ST LEONARDS: Bought for $220,000 in 2005, passed in at $225,000.
By John Van Klaveren
PROPERTIES across the Geelong region are failing to sell for less than they cost up to four years ago, new figures show.
The Real Estate Institute of Victoria (REIV) figures suggested owners who bought houses during the real estate boom could face financial hardship with negative equity.
The figures from the past fortnight included a four-bedroom house in Geelong that sold for $560,000 in 2008 passing in at auction for $470,000.
A one-bedroom Herne Hill unit passed in at $170,000 on a vendor bid after failing to reach its reserve of $195,000.
The owners bought the property in March 2011 for $200,000.
Coastal properties also struggled, with a three bedroom St Leonards house passed in at $225,000 despite the owners paying $220,000 in January 2005.
The REIV figures showed clearance rates down to 33 per cent.
Clearances were 50 per cent for the same weekend last year.
Knight Frank research director Richard Jenkins blamed a lack of confidence among buyers.
“If you don’t need to sell, stay out of the market,” Mr Jenkins advised.
“There’s a reluctance to enter into any significant purchase and that translates to buyer sentiment, for both owner occupiers and investors.
“Clearance rates have been low across board, with a real lack of confidence.
“All sectors are soft, including office, business investment and retail,with prices easing for the last 12 to 18 months.”
Mr Jenkins said the trend was apparent beyond Geelong, with owners of properties in fringe areas of Melbourne also facing significant negative equity.
“The property market sustained outstanding growth in the past 10 years, with record highs, so we won’t see significant price growth for a number of years.
“Price expectations are becoming more realistic and funding is more difficult.”
Mr Jenkins said vendors had to ride out the drop in the real estate market.
“Further interest rate cuts should provide a stimulus
“The fundamentals are strong. It’s just the confidence factor rather than a shift in the supply equation.
“Geelong’s lower price point will see people continue to relocate into the region and further insulate it from significant falls.”
