Melbourne’s most popular neighbourhoods for home buyers right now

Home owners in Melbourne’s south-east, inner east and north-east have a better chance than elsewhere of selling their homes at auction right now as the spring selling season begins.

Home buyers, on the other hand, will find less competition in the west or on the Mornington Peninsula.

Melbourne’s property market has picked up this year – Domain data shows the overall auction clearance rate was 68 per cent in August, the fifth straight month above 65 per cent.

That’s below a June high of 75.1 per cent, but well above the 55.5 per cent recorded in August last year, when interest rates jumped.

An auction clearance rate of 70 per cent usually reflects an annual price growth of around 10 per cent, while a 60 per cent clearance rate indicates a more balanced market. Lower results can lead to falls in property prices.

Dr Nicola Powell, Domain’s chief of research and economics, said stronger results were being recorded in Melbourne’s sought-after markets, particularly in the eastern regions.

“I think what’s very clear is that in some of the more affordable areas of Melbourne, where the market is not as auction-centric, we are seeing weaker results,” Powell said.

The strongest clearance rate – of 74.3 per cent – was in the south-east region. That rate was up 18.6 percentage points since August last year, when Melbourne’s market was slowing.

In the inner east, the clearance rate was 71.4 per cent, up 6.5 percentage points compared to a year ago.

In the north-east, the clearance rate was 70.2 per cent, up 16.2 percentage points.

Spring will test Melbourne’s market with more houses being listed for sale.Credit: Luis Enrique Ascui

The weakest clearance rate was in the once-booming Mornington Peninsula, which fell to 55.4 per cent, while the western suburbs were at 61.7 per cent.

“In the Mornington Peninsula, the desirability is still there, but I do wonder whether the affordability stakes may be weighing in,” Powell said.

As more new listings come online this spring, buyers are set to have more choice, she said.

AMP chief economist Dr Shane Oliver said Melbourne could expect a downward trend over spring, as more properties came up for sale. However, house prices and clearance rates would not plummet to last year’s lows.

“We could see another fall if interest rates rise again, but I can’t see it going back to the 50 per cent clearance rate levels we saw last year,” Oliver said.

He said the fly in the ointment for the market would be if the unemployment rate started to rise.

The national unemployment rate held steady at 3.7 per cent in August, official figures released on Thursday showed, while Victoria’s fell to 3.5 per cent.

Vendors like Lee and Amy Mitchener, who are selling their three-bedroom Greensborough townhouse, in the city’s north-east, at auction on Saturday, are hoping the high clearance rates from August will continue this weekend.

Lee and Amy Mitchener, with their children Harvey and Darcy, are selling their home.Credit: Joe Armao

“We’ve loved living there, and we are sad to let it go,” Lee Mitchener said. “But we need a bigger place for our two boys.”

The couple has already bought another, larger property also in Greensborough.

Mitchener said he wasn’t nervous about auctioning his home, even though the spring market had brought more properties up for sale.

“Based on the results and feedback we’ve been getting, [our agent] is saying it’s shaping up to be a good auction,” he said.

Peter Don of Ray White Diamond Creek, the Mitcheners’ agent, said spring would be a test for the local market, given there were fewer homes for sale in August.

“The next couple of weeks will be interesting to watch,” Don said. “But even so, people’s circumstances don’t change – people still need to upsize and downsize, and they’ve probably been waiting for a bit more stability.”

Don said the Reserve Bank’s decision to hold interest rates steady this month, the third time in as many months, meant buyers knew what they could spend on property.

Barry Plant executive director Mike McCarthy agreed that the hold on interest rate rises had encouraged buyers back into the market.

Many were looking in eastern areas as they were desirable areas to live. But it did show some were being pushed further out of the city, as prices rose.

“People had been looking in Kew or Hawthorn, but they can’t get anything because of the higher prices – so now they’re looking to areas like Balwyn,” McCarthy said.