Melbourne homes that sold at auction saw a stronger price recovery than those sold privately.

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Melbourne properties sold under the hammer saw a stronger price recovery in the past year than those sold privately, new figures show.

Real Estate Institute of Victoria quarterly median price data shows that in the 12 months to September 30, house and unit values across the city fell following several consecutive interest rate rises last year.

But sellers who took properties to auction were far better off than those who sold in the private market, with auction house prices only dropping by $44,000 (3.8 per cent) to hit a median of $1.185m, while units were down just $8000 (1 per cent) to $780,000.

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By comparison houses sold privately dropped in value by a whopping $110,000 (11.6 per cent), down to $840,000, and units $30,000 (5 per cent) to $570,000.

REIV president Jacob Caine said the nature of the competition at auctions was a fundamental driver for stronger sales under the hammer, particularly in the past quarter where auction volumes had increased.

“We’ve also had some normalisation in the marketplace with a bit more stability injected as a result of interest rate pauses,” Mr Caine said.

“There’s a returning confidence among buyers.”

REIV president Jacob Caine.

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He added that many private sales had fallen through last year after buyers had the “carpet pulled out from under them” when their initial pre-approval failed to match their actual borrowing power after interest rate rises.

“We’ve seen people who had pre-approval for properties who came to get finance and the difference between what they were initially approved for and what they could get is 15-20 per cent,” Mr Caine said.

However he predicted price recovery would continue in both markets going into 2024 with buyer confindence increasing.

34 Mascot Ave, Bonbeach, sold $180,000 above reserve on Saturday.

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It comes after PropTrack recorded an early clearance rate of 68 per cent on Saturday from 566 reported results, with more than 1700 auctions scheduled for the coming week.

Among last week’s result was a four-bedroom house in Bonbeach which flew $180,000 above reserve to gift its sellers a strong $1.89m sale under the hammer.

Three buyers competed on Saturday for the 34 Mascot Ave pad, which was initially listed for $1.5m-$1.59m.

Ray White Patterson Lakes director Genevieve Hill helmed the sale, which was a testament to the strength of sale prices under the hammer.

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