Population surge fires up market

02 April 2014

Chris Tolhurst - The Age, 30 March 2014

Home buyers purchased three out of four properties put to auction in Melbourne on Saturday as the market easily absorbed a big increase in listings.

Population growth pressures and strong demand for homes near schools and transport are boosting sales and setting the scene for further house price growth, especially in the inner suburbs.

About 1160 properties went under the hammer in metropolitan Melbourne, and buyers and sellers were keen to make transactions.

Jellis Craig director Andrew McCann said there was high demand for properties priced from $1 million to $2 million.

On Saturday his company saw six bidders vie for an unrenovated period house in Wattletree Road, Malvern East. It sold for $1.885 million, well up on expectations of $1.4 million.

''There is strong competition for the more generous land allotments, even on main roads,'' Mr McCann said. ''For a Wattletree Road address needing a renovation to bring six bidders and almost $2 million shows there is some real strength in the $1 million to $2 million market.''

Figures from Fairfax-owned Australian Property Monitors show weekend clearance rates have averaged 74.2 per cent over the past eight weeks. The market held up well on Saturday, with APM reporting a clearance rate of 72 per cent from 859 auctions.

The Real Estate Institute of Victoria posted an interim 71 per cent clearance rate from 1053 results.

Melbourne has dominated Australia's population growth in recent years. The city attracts about 25 per cent of net overseas migration to Australia, which has been running at more than 200,000 arrivals a year since 2004.

Melbourne is also outperforming other states in attracting residents from interstate.

The director of Monash University's Centre for Population and Urban Research, Bob Birrell said there was a significant increase in young households looking to buy homes.

''Melbourne is growing at 80,000 people a year, which is enormous,'' he said. ''There are a lot of aspiring households around, and given that overseas migration is continuing at record levels, high levels of new household formation will continue.''

Tim Heavyside, from Fletchers, is seeing solid demand from downsizers and young families for single-level properties.

''They're like gold at the moment - I had four bidders on a three-bedroom, two-bathroom villa-unit in Surrey Hills today and it was very aggressive,'' he said.

''Downsizers went nuts for it and it sold very well.''

APM senior economist Andrew Wilson said the eastern suburbs and inner southern areas were outperforming other precincts.

''Those areas have been tracking at 80 per cent or above for clearance rates for houses,'' he said. ''They are clearly the strongest parts of the market.''

Agents say many prospective buyers sold an entry-level property last year and are now looking to buy a larger home.

The robust state of the inner suburban market was reflected in the results of some agency groups on Saturday. Jellis Craig had a 78 per cent clearance rate, selling 59 from 75 auction properties, Fletchers sold 25 from 30 properties and Biggin and Scott also notched up a clearance rate of 78 per cent, selling 29 from 37.

RP Data spokesman Robert Larocca said there had been a substantial surge in listings over the past three weeks.

''It signifies a shift in the market,'' he said.

''The overall strength of the market in March has been surprising.''

APM expects 1000 auctions will be held next weekend.

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