Auction results solid, but outlook mixed for prestige property

The property market is continuing to deliver solid results despite the cooler weather, with Melbourne recording an auction clearance rate of above 80% for a ninth consecutive week.

But debate is continuing to rage over whether the luxury end of the property market is seeing a recovery, with experts disagreeing over whether high-end property has already started to see price gains.

Louis Christopher, property advisor at research group Advisor Edge, says the luxury end of the market has continued to perform badly, with properties above $1 million struggling to sell.

He says there continues to be an over-supply of property as sellers continue to discount their prices in an attempt to sell as quickly as possible.

“I think the anecdotal evidence suggests that the luxury property market is possibly not in the bad situation we were last year, but still struggling.”

“I don’t think it’s recovering quickly, however. I think when we start to see recovery in the overall economy is when luxury property will follow. There have been good signs, but are we in a recovery? No. That certainly isn’t happening now.”

But David Airey, president of the Real Estate Institute of Australia, disagrees and says the luxury end of the market is holding up well, and that pricing discounts show sellers have readjusted to realistic pricing levels.

“We have seen a recovery in luxury property, and that’s probably started last month or in May. Most capital cities are recording sales in the millions and above the $1 million bracket in auction, specifically in Melbourne, Perth and Sydney. It’s showing significant improvements in that part of the market.”

“I’d like to see a few more months of sustained market activity, but there are certainly signs that in those three capitals a recovery in the top end is being seen. Now, the recovery has come from the bottom end of the market, but recovery is still starting to be seen.”

Airey says he is puzzled over claims from Christopher that the market is not experiencing a recovery just yet, and says that examining detailed sales reports should give an indication of the market’s status.

“If you look at the sales lists, there are properties selling over $1 million under the hammer, and properties at auction are a great test of the market, as there is competitive bidding, particularly above that $1 million mark.”

Airey points to Melbourne’s property results over the weekend, which show an 85% clearance rate with 247 properties sold, with their total value reaching $145.1 million.

While the number of properties on offer was lower at just 292, the Real Estate Institute of Victoria says volumes will increase to about 400 over the next few weekends.

REIV chief executive Enzo Raimondo said in a statement the result shows the market “continues to benefit from the maintenance of low interest rates, a factor that increases the affordability of property. This has clearly helped to stimulate demand over the past few weeks and is one of the foundations that the spring selling season will be built on.”

In Sydney, auction clearance results reached 69%, down from the results in the 70s recorded in the past few weeks. Total sales reached $77 million from 105 properties sold.

Brisbane recorded a 42% clearance rate, with eight properties sold and sales totaling $5.2 million. Adelaide saw a clearance rate of 67%, but with just four properties sold, totalling $1.6 million.