Australia Real Estate Market: July Auction Surge

July saw a four-year auction high in Australia, driven by real estate investors selling across Victoria. Explore the market trends and insights.

A notable surge in the number of real estate auctions across Victoria has been attributed to a significant exodus of property investors from the market, according to insights from a real estate expert. Recent data from PropTrack reveals that the state achieved a preliminary clearance rate of 60.5 percent from 432 auction results recorded yesterday. This week alone, approximately 930 properties were auctioned throughout Melbourne and its surrounding regions. Such a volume of auctions has not been witnessed in July since 2021, a period marked by the state’s emergence from a Covid-19 lockdown, during which 937 properties were auctioned.

During that time, many sellers were motivated by desires for lifestyle changes or the pursuit of larger homes, a trend that gained momentum in Australia during the 2020-21 period. However, the current landscape is influenced by a myriad of factors. The escalating cost of living has prompted numerous rental providers to divest their properties, while a series of interest rate hikes initiated by the Reserve Bank of Australia since May 2022 has further strained the market. Additionally, the Victorian government has increased land taxes on secondary and investment properties valued at $50,000 or more, a significant reduction from the previous threshold of $300,000 prior to January.

The affordability of investment properties has diminished for many, with first-time homebuyers also feeling the pressure to sell, largely due to soaring owners’ corporation fees. These fees have been exacerbated by skyrocketing insurance premiums, which have seen dramatic increases over the past 12 to 18 months. The withdrawal of investors from the market poses challenges for the ongoing national rental crisis, which has recently been characterized as a “housing disaster.” Recent data from Suburbtrends indicates that over 41,000 landlords sold their Victorian properties in the last financial year. In June, Melbourne's median weekly rent reached $575, reflecting a 10.6 percent increase compared to the same period last year, compelling many tenants to seek shared accommodations or return to living with family members. PropTrack anticipates that 933 auctions will take place in Victoria next week.