The Melbourne real estate market is absolutely insane!
Right now, the average price for a home is AUD $826,000 while the average price for a unit is AUD $583,000 It blows our minds how the average person here buys a house/unit.
The buying process begins with inspections. They are not what you think of when you hear ‘inspection.’ An inspection is like an open house, where you can come to the location and ‘inspect’ it and scope it out.
Every thing is much more regimented here because the market is so competitive. Inspections have to be registered for, so it is not exactly the same as an open house.
Real estate agents only work for the seller, not the buyer. People have to do their own research, attend inspections on their own, and place bids by themselves. The real estate agents host the inspections and auctions and handle the legal side of selling.
The weirdest thing about Australian real estate is the fact that they have auctions for all of their properties.
There is usually an inspection a week or two before the auction and then another inspection just before the auction begins. The real estate agent starts the bidding at/near the seller’s reserve price (what they won’t take below). Then, depending on the popularity of the house/unit, the bidding either continues fast and furiously or more slowly.
Auctions are usually held out in the street in front of the house/unit and are open to the public to come and watch. However, to participate in an auction you have to have previously registered and submitted an offer price.
The auction format makes buying a house so competitive. People basically have to commit to the highest end of their budget first to even have a chance at participating in the auction.
At the house auctions we’ve been to (in an up-and-coming, nice neighborhood of Melbourne), the houses have ended up going for 1.160 and 1.650 million (usually for a 2 bed, 2 bath, 1 garage townhouse). Unit auctions we’ve seen (again in a nice area) have been around the $500,000-650,000 mark.
It is kind of fun to attend an auction (especially for us Americans) when you don’t have to go through the stress of bidding. The real estate agent usually has a gavel and smacks it on his folder or rolled up papers–a dramatic conclusion to a thrilling auction.
We think we may have seen the top of the market as real estate prices have been continually falling for the past couple weeks. However, the sticker prices are still shocking us.
Apparently… Sydney is even worse…