Melbourne’s first-time buyers flee the rental crisis and buy homes worth over a million dollars

25 Thomson St, Seddon, has sold for more than $1.3 million – to a first-time buyer.

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Melbourne’s first-time buyers with budgets in excess of $1 million, likely to exit the city’s rental market, contributed to seven-figure sales in the suburbs yesterday.

A day earlier, Jacob Caine, president of the Real Estate Institute of Victoria, and Anne Flaherty, economist at PropTrack, announced that those entering the property market for the first time have saved Victoria’s winter auction market.

The last three months have been one of the busiest June-August sales periods ever recorded, marked by strong activity from first-time buyers.

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And while about 950 homes tested buyers’ resolve this week, several million-dollar addresses were fought over by buyers who have never bought anything before.

PropTrack data shows Victoria recorded a clearance rate of 65.7 per cent with 578 results reported yesterday.

And Jas Stevens auctioneer Tate Moore said three first-time buyers competed for a Seddon home at 25 Thomson Street and one of them ultimately got the keys despite the sale price being $1.325 million.

At Mill Park, another entrant competed for the title at a Ray White auction, but lost out in a bidding war for $1.19 million for 26 Callistemon Rise.

The house on Thomson Street convinced buyers because of its location and a recent renovation.

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Jeremy Tyrrell, chief auctioneer at Ray White, said first-time buyers with budgets over $1 million are “definitely not uncommon” at the moment.

Although figures are difficult to quantify, Mr Tyrrell believes that apartment activity has increased due to Melbourne’s rental crisis, with many who would otherwise have happily rented and saved for years now opting to buy.

“So we are not just talking about 18- to 25-year-olds,” he said.

“And that’s probably why we’re seeing more of these more expensive first-time home purchases.”

There are no government support schemes or stamp duty rebates for those bidding over $1 million at auction. And Mr Tyrrell said many of them were likely to take out large mortgages – another indication that homebuyers are at least no longer afraid of interest rate rises.

There was a first-time buyer in competition for 26 Callistemon Rise, Mill Park, although the final sale price was $1.19 million when the hammer fell.

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However, with PropTrack data suggesting that more homes are sold before an auction than are passed on, Mr Tyrrell pointed out that it was possible that first-time buyers wanting to add a “subject to finance” clause to their purchase, which is not possible at auction, could be behind the rise in the number of homes changing hands before the scheduled sale date.

The auctioneer added that in Melbourne’s affordable western suburbs, particularly where homes cost less than $500,000, there is “a brisk influx of first-time buyers entering the market”.

Professional auctioneer Andy Reid said a week ago he sold 17 Glenvale Rd, Donvale, to an initial buyer for $1.13 million in post-auction negotiations after the latter placed a bid of $1.1 million under the hammer.

17 Glenvale Rd, Donvale, sold to a first-time buyer for more than $1 million a week ago.

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Mr Reid noted that he believes mortgage brokers have fewer clients looking for homes outside of first-time buyers and are therefore making more of an effort to give them the confidence to bid at auctions, rather than advising them to bid contingent on finance, as was more common in the past.

Daphne Lai of ARM Real Estate handled buyer inquiries for the four-bedroom home.

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