Burbs Property Sales Update: 28th May

Great news! This past week has seen a sharp rise in the number of sales in the Western Suburbs according to the Courier Mail. The property section reports 9 sales over $500k, which is 3x the recent weekly run-rate. However, I mentioned in a recent post that a sales rate of 20 per week was needed to bring current 'supply' back to a more normal six months' worth.

There were no sales over the $1m mark.

The bad news is that the number of houses for sale in the Burbs in the $500k+ bracket has risen to 635 from 620 during the same period, so this blockbuster rise in sales has been swamped by new supply.

Auction news:

139 Queenscroft, Chelmer: Was bid up to $1.35m (with some arm-twisting) and was passed in on a vendor bid of $1.5m. By all accounts the price the vendors want (or have been promised by a bullish agent) is well north of $1.5m.

18 Consort Street, Corinda: The advertising campaign for this property was one of the most high profile (read: expensive) I have ever seen, with large ads appearing in several issues of the Brisbane News, B-Mag and the Courier Mail. The bidding kicked off at $1m and headed to $1.2m, with the original bidder dropping out early on, leaving two others to take it up to the $1.2m mark. Here it stalled and the property was passed in on a $1.4m vendor bid. The vendor is apparently committed elsewhere, so it'll be interesting to see how this plays out, if this is the case.

The vendor bid at $1.4m points to expectations of $1.5m+, which further supports my view (alluded to in a previous post) that the current gap between vendors and buyers is still substantial i.e. 20% plus and also supports the view from abroad that the extent of the over-valuation in the Australian market could easily be up to 40% (The Economist reckons c.50%). The consensus is that the market will remain difficult throughout 2011, with no real view of what 2012 holds, so the end to this weakness is some way off yet. However, if we continue to get stronger sales data across successive weeks, it will be a good sign for sure.