Melbourne buyers paralysed by fear as auction clearance rate plummets

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Melbourne buyers froze after Labor’s budget property tax hit, with the city recording a 56 per cent auction clearance rate. Picture: NewsWire / Andrew Henshaw

Melbourne property buyers froze after Labor’s budget property tax hit, with the city recording a 56 per cent auction clearance rate as bidder nerves gripped the market.

PropTrack data reported 467 auction results across Melbourne, with 263 homes sold, after Treasurer Jim Chalmers handed down a federal budget on Tuesday containing changes to negative gearing and capital gains tax.

The result gave the city’s auction market its first major post-budget test, with agents reporting buyers were still turning up but many were reluctant to make the first move under the hammer.
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Apollo Auctions Victoria director Andy Reid said the biggest hurdle was psychological, not financial.

“The psychological hurdles in the market right now far eclipse the economical ones,” Mr Reid said.

“The money is there. Buyers are there. But they need social proof.

“They need to see another buyer do something because then they feel safe to do something themselves.”

Apollo Auctions Victoria director and auctioneer Andy Reid - for herald sun real estate

Apollo Auctions Victoria director Andy Reid said Melbourne buyers were still there, but needed “social proof” before bidding.

Mr Reid said the budget noise, interest rate pressure and cost-of-living strain had left some buyers overthinking their next move.

“If they are not careful, they are just going to get analysis paralysis and do nothing,” he said.

He said a number of properties that passed in could still sell in the days after auction if agents handled post-auction negotiations well.

OBrien Real Estate Rowville agent Rene Mawad said buyer fear was clear after a home passed in despite 10 registered bidders.

OBrien Real Estate Rowville agent Rene Mawad said that hesitation had played out at a Buckingham Drive auction, where a $1.2m-$1.3m family home passed in despite attracting 10 registered bidders.

“There is a lot of fear around what is to come,” Mr Mawad said.

Treasurer Jim Chalmers handed down federal budget changes to negative gearing and capital gains tax that have rattled property buyers. Picture: NewsWire / Martin Ollman

Mr Mawad said three parties had made contact after the auction, with the home now in private negotiations.

He said the level of interest had still been rare for the current market, with the renovated home drawing family upsizers seeking a move-in-ready property.

“These are not wealthy people. They are not big-money buyers,” he said.

“They are very normal, very hardworking Australians.”

Ray White chief economist Nerida Conisbee said the budget contained “major changes to housing tax settings” that were significant enough to add uncertainty for buyers, sellers and investors, even though they were not immediate.

Luke Banitsiotis - Ray White chief auctioneer - for herald sun real estate

Ray White Victoria chief auctioneer Luke Banitsiotis said strong homes were still drawing competition despite post-budget buyer nerves.

Ray White Victoria chief auctioneer Luke Banitsiotis said strong properties were still drawing competition.

He pointed to 6 Azalea Ave, Mill Park, which sold under the hammer for $1.082m after seven bidders fought for the keys in front of about 65 onlookers.

“The crowd told the story before the bidding even began,” Mr Banitsiotis said.

Camberwell recorded Melbourne’s top reported auction result, with 10 Callanish Rd selling under the hammer for $2.86m.

The Burwood home at 41 Morton Rd was Melbourne’s second-highest reported auction sale, fetching $2.61m.

Melbourne’s top reported auction result was 10 Callanish Rd, Camberwell, which sold for $2.86m.

It was followed by 41 Morton Rd, Burwood, at $2.61m, 3 Libere Crt, Doncaster, at $2.6m, 28 Newry St, Fitzroy North, at $2.526m, and 6 Kangerong Rd, Box Hill, at $1.9755m.