What a difference a couple of weeks can make! Yes, the worm is showing signs of turning and, no, that can’t be put down to the Head of the River, the Grand Prix, Easter and school hols around the corner or increased levels of stock.

We sense a change. To paraphrase an old ad: the market’s get up and go may have got up and gone. It’s zing no more.

How can we tell? Yes, sales results (see below) but even more than that, it’s the games agents start to play when they sense a slipping sale. When enough of them do it, that starts to look like a faltering market. Mistruths, fallacies and vivid imaginations that all add up to lies when, for example, we’re told a property has an offer and weeks later it’s still unsold. Truth will out.

Any faltering wasn’t helped by a lack of top-end properties on offer over the weekend (and let’s not forget the half a dozen or so unsold mansions that have been hanging out in the breeze like old shirts on the line for the last 3-4 months).

While most in the media (it is their job to sell papers), the REIV (we are not quite sure what their job is but they don’t seem to be helping anybody) and the agents (we all know what their job is even if some of them don’t know how to do it) are claiming buoyant, record times with high clearance rates and lots of chest thumping about what a wonderful time we’re having, if you delve a little deeper you’ll see tension and the stresses increasing.

Take a closer look at what happened at the top end over the weekend. Note the number of properties that passed in without bids. Raise an eyebrow at those that did sell while having only one bidder.

20 Montalto Avenue, Toorak, no sign of the Easter Bunny. Passed in at $3.8 million.

26 Monaro Road, Kooyong, ditto: passed in at $5.5 million (and too ambitious even in this market).

9 Fraser Street, Malvern, still no Bunny: passed in at $2.2 million.

263 Domain Road, South Yarra (unreported to REIV). Passed in.

Is there a pattern here?

Even some reported as sold did not sell at auction: 50 Avoca Street, South Yarra, was passed in at $3,050,000 and only later sold for $3,150,000.

And there’s always an exception: 7 Teringa Place, Toorak, sold for $4,105,000 to, we believe, the people next door.

Could a little logic be creeping back? Could there be cause to question the REIV’s clearance rates?

Well, yes. And well questioned they were in Marika Dobbin’s piece in this morning’s Age. One quote saysquite a lot: “… the REIV’s September quarter median for Melbourne was $470,000, compared with the Valuer-General’s at $360,000.” We don’t hear from the Valuer General until months after the event; but the VG figures include every property sold and not only those selectively reported to and published without question by the REIV.

More on this in Damian’s Bayside report below.

A helicopter view of the top end over the last nine months suggests there has been an overall rise of 20-25% In other words, serious money. But even a Year 9 economics student (we have one in-house) could tell you that can’t continue forever. The Melbourne market has been on steroids while the rest of Oz has been drifting along. We go along with the analysts who predict that will re-balance over the next six to twelve months.

Looking at what the tea leaves promise between now and Easter?

Next weekend is probably is the last chance to buy good property before the end of April as Easter, school holidays and Anzac Day loom.

David Morrell

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Bayside: Bubble, bubble, toil, no trouble

Accurate and timely information is readily available to buyers of a huge range of products and services in Victoria ranging from a loaf of bread to a share in The Big Australian to the price of a Holden.

But not, it seems, to the biggest and most important purchase buyers will ever make in the form of their family home or an investment property.

With buyers desperately trying to make sense of this volcanic market, this lack of transparency and ready availability of property sales data continues to frustrate and even infuriate those most in need of it.

While some agents are diligent and report their private sales and auctions, a large number of sales are either not available at the time of the sale or the report is made months later if made at all.

There is no mandatory reporting requirement and although REIV agents are encouraged to log their sales on a weekly or monthly basis by their Institute, this does not always happen. To make matters worse, agents can elect to register sale results with the REIV’s sales data collection arm but declare the result is “undisclosed” (to the public), which means potential buyers are again deprived of vital sales evidence. While all agents must be licenced, not all are REIV members. Non-members are free to do as they please.

Public auctions are public events. Their results should be reported. “Private sale” is an oxymoron. Private sales involve members of the public and in the interest of consumers being able to make accurate judgements on what they should pay for a property, the results of these sales should be reported. Not months later but on a weekly basis.

And so to this week’s events.

First a clarification of a report in this column last week. We were advised that the EOI for 14 North Road, Brighton, resulted in a sale “very close to the vendor’s price of $6 million” according to a first-hand report from the selling agent. Upon checking the actual result logged with PDOL (the REIV sales data agency), it appears the real price was $5,510,000. Almost $500,000 is a significant variance and is misleading to buyers using that sales information to assess the value of similar properties in this locale. Now we are not into naming and shaming, but a little respect for us and our clients wouldn’t go astray. NB. See above.

A sale was reported last week for 208 The Esplanade (sorry, no link) which, according to PDOL, sold for $6.6 million. It seems, however, the property transaction was dated late last year, perhaps in October. Why the delay? Timely reporting should also be mandatory. NB. See above.

Another stellar week in Bayside with 16 from 18 positive auction results reported in Bentleigh with (no surprise) prices at or over expectation.

The highest on the day was 34 Vickery Street, a six room weatherboard house on about 657 sq m. It was knocked down at $1,055,000 following a $920k-$1m price range.

Brighton had its biggest auction day of the year thus far with 26 results from a total of 29 scheduled for the day, of which 4 were sold prior.

Of those only 77 South Road was undisclosed. (OK, it went for $2.85 million.)

It appears the $5m+ market is still tough. 34 Dawson Avenue in the Golden Mile. An as-new house with all the bells and whistles, it was passed in on Sunday on a vendor bid of $7 million with a reserve of $7.4 million.

The market up to $3 million was very active:

4 Dawson Avenue, an older single level brick house on 700 sq m went for fair land value in the Golden Mile: $2.64 million; or $3770 sq m.

30 South Road, on the corner of Hoyt Street, was one of the few passed in on the day. There was only a vendor bid, however subsequent discussion led to a respectable $2.62 million sale shortly thereafter.

6 Menzies Avenue.  On a corner allotment of 725 sq m, a period style house requiring serious renovation surprised all: $2.58 million.

19 and 21 Martin Street were owned by the same family but auctioned separately within 15 minutes of each other. 21 was offered first and sold for $2.375 million after brief post-auction discussions. Its neighbour, at land-value only, sold for not much less: $2.22 million.

Again illustrating the demand for house sites was the auction of 9 Keith Court. A tightly held cul de sac off The Esplanade, it’s a small site (582 sq m) with bay views but without the traffic and noise of The Esplanade. It sold for $2.3 million.

Back to the Golden Mile: 10 Kent Avenue, on just 500 sq m, sold privately only 10 months ago and struggled to reach $1.85 million. A builder will now demolish the existing house and start again, having parted with $2.15 million for the privilege.

A rare pass-in occurred at 75 Roslyn Street, a repeat performance of when it was last auctioned in 2008. Then it finally sold for $2.58 million. This time it was passed in at $2.75 million on a vendor bid. The reserve is $2.95 million.

A big family house sold at 3 Comer Street in East Brighton following determined competition from three bidders before the hammer fell at exactly $2 million.

The desire for house sites exceeded supply with four bidders bidding for 7 Letchworth Avenue, adjacent to Dendy Park, before it sold for $1,065,000.

Next weekend will be even bigger and then Easter and school holidays are upon us.

Forward estimates from agents indicate not much in the way of new stock after that, but that’s what they always say.

Damian Taylor

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The weekend’s activities were … mixed. Even with a reported clearance rate of 87%, the top end of the market is still digesting the leftovers from last year and much remains unsold.

Where competition is strong is well down the ladder: investment apartments between $500,000 and $750,000, family houses between $750,000 and $1.5 million (where it’s not unusual to see three to six families going to war at auction) and well-priced property above $2 million.

We have now seen enough of this year to be picking trends and while there is no doubt that competition from Asia has decreased, the slack is being picked up locally and that’s what continues to drive the market.

More discreetly, over the past month our doorbell has been ringing with a number of estate agents enquiring whether we have clients interested in high end off-market and very private negotiations.

The big question hanging over all this remains: How long can the market continue on its ski jump trajectory? For some, not very long at all:

• 61 Lewisham Road, Prahran, was passed in at $1.150 million. Its reserve is $1.450 million. Serious ouch.
• 9 Kensington Road, South Yarra, was passed in at over $4 million. Negotiations continue.

The well-bought:

• 338 High Street, Prahran – effectively land value (784 sq metres). An opening bid of $1.7 million a reserve of $2.2 million and an eventual sale price of $2.31 million; leaving three bidders still looking.
• 11 Airdrie Road, North Caulfield. An opening bid of $3.925 million, a reserve of $4.230 million and sold for a touch over that at $4.265 million.

The end of the month will produce more interest at the upper end when expressions of interest close on 482 Barkers Road, Hawthorn East and 252 Walsh Street, South Yarra (12,150 square feet) and with the auction of 5 Moore Street, Hawthorn.

Meanwhile, up here in the stratosphere …

One of the off market deals that pricked up everyone’s ears was the re-sale of the Baillieu family estate in St Georges Road. Sold last year for around $15 million and just re-sold at $25 million. If it is good, it goes. And goes.

Interesting, also, to see The Age providing self-serving space to a buyer’s advocate to comment on the top end when that agent, at best, only has a view from the distant sidelines.

May we remind you of David Morrell’s comment published here on February 22.

Star Gazing

It seems everyone’s an authority on the top end (estate agents who would like some listings, buyers’ advocates we never see). We suspect there’s a lot in common with the fan magazines’ fascination with the royalty of Hollywood. And is about as reliable.

The top end is our backyard. We don’t rely on rumours, we know what’s happening there (we have, for example, bought more of Toorak than anyone in its history).

And so a word of caution: do not believe all that you hear. If claims are being made, ask to see proof.

Christopher Koren

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Bayside: it’s a tangled web they weave.

You may have read Saturday’s Age report regarding “maverick” agent John Keating being kicked off the REIV’s Ethics Committee after eight years of valiant service.

His one-man campaign to stamp out the misleading and systemic practice of underquoting among his real estate peers has finally lead to his banishment.

Mr Keating is from the old school. He stands both tall and well apart from those agents complicit in misleading their customers (buyers) week in and week out. But it seems those at the REIV, and in particular their Ethics Committee, would rather silence their critic and continue to deny the fundamental issue that affects hundreds if not thousands of people who weekly attend open houses and auctions.

The response and comments in relation to this made by the CEO of The REIV, Enzo Raimondo, to the effect that there was not a problem regarding underquoting is ridiculous. A poll of buyers and attendees at any number of randomly selected opens and auctions would confirm the blindingly obvious.

Mr Raimondo’s reaction to David Morrell’s comments to the effect that Morrell is not a member of the REIV and that “… we wouldn’t want him as a member in any event.” is disgraceful and should be retracted and and an apology issued. (For the record, David Morrell and Christopher Koren resigned from the REIV years ago. They objected then, and still do, to that organisation’s continued tolerance of practices they regard as unethical.)

Meanwhile, back where the Bayside action is, the market continues to bound along with clearance rates now regularly in the mid eighty percent area and a stream of frustrated underbidders left pondering their next moves.

In Brighton:

• Bayside’s top auction result for the weekend was at 42a Black Street. A single-level Victorian villa on 866 sq m on the corner of Male Street, it sold for $2.2 million.
• 164 Cochrane Street had strong interest and went for $1,842,500. That’s hefty for a less than prime location reproduction Edwardian on just 554 sq m.
• A solid brick town house with a basement garage at 2 Campbell Street sold prior for $1.75 million.
• A previously loved original Edwardian cottage on less that 500 sqm at 111 Martin Street brought $1,046,000.
• 46A Lynch Crescent, a town house, was less loved: a vendor bid of $1.45 million was later bettered by a genuine $1.5 million bid, still shy of meeting the reserve of $1.585 million.
• 9 Peacock Street has been sold a couple of weeks after auction at $2.45 million.
• 27 Albert Street has at last found someone to love it (after parting with $1.69 million), a considerable discount to the initial expectation of over $1.9 million.

And then came the private sale of 14 North Road, Brighton in the Golden Mile. It’s 1523 sq m and has been bought by a developer for an undisclosed amount believed to be close to the asking price of $6 million.

Brighton East was also busy:

• Highest on the day was 2 Connor Street where a “state of the art ” contempory house sold for $2.3 million.
• 48 Shasta Avenue (on 630 sq m) reached $1.315 million.
• 49 Union Street sold within it’s quote range at $1.615 million.
• 9 Edro Avenue sold prior for $1.521 million.
• The only pass-in was 13 Churchill Court. A vendor bid of $1.8 million was as high as it went. Its reserve has now been revealed as $2 million, $50,000 above the quoted $1.8-1.95 million.

Elsewhere in Bayside, Bentleigh cleared 17 from 18 scheduled, Black Rock and Beaumaris were well down on listings with only three scheduled for the weekend and Hampton/ Sandringham a little busier with 10 auctions listed for the day with all but two being sold.

42 Abbott Street, Sandringham was the highest priced: $1.42 million bought a 7-room period weatherboard on a modest 493 sq m.

Damian Taylor

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It was the first big weekend of the year and it had all the signs of going off with a bang, but…

That was deafening.

And there are some worrying echoes.

First, the big bang:

There’s still a wave of pent-up demand, much of it dating back to last year. Once people have made the decision to move (or circumstances demand it) there’s usually a period of quiet optimism – getting to know what’s out there, no rush – and then there will be a property or two which really appeals and, not unusually, goes to others; and then disquiet starts to gnaw. How much higher can prices go? Is it now or never?

All of which can add up to some very anxious people offering numbers they never expected and may regret. Which helps to explain days like Saturday.

There were numerous auctions where four or more bidders were still in there well beyond the reserves and there were prices 10-15% and more above what we believe is fair value (and even that is well above what it was just six months ago). Particularly stressed were those putting up their hands at between $1 and $3 million.

Can it go higher? Is another 10-25% possible? Yes. And yes.

Can that go on? Not unless someone has repealed the law of gravity.

How volatile does it get?

About a week ago, 1002 Malvern Road, Armadale, a large Victorian house on 12,000 square feet, sold before auction for $2,825,000. On Saturday, four doors up at 122 Kooyong Road, a smaller Victorian on 8,000 sq feet sold for an impressive $2.7 million against a reserve of $2.4 million. One property was an outstanding buy and the other truly expensive and just 8 days separated them. Why? What (or who) persuaded Malvern Road to sell? What persuaded six people to go head-to-head and so far over the top in Kooyong Road?

2 Selbourne Road, Toorak, a modern townhouse, sold for a very large $4.75 million after being passed in at $4.6 million (someone couldn’t wait for the Easter bunny?). A grand, renovated-by-the-local-RSL (not their forté) Victorian mansion at 23 Loch Street, St Kilda West had nine bidders who took it to $4.1 million. No surprise there, but still quite a clutch of under-bidders who, presumably, are ready to put their hands up elsewhere.

Boroondara. A student from mainland China saw the property for the first time only minutes before the auction … and bought it. Impulse buying is supposed to be restricted to supermarket checkouts. Now it’s houses?

Even in paddocks we don’t often play in – investors and apartments – close to the city there have been prices paid that only astronomers could comprehend.

And the hangover from last year’s very top end expressions of disinterest campaigns has been relieved, a little, by a new owner at 10 Heyington Place. In the end there were two interested buyers and one genuine seller. How do we know? Well…

But it’s still those echoes which worry. Not so much of a problem at the very top end, but head down the scale and you will quickly find the over-stretched. Head all the way to the first-home buyers and you’ll find what for some is a recipe for misery.

It’s not good. Not good for individuals and not good for a society which is increasingly becoming split along lines of those who can afford somewhere they are happy to live and those who cannot.

There are two elements to what we believe is now an unhealthy market: one is the seemingly inexorable rise in prices, the other is the volatility which shakes confidence among both buyers and sellers and, in the end, helps no-one. Both are, we hope, exercising the minds of those in government and at the Reserve Bank.

For now, the rise and rise continues, but history suggests it’s unsustainable.

David Morrell

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Bayside takes plunge

Last week it looked like Bayside buyers were dipping a toe into the water before deciding to stay dry or to dive back into the market.

Not this week. Now there are rows of wet Speedos hanging on the line. There were strong clearance rates at auction and numbers of sold-priors and private sales; while properties passed in at auction were rare (and mostly due to getting prices well and truly wrong).

Bentleigh powered along with 16 sold from 18 auctions; with multiple bidders and prices mostly above expected. Bentleigh East is the local darling: strong buyer support and two properties topping the million dollar mark.

4 Kadir Street was expecting mid $900′s but zoomed away to sell at $1.07 million and 19 Vasey Street quickly eclipsed that: $1.295 million.

Beaumaris and Black Rock had a big week with the former recording 11 auction and private sales for the week; the vast majority around the million dollar mark.

Exceptions were pass-ins at 6 Rennison Street ($1.7 million, reserve $1.95 million) and 374 Beach Road ($2.7 million on a vendor bid, reserve $2.9 million). Seems the Bayside top end can still be challenging.

9 Cullinane Street, Black Rock sold at $1.235 million. 19 College Grove sold prior for $1.425 million.

Brighton and Brighton East sold 14 from 18 auctions and also recorded a handful of privately sold properties.

Among the successes, the standout was the unreported result under the hammer at 40 Sussex Street. It’s an unremarkable 70′s style single-level house of modest proportions on equally modest land of 700 sq m and expected to sell for $2.6-2.7 million based on two or three similar sales made less than three months ago. After an epic tussle, shortly after the auctioneer’s one and only opening bid of $2.6 million, it was knocked down for an astonishing $3.25 million – a mere half a million above expectation. If an underbidder is ever happy at missing out, it should be this one.

Also in the money are the vendors at 38 Montclair Avenue. A renovated and extended 1920′s brick house, its presentation and accommodation obviously appealed and $2.25 million was the result.

2a Rippon Grove buyers were not confused by the address. It’s on the corner of South Road with views over Brighton Beach oval and out to the bay. On 1077 sq m, it sold under the hammer for $3.2 million.

One of the few passed-in properties was 44 Roslyn Street. A new spec house, it failed to excite and could only muster a vendor bid of $2.5 million before the reserve of $2.85 million was announced.

An orphan from last year, 7 Wagstaff Court, was dusted off and set to be auctioned again over the weekend, but a buyer felt the love and parted with $1.925 million prior to the auction. Group hug for all involved.

Less than 12 months ago, a landmark house at 186 Church Street – on the corner of Halifax Street – was privately sold for $2.65 million. With very little done to it, the price has since climbed $550,000; or over 20%. It sold again during the week for a very handy $3.2 million.

Brighton East was less busy than its cousin but included a result at last for another 2009 reject: 1 Collis Street. An as-new property on 650 sq m, it sold for $2.5 million.

1 Lansdown Street was not so fortunate. The highest bid was the auctioneer’s $1.8 million. A later offer brought that up to $1.825 million but still nowhere near the vendor’s now stated reserve of $2,050,000.

13 Alicia Street, Hampton, also profited from a stronger 2010, selling for $4.17 million following an expression of interest mini campaign. It’s a substantial resort of a property with pool and court and languished on the market earlier last year with no takers at mid-$4 millions.

The vendors of 31 Gordon Street, Hampton, will be hoping to do still better. They’re looking for $5 million or more in an expressions of interest campaign. Expect a sale soon.

Dreadnought Street, Sandringham, has become a classification of its own. Three sales in a week:

• Number 9. Standard two-storey townhouse, sold at auction on Saturday for $877,000.
• Number 15 was sold at auction on Sunday for exactly $1 million.
• Number 22-24 changed hands during the week for $1.8 million.

The Labour Day long weekend will give buyers who have been underbidders these past two weeks time to reflect on their buying strategies for the remaining auction weeks prior to Easter.

Some will decide to dig deeper if they must to buy into the most keenly sought locations. Others it will be a matter of reviewing what is on their must-have lists and to get the red pen out. And some will have little choice than to widen the geographic search area in an attempt to find the affordable.

The least advisable option is to do nothing in anticipation of the market going into a huge correction phase (or to crash as some would like). That said, it is patently obvious that the current heat in the market is not sustainable, nor healthy, and the sooner the market plateaus, the better for all concerned.

Damian Taylor

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