Melbourne first-home buyer Jen Rothwell said she was shocked when this two-bedroom apartment sold for $200,000 over its price guide on the weekend. (Source: TikTok/@jen.rothwell/realestate.com.au)
A Melbourne first-home buyer has shared her shock after a property she viewed at auction sold nearly $200,000 over its original price guide. Some properties are generating an “enormous” amount of interest, with recent interest rate cuts lifting buyer confidence.
Jen Rothwell and her partner have been looking to buy their first home since the start of the year, when they first got pre-approval. The 29-year-old interior designer told Yahoo Finance the couple were looking for a two-bedroom unit in inner south east Melbourne, in areas such as Richmond, Hawthorn, South Yarra and Armadale, with a rough budget of between $550,000 and $750,000.
“It’s been a longer process than I think we first expected. Being in this price bracket, especially in the areas we are interested in, means high competition as there are first home buyers, investors and also people looking to downsize,” Rothwell said.
“This was something I didn’t realise when we first started looking.”
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Rothwell attended an auction for a two-bedroom, two-bathroom apartment in Prahan over the weekend. The property was quoted between $600,000 and $660,000 and ended up selling for $855,000 with dozens of people in attendance.
“I was very surprised to see that property sell for what it did. I knew that it would go well above the listed range but I did not expect that high of a jump,” Rothwell said.
Listing agent Elizabeth Lopez from Beck & Small Property told Yahoo Finance the property generated “enormous interest” from first-home buyers, along with downsizers as the property was located on the ground floor, and young professionals.
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Rothwell and her partner have been looking for a property since the start of the year and have been faced with a high amount of competition. (Source: TikTok/Instagram/@jen.rothwell)
“So there were three types of buyers attracted to the property, which meant it was keenly sought after,” Lopez said.
“Young professional couples and downsizers generally have a higher budget than first home buyers, so in this circumstance, I was not surprised it was a young professional couple who purchased the property, paying a premium, with downsizers being the under bidders.”
Lopez believes the location, the fact that the apartment was on the ground floor, in a smaller complex and ready to move straight into, helped garner interest.
“I haven’t had any property sell the way that one did, or create the interest that that one did,” she said.
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The two-bedroom, two-bathroom Prahan apartment sold for $855,000 at auction over the weekend. (Source: realestate.com.au)
Lopez said there were eight bidders on the day, with between 50 and 100 people estimated to have attended the auction.
“Most of the first home buyers at the auction were out after the first bid of $700,000 made by downsizers. Strategically done I believe, to knock the wind out of the sails of other interested buyers,” she said.
Lopez said the range quoted for the property was fair and legal, and reflected comparable sales in the immediate area and council rates.
“In this particular instance, it’s the buyers pushing the price,” she said.
National home prices grew 0.5 per cent over August, the latest PropTrack Home Price Index found, pushing them 5.3 per cent higher than a year ago.
In Melbourne, prices rose 0.3 per cent in the month and are now just 0.6 per cent below their 2022 peak and have almost fully recovered after years of underperformance.
Looking ahead, PropTrack senior economist Eleanor Creagh said the combination of lower interest rates, increased borrowing capacity and improved sentiment was expected to continue to drive demand.
“Constrained new housing supply, strong population growth and the expansion of the Home Guarantee Scheme from October will also maintain upward pressure on prices,” she said.
“As we enter spring, the housing market appears poised for another leg higher, albeit strengthening in some capitals while normalising in others.”
National home prices grew 0.5 per cent over August, the latest PropTrack Home Price Index found. (Source: AAP)
Lopez said she was generally seeing very good enquiries for properties in the $450,000 to $650,000 range, and reasonably good competition for properties under the $700,000 mark, but it depended on what the property had to offer.
“I think the government incentives for first home buyers are also helping to increase interest at certain price points, leading to competitive interest which potentially pushes the prices beyond the range that is quoted,” she said.
From October 1, the government’s 5 per cent Home Guarantee Scheme will be expanded with unlimited places and increased property price caps. In Victoria, Melbourne and regional centre caps will go from $800,000 to $950,000.
Rothwell and her partner have gone to auction twice so far, with one property selling for $90,000 over the quoted range at $790,000.
“The first auction result was pretty unexpected and was a bit of a shock for us due to the buyer coming in so late at the auction and climbing the price up high,” Rothwell said.
“We were disappointed as it was a unit we really liked. Going to auction is also tricky, as it does cost money upfront to have contracts read and building inspections conducted up to $800, so if you keep losing out at auctions that is money down the drain.”
Rothwell admitted the property journey did get “exhausting”, but the couple were keeping on and hoped the right property would come along for them.
“Lots of new properties keep coming on the market and I’m very thankful that I love where we currently live and are not in a position where we need to leave,” she said.
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