Open for inspections are now once again permitted. It’s great news for Melbourne’s resurgent property market, as it continues to gather momentum into 2021 and rebound from COVID-19. It's also a timely moment to pay tribute to property industry workers and customers alike, and their ability to successfully overcome what’s been a very challenging year for Victorians.
Melbourne’s unique property auctions: captivating locals, tourists and Nobel Prize winners
By Jarrod McCabe - Director
While it hasn’t been the biggest year for Melbourne auction numbers given the COVID-19 restrictions, they have helped inspire a recent Nobel Memorial Prize winner.
Standing on the front lawn amid a sea of unknown bidders might seem common practice for Melburnians, but it’s an auction process and atmosphere that is truly unique.
Melbourne auctions, which take place outside the actual homes being sold and require no vetting of bidders, provided Nobel Prize winner Paul Milgrom with unique insight into what is considered the most ‘informal-formal’ selling process of its kind.
Professor Milgrom visited Melbourne in the early 2000s and stopped past an auction in Toorak that went $500,000 above its $2 million reserve price.
"Paul had heard about them, but couldn't really believe that they worked,” explains fellow academic Joshua Gans, who accompanied him.
“It was amazing to see the pre-eminent auction designer of his generation have his eyes opened again by high-stakes practices.”
And while inspiring future Nobel Prize winners may be a more recent occurrence, the city’s auctions have been a foundational cornerstone in shaping the Melbourne we know and love today.
We can see clues into the origins of Melbourne’s unique location based auction process way back in the 1800s when according to the Historical Society of Port Fairy, Victorian settlers asked for land auctions to be conducted on the spot instead of in Sydney.
Historians say NSW Governor, Richard Bourke was unconvinced, responding that the town allotment sales must be carried out in the harbour city.
However, when he made the trip to Port Phillip, he realised how difficult it would be for many settlers to travel to Sydney, so he agreed to have the sales conducted in Melbourne.
The first sale of crown land in Melbourne was conducted by public auction in the 1830s for what was then known as the Hoddle Grid, which now forms the central business district.
The half acre lots were auctioned off by the grid’s designer Henry Hoddle.
One of the many buyers was Henry Batman - brother of Melbourne’s founder John Batman - who managed to buy his block on Collins Street for 18 pounds. It’s safe to say there’s been some capital growth in the years since!
Last month further along the street, the 139 Collins Street building, which houses the Louis Vuitton store, hit the market with price expectations of over $50 million.
While this landmark sale is being conducted by international expressions of interest, the traditional Melbourne auction continues to be the mainstay for local property buyers across the city.
The electric atmosphere of a good Melbourne Spring auction has also become somewhat of a tourist attraction, with Airbnb recently offering travellers the ‘Unique Australian Home Auctions’ tour for visitors looking to experience the action.
Curiosity aside, while Melbourne’s auctions have captivated esteemed economists and tourists alike; they will continue to drive our property market as we re-open in the wake of COVID-19 and grow long into the future.