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First home buyers misjudge market values as auction prices exceed expectations
The Melbourne property market is experiencing a disconnect between buyer expectations and actual auction prices, with first home buyers often underestimating the true value of properties. A recent auction in Clayton, outer east Melbourne, saw a first home buyer bid $190,000 for a two-bedroom unit listed at $480,000-$520,000 with a reserve of $490,000. The property ultimately sold for $492,000 after a second bidder, also a first home buyer, outbid the initial offer. McGrath Clayton agent Elroy Malowney noted that buyers are operating under a 'skewed perception of market conditions,' assuming prices have dropped significantly when in fact recent price adjustments have already been factored into listings. Many buyers believe they can discount prices by 15-20% below the quoted range, not realising these reductions are already reflected in the market. In another auction, a young professional woman paid $941,000 for an inner-city apartment after initially offering $860,000 privately. The property, with a price guide of $850,000-$900,000 and reserve of $880,000, attracted four bidders including investors and upsizers. The auction saw competitive bidding with the investor family making larger increments while the owner-occupier countered with smaller increases until the investor withdrew. Ray White Southbank agent Tommy-Lee Davies observed that buyers are becoming more confident with lower offers, assuming they have market power to secure bargain prices. However, the market remains cautious, with buyers taking their time and acting as if they are the only buyers in the market. Davies noted that Melbourne's one-bedroom apartment market is performing well for investors due to strong rental yields, while other segments struggle with low buyer interest. The article highlights a growing trend where buyers' expectations are misaligned with current market realities, leading to missed opportunities for first-time buyers and competitive bidding scenarios that reflect the market's resilience despite recent media reports of price drops.