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The last week has been a busy one at Advantage, following on from the last month where we had noticed a marked increase in enquiry and consumer sentiment, as most people feel that interest rates have peaked and are on the way down. With nearly all banks reducing their fixed rates to approximately 6.3%, we would expect to see the standard variable rate drop below that in the next 12 months or so.

Enzo Raimondo, CEO of the REIV said a clearance rate of 54 per cent has been recorded from this weekend’s auctions compared to 51 per cent last weekend and 66 per cent this weekend last year. The REIV's September quarter property update shows that the median price of homes sold at private sale has dropped by 1 per cent, from $485,000 to $480,000 since the June quarter. This is a better result than for homes sold at auction whose median price dropped by 5.1 per cent from $725,750 to $690,500. This is reflection that there is a greater demand for more affordable homes. There were a total of 576 auctions reported of which 313 sold and 263 were passed in, 175 of those on a vendors bid. Next weekend auction numbers increase again with 880 homes expected to be offered for sale. (Source REIV Website)

It is definitely a buyer’s market with market conditions stacked in favour of the buyer for 18 months or so. A great example was our purchase of a renovated 3 bedroom house with a pool at 25 Charles St Prahran for only $1.410 million ($95,000 under reserve and our client’s maximum budget and I was the only bidder in a crowd of around 30). Four years ago the vendor fought it out against seven other bidders in a crowd of 200, paying $1.45 million, $300,000 above reserve. As I ask my clients, when do you want to be buying this property, in the heated market of 2007 or when the scales have now tipped in your favour today?

Another example of the excellent buying opportunities at present was our conjunctional Vendor Advocacy sale of 202 Inkerman Street, St Kilda, a fully renovated 3 bedroom, 2 bathroom Edwardian with a double storey extension. It passed in on a vendor's bid of $1 million (reserve was $1.060 million) and a buyer would have paid 10-15% more pre-Anzac day last year.

The REIV released their September quarter median prices which showed that the median house and unit prices had decreased by 2.8% and 2.3% respectively. Though, despite all the global uncertainty, the yearly figures show that the median house price increased by 1.4% and the median unit price decreased by 0.8%. Many of Melbourne’s inner suburbs decreased by 5-10% to create much better buying opportunities, while over 20 more affordable middle to outer Melbourne Metropolitan suburbs had the strongest growth in the sub $600,000 price range.

Until next week...happy property investing.

Frank Valentic,

Managing Director