Real estate buyers are ''overshooting'' the market and paying top-dollar prices that are above fair market value, property experts say.
Estate agents say many inner-suburban properties are now snaring four or more bidders. Some houses and units are selling at auction for 10 per cent above what comparable sales data indicates they should be worth.
''Buyers need to be really careful they don't get involved in bidding wars that inflate the price disproportionately,'' Catherine Cashmore, a buyer's advocate with National Property Buyers, said on Saturday.
''We have a bull run on the market at the moment because 50 per cent of our market is made up of investors.''
The Real Estate Institute of Victoria reported an interim clearance rate of 72 per cent from 686 reported auctions on Saturday.
Jellis Craig director Andrew Keleher sold a modern house on a 4000 square metre block at 6A Read Street, Templestowe, for $2.28 million. The reserve was in the ''high one millions'', he said.
''We had five bidders on that property today,'' Mr Keleher said. ''Nine months ago it was on the market with no buyers.''
Jellis Craig averaged four bidders an auction across 40 auctions on Saturday.
Some entry-level properties are also fetching prices well above the reserve. Hocking Stuart sold a single-fronted house at 129A The Avenue, Spotswood, for $580,000 off a reserve of $480,000. Director Leo Dardha said the company also sold a house in Footscray for $685,000, which was $85,000 above reserve.
Buyer's advocate Paul Osborne said ''a good number'' of buyers were bidding without fixing a firm price limit. ''You are seeing this overshoot, particularly with the low interest rate environment, where some properties are selling for 10 per cent more than what you would consider to be fair value based on other precedents.''