Excitement, anticipation, hope, dissatisfaction, frustration, lack of depth with lists, contempt, delight and large helpings of “What if?”

And that’s just the start of the footy season. You should see what’s been happening in real estate.

Last week, the top end was full of promises with a mixed bag of lollies the result. What was surprising was just how many lollies (bidders!) were there. Put simply, the short supply of quality properties is continuing to underpin the market. If there had been as many properties as last year on offer this year, we suspect you would be hearing a lot of air coming out of a lot of tyres.

Quality is still the underlying issue. This also harks back to position, position, position.

So. Over the weekend, Melbourne’s top end largely defied the law of gravity being enforced in top ends everywhere else on earth.

Some litmus tests:

15-17 Irving Road, Toorak arguably one of the best addresses in Melbourne. 10,220 square feet of prime Toorak real estate. On the market for $3,850,000 with multiple bidders pushing it to $4.6 million. $450.00 per foot. Now rewind to last year at the height of the market: 23 Irving Road sold for $500 per foot ($1 million over its reserve) with six bidders. That is, even with multiple bidders, 15-17 sold at around 10% under the market peak.

9 St James Place, Toorak land again, more prime rib, 8,740 feet of it with a single dwelling covenant, sold for $4 million after being passed in at $3,620,000. That?s $457.00 per square foot.

3A Irving Road was put up for the second time in a year and sold for more than $3.2 million ($533 per foot). It has some issues, but last time there was not a bidder in sight and this time they came in pairs.

5 Mernda Road, Kooyong a contemporary house with a pool and within walking distance of Scotch, St Cath?s etc. It sold for $4,320,000 and had multiple bidders. The expectation was high $3?s. You could argue that it was the proximity to schools that sold it; and we would agree with you. But there’s another big factor at work:

Lack of choice. Lack of choice. Lack of choice.

The lesson in all this?

The top end is not as sick as some reports would have you believe (OK, there are times our own optimism has been running dry). 10% down? Yes. 20-30%, as in some of the “middle” areas of Melbourne? No.

The patient is not dead, not at least in Toorak, Armadale, South Yarra, Malvern and Hawthorn.

Meanwhile, investors are continuing to pop their heads over the parapets.

Is this the turnaround the market has been waiting for? Has the market bottomed and are we on the way back?

With the greatest of respect to those whose tea leaves predict that the worst is over, we would still advise some caution. There has certainly been a blip on the radar and the top-end land prices are holding; and land is often the first sign of a market movement.

DM

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Bayside: 90% AUCTION CLEARANCE!

… makes a great headline, but scratching beneath the surface reveals a miserly 33 auctions conducted across the dozen or so suburbs in all of Bayside.

Among so few, whether 65%, 75% or 100% sold, it’s apparent that auction clearance rates are no longer the barometer of the health or otherwise of the residential property market.

All the attention is on the auctions when most of the action is elsewhere. Every week, private sales and off-market transactions are taking place, virtually unreported.

Beaumaris, suffering a severe dose of the rigors (feeling frozen while running a temperature) had a fabulous-headline 100% clearance rate (OK, one auction) while five private sales were completed.

Elwood: two auctions and one sale suggest a 50% clearance rate, but there were also five private sales including two at more than $1 million.

Might be time to look at all transaction results for the week to gather a more accurate state of the market.

Elsewhere …

Hampton had no private sales for the week but in two auctions 49 Bridge Street, Hampton, sold for $1,125,000 while the best 4 Gordon Street could manage was a vendor bid of $2.1 million against a challenging reserve of $2,380,000.

A little further inland, Hampton East had a total of five transactions for the week; all but one being  private sales.

The real interest in Sandringham this week was the report of the sale of 31/49-51 Bay Road for $2.6 million. It’s the east facing penthouse in Portofino (yes, there are two).

And 2 Southey Street, Sandringham has finally sold for $1.343 million.

Brighton’s tom toms were sounding this week with the apparent sale of 32 Middle Crescent for a price rumoured to be between $10 and 11 million. Although not strictly on the market, the property has been quietly available for over six months. It previously sold for around $8 million.

Brighton East also saw some activity at the top end: 23 Clinton Street sold for $1,405,000 and 94 Glencairn Avenue went for $1,452,500.

Cheltenham had a busy auction day: all five properties scheduled were sold.

Bayside’s standout? Highett: 10 sales ranging between $437,000 and $1,170,000; just two of those at auction.

DT

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Let us answer some frequent questions and help you make sense of all this …

Are shares and top end property now aligned?

Sorta. In the sense that cashed-up offshore investors are now picking over the bargain bins created by falling markets and a depressed AUD. In the share market, it’s Rio, et al; in property there are examples such as Struan Street, Toorak, an off-market sale at over $8 million, Maple Grove which sold post-auction for $1 million over the final bid at auction and a house in Malvern which had been languishing for over 12 months finally selling for $2.5 million.

All went to overseas buyers, none of whom were ex-pats. All will require Foreign Investment Review Board approval. It would be interesting to know on what basis that is now being granted.

Am I seeing double?

You are. You are. (There, you’ve just done it again.)

Some familiar addresses are reappearing; apparently as new listings. Some have even come back, back, back for the third time in 12 months.

As Julius Sumner Miller never tired of asking: Why is it so?

Choose your answer:

1. There’s so little choice that even lemons deserve another chance.
2. There’s so little stock that even the over-priced might find a buyer.
3. There’s so little real work for agents to do that if they can persuade owners to try, try, try again, they (the agents) will at least have some ads appearing with their names on them and so may attract other vendors with decent properties to sell.
4. A dead horse feels no pain (but its buyer might).

Why is the top end market dead?

Again, a multiple-choice answer. According to the agents:

1. “The Easter Bunny is coming and has frightened the vendors away.”
2. “The Easter Bunny is coming and has frightened the buyers away.”
3. “I’m only an agent, I haven’t got a clue.”

What you can be sure of is that what’s on offer now is about all there will be until after the school holidays; and we’re currently seeing the least activity in 30 years.

Is there any hope at all?

Well, yes. There are a few good properties coming up next weekend; and there’s an increasing trend to off-market transactions which is occasionally bringing worthwhile property to market. We would like to see more (and so would a number of our clients).

We know the demand is there; it’s the supply that’s the problem. Too few quality choices at reasonable prices.

The future?

The crystal ball has shattered, but we’re hoping to see more decent choices becoming available after the holidays. Following that, a June 30 deadline will be looming for some.

In the interim, and unhappily, the Family Court remains the one reliable market catalyst.

DM

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Peakless in Bayside.

The third weekend in March is, under normal circumstances, a peak auction time in Bayside.

Not this year.

From Elwood to Mordialloc was strangely quiet. Relatively few auctions and only a few private sales made all week.

As expected, Elwood was busiest in the “hot” $300k to $600k range; and also recorded one sale in the million plus bracket: $1.2 million on the  Ormond Esplanade.

Brighton and Brighton East were mainly active under the million dollar mark: six sales and a solitary sold-before: 41 Clonaig Street sold for $1,075,000

Of the very few auctions conducted in this area, 1/16 Black Street, Brighton, a two bedroom ground floor apartment next up from Church Street, was fiercely contested by multiple bidders and sold for $605,000; well in excess of its reserve.

Hampton, Sandringham, Black Rock and Beaumaris had mixed results. Anything under a million dollars again found buyers while the upper-level offerings continued to struggle.

Beaumaris had a bet each way: 5 Mariemont Avenue was passed in without a bid (they were asking $1,410,000) while 17 Cloris Avenue (quoted at $1.6 million+) was sold privately for $1.53 million.

172 Beach Road, Sandringham, was passed in at $1.45 million. Its reserve is $1.52 million.

Further down the Bay, Highett, Cheltenham, Mentone, Parkdale and Mordialloc recorded 19 sales for the week; ranging from $250,000 for 2/56 Milan Street, Mentone to $845,000 for 2 Maiya Court, Cheltenham. They’re solid sales at the lower end, but nothing approaching spectacular.

And the middle market “rock” of Bayside: Bentleigh (with able assistance from neighbouring Ormond and McKinnon) saw a 100%  auction clearance rate and total transactions for the week numbering 11 sales with only one just cracking seven figures: 13 Anthony Street, Ormond sold privately for $1,012,500.

Bayside has recorded some of the biggest transactions in Melbourne this year and will be tested again when expressions of interest close on two very good yet very different houses.

14 Coronet Grove, Beaumaris is “a spectacular architectural creation” on the bluff overlooking Beaumaris Bay. Its suggested price is around $4 million.

28 Cole Street, Brighton is the product of locally well-regarded architect Nicholas Day and builder Max Hudgton. It’s in Brighton’s Golden Mile and they’re looking for over $5 million.

Stay tuned.

DT

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Somewhere on a planet far, far away, where many top-end vendors and their agents still live, things are growing a little queasy, a little uneasy. There are agents wandering lonely as clouds and in need of vigour transplants, wondering where their enthusiasm went (OK, they’re suffering from shock) while their vendors are having a Bex and a good lie down in the hope that things will have improved by the time they wake.

Back on planet earth, buyers look up and wonder where all the good properties have gone. They’re ready to pay fair prices (not last year’s), but there is little to excite them in what’s presently on offer.

The long view of the last three months at the top end is that’s it’s a desert. Almost no activity since Christmas; and that’s been brought about by real estate’s ’09 disease: lack of quality and choice.

It’s a malaise which continued through most top end auctions held over the weekend. Not a lot of quality and little choice, resulting in those which did sell selling at the lower end of price expectations.

Away from the top end, the pulse is strong. Things are thriving below $1 million with investors competing with first-home buyers who are comfortable with the interest rate prognosis and keen to buy before the grants are withdrawn. (It’s not our territory, but if we were advising them, we’d ask them to consult financial planners who may suggest they budget on interest rates rising by as much as 5% in the life of their loans and the employment market becoming even less certain.)

Meanwhile, under the radar, some top-end deals are still flying; but at treetop level.

It’s a Jane Austin market: marriages are happening, but there’s an amazing amount of pre nup going on. Transactions which are taking place are happening quietly, not quickly. Weeks can go by while vendors come to the realisation that the offer they have is the best they’ll get; and they either adjust their expectations or the endings are not always happy.

All a bit of a masked ball, really.

And when the masks do come off, will the buyers still be there?

(OK, in real estate there’s aways an exception to a rule: this weekend’s was a house in Alma Road, Camberwell, that sold off-market for nearly $5 million, which may be a record for a house to the east of Burke Road.)

Next weekend? There’s more choice and higher quality in prospect. Expect some marriages to be made.

DM

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Bayside. Brighton: Some bleeding, not terminal.

Can you believe everything you read?

Yes. And no.

While it’s true it is Melbourne’s top end which has suffered most in the ’09 market (see DM, above), there’s still a lot of life in Brighton; especially at its very top end, where there’s never enough to go around.

If you have been watching auction results, you’ll have seen that the highest price Melbourne recorded over the weekend was the $4.6 million for 15 North Road, Brighton. What is not recorded is that the property last sold in April, 2007 (at near the height of the bubble) for $4.3 million. If this was a litmus test, it would suggest that values are holding. In fact of the 11 auctions scheduled in the Brighton/Brighton East area only three are yet to be sold.

What’s left?

23A Champion Street. It’s a well designed and built new town house which passed in at $1.9 million on a vendor bid but attracted a later offer of $1.95 million against a reserve of $2.25 million. A good property, but the price is optimistic in this location.

What’s not?

36 Lynch Street sold for $906,500 at a mortgagor in possession auction. It was bought early in ’07 for under $800,000 and sold in September that year for $1,250,000. The bubble burst, the value did not.

29 Tennyson Street, on the corner of Kinane Street, did not last long on the private sale market. Listed at an estimated $1.75 million, it sold within days for $1.81 million. Apparently land only, this represents a healthy $2800/sq m ($260/sq ft).

Elsewhere in Bayside …

11 The Avenue in Hampton sold before auction for $1,305,000

Tramway Parade in Beaumaris had mixed fortunes: a private sale at 92 Tramway Parade brought $1,201,000. Further down the street, 170 Tramway Parade was passed in on a vendor bid of $1.4 million; its reserve is $1.5 million.

Predictably, Elwood was busy: a total of 12 auctions and private sales. 11 of those sales were in the hot bracket between $300,000 and $650,000 with only one,  2 Dryden Street, in the very upper level for this area. A very well renovated and extended Victorian house, it sold for $1.93 million.

Bentleigh is having a minor boom. Its convenience and value translated into 11 auction and private sales (and nothing passed in). The cheapest property was at 3/16 Vickery Street at $315,000, the show stopper was 4 Ross Street, a private sale quoted at $1-1.08 million. An offer one hundred dollars over the bottom of the quote range was enough: it sold for $1,000,100.

DT

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The weekend was the quietest long weekend in 25 years. Uncertainty, lack of quality stock and a financial crisis or three which all added up to … nothing. The only trend in evidence was indecision. Even the usually-active holiday house market was moribund. Buyers are waiting (tigers in long grass) for opportunities which vendors are reluctant to provide, at least until there is more strength in the market.

Need proof?

From the REIV (we’ve always loved them) Weekly Auction & Sales Results, Market Overview for the weekend:

TOP 5 HOUSES
1. 16 Gracie Street, Northcote $800,000
2. 58 Station Street, Burwood $785,000
3. 7 Bodley Street, Beaumaris $781,000
4. 4 Rowland Street, Bentleigh East $725,000
5. 7 Homebush Court, Doncaster East $717,500

… the top house is in Northcote? It’s $800,000?

That’s no trend at the top end. The top end went away for the weekend.

We’ll be back next week.

DM

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The world real estate market is dying a death. From LA to Leningrad (with stopovers in Ireland, UK, Europe – and Asia if you’re going the long way) there’s little to be heard but wailings and gnashings of teeth. Forced sales and more up-facing bellies than can be found on the beaches of San Tropez.

Yet here the Sat sport of auctions is still a sell-out. Over the last couple of weeks it’s been standing room only: crowds of 80-200 and forests of hands held up for the right properties.

Then why are the real estate agents being found sobbing in the corners?

Nothing to sell. Or very little.

An eastern suburbs stalwart, director of a large agency, tears pouring down his face told us that last year they had over 100 properties to sell in March. This year? An almost inaudible 27. Sob.

And most agencies are in the same boat.

But, encouragingly, some reality is creeping in. Sales are being made more often within the quoted range (gosh! It’s been possible all along!) and vendors’ price expectations have fallen back toward the real.

The weekend’s sporting highlights?

35 Mary Street, Hawthorn sold for $2,200,000 with two advocates, a next door neighbour and an agent fighting it out.

30 Bonview Road, Malvern sold with three bidders at $1.36 million.

An Art Deco apartment at 109 Nimmo Street, Middle Park, quoted at $450,000 plus, on the market at $515,000 and sold for $635,000

Four bidders went head-to-head in a mortgagee sale at 29 St Edmonds Road, Prahran with the property eventually being bought at $1,662,500.

There’s certain (reasonable) buyer anxiety that with so little on offer, anything is better than nothing. It’s something we try to persuade clients not to act on. Repenting at real estate leisure is an exquisitely painful form of repent.

And there’s quite a lot happening behind closed doors; and certainly more to this market than meets the eye.

Our bet is that after this flurry of activity, the market will go back to the grind with a lot more wheeling and dealing and trading going on behind the scenes, with prices still subdued, agents keen to do deals and vendors, at long last, meeting the market.

CK

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Bayside: Are we right or are we right?

You may recall that last week we said:

Lordy, we’re good. The weekend brought examples of all three and Brighton duly recorded its busiest week in living memory (well, months, but it seems like lifetimes) in both auctions and private sales.

Better choices, decent properties and sellers who were ready to meet the market. Bingo.

The standout was “Blair Athol” at 5 Leslie Grove, Brighton Beach. An estate of over 3,000 sq m with pool and tennis court, it’s a two-storey Victorian which marries the best of many eras. Marketed over six months with expressions of interest invited at around $10 million, it has finally sold to a local buyer for a price believed to be around $8 million.

24 Sussex Street, Brighton, sold after a short private sale campaign which anticipated $3-3.5 million. On 971 sq m, the 20 year old single-level residence with an indoor pool sold for $3.15 million and is now destined for a major renovation.

8 Young Street has finally resold for $1.8 million. A 20 year old reproduction Edwardian on 850 sq m, it sold early last year for $2.3 million. Its price “correction” precisely mirrors the official fall in Brighton prices of 21.7% over the past 12 months.

At least some auctioneers were smiling after seeing some real bidding activity for once and no more so than at 17 Shasta Avenue, Brighton East. Always a popular street, the single level solid brick four bedroom home has good bones and a northerly rear facing allotment of 820 sq m. Seeing at least five bidders having a red hot go was reminiscent of the heady days of 2007, with increments ranging from $100 to $5,000 before an exhausted auctioneer finally dropped the hammer at $1,476,000.

Another strong result was the sale before auction of a new timber period-style home with a basement garage at 9 Heathfield Road, Brighton East. Complete with a pool, the well designed and finished home was snapped up for $2.3 million; the highest price paid in the area for 12 months.

35 Drake Street, Brighton, sold post-auction to the highest bidder for $2,075,000 (less than a price offered at a private sale last year – reality bites). It’s a good house: four bedrooms, well renovated, a large block and handy to the Head Street park.

A contemporary two-storey home at 35 Hanby Street, Brighton sold for $2.1 million. It last changed hands in August 2006 for $2,080,000 at an auction in which the current purchaser was the underbidder. Good things come to those who wait?

Hampton had an outbreak of grinners: 100% sold.

60 Service Street, a typical “Cal Bung” on modest land sold for $1,225,000.

73 Thomas Street, a brand new spec home sold at a builders realisation auction for $1,595,000.

But all is not sweetness and light. The Beaumaris top end remains parked.

422 Balcombe Road couldn’t raise even a vendor bid. Its reserve is $1,525,000.

An enthused auctioneer bid $1,350,000 at 426A Beach Road before passing the property in with a reserve of $1,550,000. The drawing board beckons.

The lower-to-mid spectrum of the Bayside market continues to tick over: most property in the $500,000 to $800,000 range attracted multiple bidders and buyers.

Bentleigh, Ormond and McKinnon are performing well. Lower interest rates, the first home buyer grant and investors are all driving demand, but anything over $1 million is harder work; as evidenced by the result at 24 Paschal Street, Bentleigh. Passed in at $990,000 (presumably genuine), a later offer of a whopping $1,240,000 was apparently rejected with the vendor wanting $1,350,000. Wish them luck.

The Labour Day long weekend means auction offerings will slow to a trickle. The focus will shift to private sales.

The lesson of the week?

If potential sellers have quality properties which are priced to reflect current values, they shouldn’t hold back: the buyers will come.

We know that. We talk to them every day.

DT

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