying to make plans before the year comes to a conclusion,” he said
Stock levels had increased 20 to 30 per cent in the last month, Mr Way said.
“We’ve only got a few weekends to go anyway so the auctions get compressed as a result,” he said.
He said that the reduced clearance rate may not tell the full story of the current market, with many homes selling in the week following auction.
“It's probably a couple of things, stock levels being higher than normal and I think another factor is the lack of follow through on reporting results. The majority of properties that do get passed in sell in the week following an auction so you do get a bit of a distortion there.”
He predicted that the busy auction market would extend into the new year, with many agencies resuming campaigns earlier than is traditional.
“I think the year will start off a bit earlier again for us. We started it earlier last year and we were conducting auctions in mid to late January.”
Property transactions in the year to November 2021 trended above the decade average, according to CoreLogic, despite social distancing restrictions impacting campaign activity.
CoreLogic estimates there were 104,562 transactions across Melbourne in the year, 24.1 per cent higher than the decade annual average sales volume of 84,248.
CoreLogic noted that the difference in performance between houses and units had been stark during the pandemic, with house values up 19.5 per cent over the year and unit values only up 9 per cent.
Rental reductions in the apartment market had also seen high-density areas where investors made up a large proportion of owners, like the City of Melbourne and City of Stonnington, underperform.
Sydney house values grew by 30.4 per cent during the same period.
Mr Way said that it was unlikely that Melbourne property values would be able to catch up with those impressive growth rates, with the local housing market facing several headwinds.
“I think the Victorian economy is probably going to be a fair bit softer than some of the other states given our lockdown in comparison. I think the state budget has a lot of work to be repaired as well. We did have a lot of migration out of the state at the time of those lockdowns.
“Until international visitors can reignite I don’t see us catching up big time, I think our market will remain relatively stable throughout.”
Mr Way said that the prospect of a rate rise and two elections - federal and state - next year also loomed as a test for the market.
“I think any time there's upward movement in rates it has an impact on buyer sentiment. Obviously we’ve got two elections next year, federal and state… I think the elections will both be disruptions.
“We saw that in 2019, we certainly saw a softening in the market leading up to the federal election just with that element of uncertainty with the opposition's policies on capital gains and a few other things,” he said.
CoreLogic head of research, Eliza Owen, said that it was unlikely any of the major markets would repeat their 2021 performance.
“Listings levels are normalising across Sydney and Melbourne, and affordability constraints are worsening across most housing markets. As a result, it is expected that 2022 will see far milder rates of appreciation in Australian dwelling values,” Ms Owen said.
Consumers tip property price rise
Experts may be predicting a market slowdown, but many Australians still believe prices have some way to run in the new year.
A survey from comparison site Canstar found that 18 per cent of respondents believe prices will grow more than 20 per cent in the next two years, while 44 per cent are expecting a “steady increase”.
12 per cent of respondents expect prices to remain stable and 11 per cent expect them to ease or crash.
The same survey found that property remains a popular choice for first-time investors, ranking ahead of cryptocurrency.
The top three investment options among first time investors in 2021 were shares (80 per cent), followed by property (25 per cent) and cryptocurrency (24 per cent).
A separate survey from comparison site Compare the Market has found that 25 per cent of those who sold property between 2017 and 2021 had struggled to buy their next property.
The survey of 510 people who sold property between 2017-2021 found the main reason for difficulty was because of rising prices, nominated by 14 per cent of respondents, or due to a shortage of stock, 12 per cent.
Mr Way said that while the phenomenon was noticeable during the pandemic, when many vendors held off listing, it had likely eased in the past month.
“I think that’s probably alleviated in the last month with the extra stock. I would think with the greater supply coming on less of a challenge.”