First-home buyers utilise stamp duty cuts and upper end of Melbourne auction market slows

Generation Y buyers upped the ante to purchase properties at the weekend as new stamp duty concessions for first-home buyers revved up sections of Melbourne’s auction market.

The Domain Group reported a clearance rate of 73.5 per cent from 558 reported auctions on Saturday.

“It is a pretty good result that has been inflated by first-home buyers or certainly supported by them,” the Domain Group’s chief economist Andrew Wilson said.

On Saturday 70 Kay Street, Carlton was passed in on a $2.5 million vendor bid.

In Richmond, a young woman beat off two competitors to secure a one-bedroom apartment at 202/47 Murphy Street for $458,000.

Biggin & Scott Richmond auctioneer Russell Cambridge said the woman engaged a buyer’s advocate to bid on her behalf, with the two-year-old unit being declared on the market at $420,000.

His office auctioned 10 residential properties in Abbotsford and Richmond on the weekend, many of them quoted at below $1 million.

35A Russell Street, Surrey Hills sold for $1.3 million on Saturday.

At another Richmond auction for a two-bedroom cottage at 13 Francis Street, two young single people pooled resources to buy the property for $1,165,000. The home was quoted at $900,000 to $970,000.

“They made it quite clear they were not together and not partners, but they bought the property together as friends, which I thought was not a bad move,” Mr Cambridge said.

• Related: Click here for Saturday’s auction results
• Related: Click here for the Market Snapshot
• Related: First-home buyers beaten at Highett auction   

Entry-level properties set the pace in Melbourne’s weekend real estate market. On July 1, the Andrews government abolished stamp duty for first-home buyers purchasing below $600,000 and introduced a sliding scale of stamp duty discounts for properties between $600,000 and $750,000.

On Saturday 63 Liddiard Street, Hawthorn passed in for $2,775,000. After negotiations, it sold for $2.9 million.

The initiative will hand a $15,000 saving to many young buyers. Reduced stamp duty costs also mean first-time buyers will be able to borrow up to $100,000 more than they could previously, which will push up prices for some budget-priced homes.

Saturday’s market for higher-priced properties ran at a canter, not a gallop. Many $2 million-plus homes attracted slow and cautious bidding as prospective buyers tried to take advantage of the market’s reduced buyer pool.

There are fewer rival buyers to compete against in winter because most homeowners buy and sell in spring or autumn.

A three bedroom apartment at 23/350 Toorak Road, South Yarra sold for $1,235,000 on Saturday.

But while buyer numbers pull back at this time of the year, so do property stock levels.

Dr Wilson said sellers were often more motivated to achieve a sale in the winter months.

“Winter can be a good time to buy because you can get a higher proportion of the sellers who are more highly motivated,” he said.

13 Francis Street, Richmond sold for $1,165,000 on Saturday.

“You also have fewer buyers in the market as most people make their buy and sell decisions at the start of the year or about now if they are going to sell in spring or at the end of the year.”

On the weekend, the million-dollar-plus auction market was notable for restrained bidding. Buyers also attempted to drag down selling prices by reducing bid increments.   

A crowd of 90 people attended Jellis Craig’s auction of a double-fronted Victorian home on a 636-square-metre block at 63 Liddiard Street, Hawthorn. But extracting bids from those gathered was difficult for auctioneer Alastair Craig.

He had to post two vendor bids – the second at $2.4 million – and refer to the owner as the crowd stayed mute.

Eventually, a woman offered $2.45 million, then two more parties joined in. The property was passed in for $2,775,000. After negotiations, it sold to the woman for $2.9 million.    

“I think buyers have slowed down their enthusiasm for bidding at auctions,” Mr Craig said. “I don’t know whether or not that is because they are being a little cautious, but I’d say we are still getting two to three bidders on most of our auctions.”

Across town, a decommissioned pub with a second dwelling on title failed to garner interest.

Nelson Alexander sales director Arch Staver told the crowd of 15 that the seven-bedroom property at 70 Kay Street, Carlton would “lease out in a flash”. But there were no takers and the property was passed in on a $2.5 million vendor bid.

Mr Staver said there was a lack of consistency in the market with some properties that agents expected to do well failing to attract much interest. In other cases, properties that agents had concerns about, were performing very strongly.

Certainly, some property types are performing better than others. For example, downsizers robustly competed for a three-bedroom apartment at 23/350 Toorak Road, South Yarra.

Buyer’s advocate Miriam Sandkuhler, from Property Mavens, said four bidders pushed the Jellis Craig-listed unit beyond its $1.1 million reserve to a selling price of $1,235,000. The buyer was a downsizing owner-occupier.

Fletcher’s director Tim Heavyside passed in one house at auction in Surrey Hills but sold another in the suburb for $1,385,000.

He said the three-bedroom property, at 35A Russell Street, attracted three strong bidders and was on the market at $1.3 million.

“Inquiry is solid, but the truth is there is not much stock out there,” Mr Heavyside said.

“The properties that are just coming on at the moment are getting good interest – there are good levels of email, phone and text message inquiries as well as of physical inspections of properties.”

In addition to the 558 reported auctions on Saturday, the results of a further 155 scheduled auctions were not reported by agents.