Property buyers turn their gaze to budget, interest rates
Brad Teal agent Noel Kelly. Photo: Ken Irwin
PROPERTY players will be watching tomorrow's news with keen attention as the Baillieu government unveils a difficult budget and the Reserve Bank of Australia possibly cuts interest rates.
The RBA is widely expected to cut the cash rate by 50 basis points, which could help boost the fragile confidence of first home buyers.
The importance of the housing market to the broader economy is underscored by the impact it has already had on the Victorian budget.
The falling value and volume of stock sold in the past year has put a hole in the revenue collected by the government from the stamp duty paid on property transactions.
The Baillieu government is expected to cut how much revenue it books from stamp duty in 2011-2012 to $3.29 billion, down from previous estimates of $3.65 billion.
Worse, it is expected to reduce its predicted stamp duty take for the following three financial years, with a total $1.12 billion expected to be lost from revenue by the end of 2015.
While a range of different market analysts indicate prices have been in flux over the past year, agents are tentatively suggesting prices have started to settle down and properties are clearing the market.
Melbourne's auction clearance rate stayed steady at 60 per cent over the weekend from 520 auctions, although the final figure may drop slightly after the remaining 67 results are reported during the week.
Nelson Alexander auctioneer Arch Staver said his firm's results were ''patchy … like everywhere else''.
''Anything that represents value, buyers want. If it doesn't, they won't buy,'' Mr Staver said.
Biggin & Scott agent Claudio Perruzza said, unlike 2011, properties were selling shortly after they have passed in at auction.
''Last year if they passed in, they just sat there. No one wanted them,'' Mr Perruzza said.
''But prices are starting to stabilise.''
The state of the market was epitomised in St Kilda where 11 auctions were due to take place over the weekend - the busiest suburb in the city - along with an extra five in East St Kilda.
A tiny art deco villa unit at 7/45 Jackson Street (but on Enfield Street off the seedy main drag), attracted a huge crowd of about 100 people. It needed work but had plenty of charm.
Buxton agent Arthur Apostoleros had originally quoted an expected sale price of between $300,000 and $330,000 and five bidders emerged during the course of the auction.
Although it was part of a block of eight units, all attached, the one-bedroom unit and its pretty back garden were on a single strata title.
The bidding opened at $300,000 and moved quickly in $5000 and $10,000 lots before selling under the hammer for $415,000 to a young man.
An hour later, just 10 minutes walk down Grey Street, a house at 117 Barkly Street attracted a single bid of $700,000, well short of its $740,000 reserve.
Negotiations between agents Biggin & Scott and the sole bidder did not result in a sale. While the house was close to a wide range of cafes, bars and pubs, it was a couple of doors down from the very busy intersection of Grey and Barkly streets.
The pool of potential vendors was narrowed by a very awkwardly shaped backyard with drawn-up plans for a second property.
Nine results were reported for St Kilda: five sold; three passed in; and one sold before the auction date.
Biggin & Scott had better luck with a ground floor flat at 4/7 Ardoch Avenue in East St Kilda, which fetched $887,000 under the hammer.
Mr Perruzza said there were four bidders at the auction who pushed the price well past its $825,000 reserve.