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'Striking' Sydney property owners 'too scared to sell' trigger market angst

This article was first published by Nick Lenaghan and Michael Bleby on the 9th Oct 2016 for afr.com.au | Image: An investor bought this one-bedroom unit at 6/45 Gipps Street in East Melbourne for $1,015,000 at auction on the weekend. Supplied

 

Weekend capital city property auctions saw some properties fetch prices far above reserve, with buyers outstripping sellers in 'abnormal' market conditions.

A one bedrooom apartment in East Melbourne, a leafy upmarket postcode one parkland away from the CBD, sold for a record $1.015 million.

The 76 square metre ground-floor apartment at 6/45 Gipps Street set a record for the niche suburb, with four bidders pushing it past its $850,000 reserve, said Caine agent Peter Hannon.

While the result raised eyebrows, Mr Hannon said the sale to a local investor should be no surprise. 

The north-facing apartment is one of just eight in the Knightsbridge building. It has 2.8 metre high ceilings and overlooks Darling Square. 

"There's no doubt it's a very strong result. There's a great deal of demand for East Melbourne property. Historically it's always been a scarcity there," Mr Hannon said.

"The investor just sees it as a really safe bet for their money."

The runaway East Melbourne sale helped pushed the preliminary clearance rate to 81.2 per cent among 1,110 listed in Melbourne on the weekend.

The auction action was even stronger in Sydney, with 81.5 per cent of the 774 listed for the week sold, according to early figures from CoreLogic. 

In Canberra, the clearance rate was 86.7 per cent this week across 68 auctions.  

At Summer Hill, in Sydney's inner west, the two-bedroom home at 18 Grosvenor Crescent sold for $1.27 million, well above its $1.125 reserve.

A first home buyer from Woolloomooloo outbid four rivals for the property, which has planning approval for a second level that will transform it into a four bedroom home.

"This strong sale price was the result of a lack of houses for sale in Summer Hill and the potential to add value and extend the home," said selling agent Rhonda Yim of Belle Property Annandale. 

While listings in both Sydney and Melbourne have begun to pick up for the spring season, they are still well down on last year. 

Clearance rates are now strong across most suburbs in Sydney, not just the inner city. In the north-west they a little lower as the market there digests a welter of house and land packages. 

"The rest of Sydney is now recording rather strong clearance rates," said SQM Research's Louis Christopher. 

"Normally clearance rates fall with the seasonal rise in listings. There are far more buyers than sellers in the market right now and that's abnormal."

Mr Christopher likened the situation to a seller's strike, caused as much by fear as greed.

Some sellers were just holding out for for a better price, but others, having sold, were now finding it hard to buy back in.  

"That's what's going on in parts of Sydney. It has created a lot of angst in the market," Mr Christopher said.

"Sellers are sitting out on lines. They are too scared to sell because they think they'll get a better price in the future and wondering how they will get back into the market."

CoreLogic's Kevin Brogan said volumes had rebounded this week following the Labour Day long weekend which coincided with the AFL and NRL grand finals.

Even so, listings overall were down said Mr Brogan, who suggested some homeowners, faced with high prices, might be opting to renovate instead. 

"The cost of borrowing is as low as it's been for a fair while. People are looking at whether a move is necessary. Maybe people are looking at working on their own existing houses."

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