Even with the start of school holidays, Bayside activity continues; reduced auction numbers prompting its highest percentage clearance rate in many weeks, despite seriously winter weather.
It is becoming more and more obvious that the recent slide in clearance rates across Melbourne, and in Bayside in particular, has not been created by The European Debt Crisis, The Super Profit Mining Tax, The BP Oil Spill or (now) The Elevation Of Julia Gillard To The PM’s Office.
It’s Supply. And Demand. And Bayside’s reduced supply over the weekend meant demand peaked at those auctions which did take place. Multiple bidders, fewer pass-ins. In Brighton and Brighton East, seven out of seven sold.
And then another of our pet hates made its appearance: “Price undisclosed.”
Both in Brighton. Both with multiple bidders and both at prices well above their agents’ estimates (maybe that’s why they weren’t disclosed).
Kids, this is happening more and more often and it’s not good enough. They’re public auctions. They set price expectations for similar properties at later auctions. They indicate to people who are not selling what their properties are worth; and with around 60% of Australia’s wealth ($4 trillion and counting) being in residential property, they add up to statistics of national significance.
Full-disclosure time:
2/3 North Road, Brighton. Ground floor apartment in a development of four. Auctioneer kicked off with a vendor bid of $2.5 million. Two people took it to (how hard is this to say?) $3,050,000.
13 Albert Street, Brighton. 1980′s style property on 710 sq m in one of Brighton’s more sought-after streets. Quoted “…in the $2.35-2.65 million range.” Two people took it from $2.4 million to $2,770,000 where it was knocked down without referral. Solid result. In line with expectations. Why the secret?
Another sale of note last week: an off-the-plan transaction regarding a penthouse at 4 Dudley Street. Golden Mile. Designed by SJB Architects. One of six. Believed to be a record price for an apartment not located directly on the foreshore. $6.45 million.
20 Beach Road, Hampton, sold after an Expression of Interest campaign concluded last week. On a compact allotment of 500 sq m with bay views, it was quoted in the $2.7-3 million range and was reported as sold for $2.85 million.
Sandringham and Hampton also had a good week: seven sold out of nine auctioned, including:
When our market dives, it does it with style. Yes, there was a record number of properties on offer, but at the top end that led directly to what was almost certainly a record number of pass-ins.
What did that look like? Look no further (and any resemblance to any real estate agents of this town is entirely their fault):
A lot of hype, a lot of promise, a lot of agents with fingers crossed and a lot of silence when opening bids were called for. (The smarter auctioneers went straight to vendor bids.) The top end has packed its bags and shot through for the winter.
Those agents who can have taken off on cruises (after the year to April, they can afford to), and it now looks like those vendors who were thinking about selling in a rising market are now considering hibernation. This winter’s record number of listings colliding with dwindling numbers of buyers is not a recipe that promises to rise.
How confused can it get?
Come along on one EOI campaign as it descended into farce.
17-19 Huntingtower Road, Armadale. Good Victorian. 18,000 sq ft. Court. Fully renovated. The hype: as many as six interested parties all putting in expressions of interest – with cheques – at 4pm on Saturday. The fact: one party gets on this merry-go-round while two others look on. All in the agent’s office. 5pm comes around. The agent decides on a boardroom auction.
But.
But the agent won’t say whether there is a real offer on the table or whether it’s acceptable and won’t say what the reserve might be. Those interested are supposed to bid for the right to negotiate, but faced with an agent doing dances of endless veils, they bid … nothing. And why would they? This is a game with more twists than a LeCarre novel. Them that makes the rules make the rules for themselves. Sorry. Not playing. So at the end of the day, nothing results and the property is now on offer at $8.95 million.
Where does this leave a buyer who has played by the rules, only to see them changed and changed again? EOI? Expressions Of (an agent’s) Interest.
Dot points:
more and more vendors getting ahead of themselves
more and more properties passed in (see previous dot point)
fewer bidders
good properties still getting bids
underquoting still an issue
multiple bids and properties still not put on the market? (see previous dot point)
June ain’t April
agents wearing ad costs for unsuccessful auctions and EOI’s
agents bleating (see previous dot point)
agents discounting commissions to get listings
agents bleating (see previous dot point)
motivated sellers meeting market
market becomg fairer (see previous dot point)
The goss:
Jeremy Grantham is in Australia, throwing hand grenades, frightening the daylights out of many, claiming the market is in a bubble and will drop by 40%. Problem is, he doesn’t know when. People still need a roof over their heads, in a good area, close to schools, etc. Melbourne’s macro and micro issues don’t seem to add up to world views. Yet.
The REIV:
All calm. No problem. “The top end’s been nuked? Whatever.”
Those that did sell were, in the majority of cases, passed in and sold shortly afterwards.
All of which adds up to a lot of vendors wondering where the cheque books go in winter. With a couple of nearly near-miss exceptions:
51 Murray Street, Prahran. Good Victorian, always set to go through the roof, especially with a quote of $3 million plus. Five bidders had a red hot go, but (surprisingly) it wasn’t declared on the market until $3.7 million. It eventually sold for $3.740 million, less than 1% over the reserve.
52 Foam Street, Elwood. Almost a carbon copy. Quoted at $3 million plus. Five or six bidders there at the early $3 millions and two who pushed it beyond. Finally declared, after numerous requests to do so, on the market at $3.6 million. It sold for $3.61 million.
These were the supposedly runaway results?
View from the sewer:
Millions and millions of ad dollars going down the drain with little upside for vendors. It all adds up to interesting times.
David Morrell
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Bayside: Frustration is tidal
Three months ago buyers were frustrated by the lack of choice, the paucity of supply and at being forced to pay over the odds for even the most ordinary properties.
The flood onto the market since the end of April has changed the game. Sellers now look forlorn at buyers who are keeping their hands firmly in their pockets.
The vendor’s position was not helped over the weekend with almost 1,000 auctions scheduled, the largest Winter offering on record. No surprise that many passed in and, in a lot of instances, there were no real bids.
With the large overhang of unsold stock yet to be cleared, agents will now be hard-pressed to convince potential sellers to list properties for sale.
Meaning?
Good short-term choices and bargaining power for buyers, but as stock dries up, the tide is likely to turn again. It’s now unlikely that there will be any surge in properties being listed for sale until Spring and even that may be complicated by the coming elections. Many sellers choose to postpone rather than compete with political distractions.
But opportunities for buyers depend on their being realistic sellers, and that wasn’t evident in the middle to top end of Bayside auctions.
Brighton struggled with anything over $2 million, but there were 12 sales from 24 offerings – between $600,000 for apartment 6 at 35 Normanby Street to $1.86 million for 4 Baird Street in Brighton East.
The most entertaining auction witnessed for some weeks was that at 58 Dendy Street. Three genuine bidders, a reasonable reserve and an auctioneer in full flight entertained the large audience. The property was knocked down for $1.53 million.
The adjoining property at 56a Dendy Street was offered immediately after with not quite the same zip. It was passed in with one bidder and sold shortly after for $1.76 million.
Buyers over $2 million were hard to find, although two bidders reluctantly took 10 Cairnes Crescent to $2,075,000 before it was passed in. A later offer of $2,125,000 did not bridge the gap. The reserve is $2.2 million.
Tough going elsewhere.
7 Grantham Court passed in at $2.45 million, reserve undisclosed
6 Head Street passed in at $7.0 million, there was a later offer of $7.3 million. The reserve is $8 million.
Hampton and Sandringham also struggled. 6 out of 14.
31-33 Crisp Street, a development site of 1741 sq m, was the highest result on the day. Two bidders competed strongly before it was sold under the hammer for $2.86 million. Expect to see multiple townhouses or apartments.
10 Ocean Street, a red brick Edwardian on 900 sq m, was passed in. Three bidders took it to $2.39 million and it sold shortly after at $2.445 million.
4 Bendigo Street was left. Unloved. No takers at $2.85 million and a hopeful $3.1 million now the asking price. The property was bought for $2.9 million exactly two years ago so more pain than gain there.
Bentleigh has not escaped the softening in clearance rates with – by their standards – a modest nine results achieved from the sixteen offered.
However a newly released land subdivision in East Boundary Road saw 22 sales from the 50 lots available. They ranged from $550,000 for a small 357 sq m site to $740,000 for 546 sq m.
Damian Taylor
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Along with, at last count, 384 cities around the world, Melbourne claims to be the one which can offer four seasons in a day.
That’s nothing. Look at our real estate. Changeable? We define it.
In two months the clock has been wound back two years*. It’s buyers’ time again.
What’s going on?
We have been predicting this change since April. The speed of its arrival is the real surprise.
Some agents have at last caught up with the reality. They’re adjusting prices accordingly.
Saturday’s Financial Review headline: “Melbourne mansions passed up” caused significant palpitations among some vendors, but those who offer quality, position and price have no reason to panic. Buyers are still there.
What’s not?
Enzo Raimondo of the REIV scores the Ninny of The Week Award for his observation that the weekend’s results were “good”. This is the bloke who represents the vendors. The vendors are those people you see reeling, bleeding, after watching their expensive marketing campaigns going up in smoke and their properties passed in. Nearly half of those valued at $1 million plus failed to sell. That’s good?
Too many agents are still living in 2010. They’re asking too much and they’re not getting it.
What’s bizarre?
The Weekly Review. A consortium of estate agents taking on the Melbourne Weekly so they can make the profit instead of Fairfax. They’re suggesting giddily optimistic results in the face of reality. They would, they need the advertisers. Thoughts of conflict of interest? None. Awareness of the elephant in the room that’s now dominating real estate, the internet? Apparently that can be wished away.
Expressions of Interest. The agents’ attempt to claw back control – especially in a declining market. “Show us your wallet and we’ll tell you … what we feel like telling you.” You won’t know who else is interested, whether there is any other interest, whether others you are told are interested are real or the products of the agent’s imagination. Don’t play. Demand to know a price, then work down. No price? Walk away.Boardroom auctions which follow EOI’s can bring real buyers face-to-face with real vendors. That’s a paddock we will happily play in. In the meantime, EOI’s are sorely in need of rules which guarantee transparency and place a time limit on vendor decisions. Are they real sellers, or just testing the market in the hope that fools will rush in?
50 Hawthorn Grove, Hawthorn. Double fronted Victorian – they’re always in demand – four bidders. On the market at $3,030,000, sold for $3,510,000
2 Carmyle Avenue, Toorak. Land value (the ultimate litmus test). Deceased estate. Two bidders. Sold for $335/sq ft. A couple of months ago, it could have raised $360/sq ft.
What didn’t?
9 Kenley Court, Toorak. Contemporary 4-bedroom house with pool. AAA address. Passed in on a vendor bid $4 million. Weird, given its position.
10 Moonga Road, Toorak. Passed in on a vendor bid of $3 million. No real surprise. Quality was the issue.
Whatever happened to dummy bidding?
It’s still with us. At two auctions over the weekend we saw stooges bidding against vendor bids up to just short of the reserve. Goodness. What a coincidence. If they didn’t have “dummy” stamped all over their foreheads, you might have believed they were genuine. And then an agent phones: “Our other bidder has dropped out. You can have it for less than his bid.” Really and truly.
* The wheel has turned. Here’s some advice we were offering two years ago. It’s again valid.
David Morrell
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Bayside: A change in the weather
The first weekend of Winter sent a chill through an already cooling Bayside market. Real bids were a rarity and vendors took centre stage.
Brighton and Brighton East clearance rates plunged to a blood numbing 31%. 16 auctions, 5 sales
Hampton and Sandringham: 35%. 14 auctions, 5 sales
Beaumaris and Black Rock: 50%. 10 auctions, 5 sales
On the brighter side of Nepean Highway, Bentleigh and its boutique neighbour McKinnon defied the odds: 76%. 21 auctions, 16 sales
How bad is it? When auctioneers are tetchy, sales agents in shock and vendors wander the their unsold halls bewildered, you can bet something is up; and it’s not sales.
The expectations of a couple of months ago are history. Sellers will need patience and then acceptance to deal sensibly when the right buyer presents. There is no point in looking back to what might have been (ask Lot’s wife).
What bucked the receeding tide?
326 Beach Road, Black Rock. Essentially land only, it’s 950 sq m with bay views and has development or trophy-house potential. Sold for $2.45 million.
81 Iona Street, Black Rock. A nine iron to the back of Royal Melbourne Golf Course. 1977 sq m. Sold privately for $3,180,000.
12a Dendy Street, Brighton. An older style single level townhouse on a cluster title (473 sq m.) Sold to a neighbour for $1.56 million.
5 Rippon Grove, Brighton Beach. 1341 sq m of land value, originally auctioned and sold with conditions for $3.45 million on May 8. Apparently it’s now unconditional and rumour suggests it will be redeveloped into apartments or townhouses.
103 Bay Street, Brighton. Vacant land of approx 1800 sq m. Passed in $4.5 million followed by a real bid of $4.5 million followed by disclosure of a real reserve of $5.4 million (this not a misprint!)
3 Wellington Street, Brighton. Passed in at $4 million on a vendor bid after an opening real bid of $3.675 million was at first accepted and then ignored. Reserve is set at $4.1 million
190 Church Street, Brighton. Passed in on a vendor bid of $3.7 million. Reserve is undisclosed but believed to be around $4 million
68 Were Street, Brighton. Passed in on a vendor bid of $2.25 million. Reserve is undisclosed but mid $2 millions is the word.
The price fall that started at the top end now appears to be filtering down to the mid-level in a number of suburbs where passed-in results have been common at around and even under the median price for those areas.
You’re an agent?
Break out the woollies. It will surely be a very cool winter ahead.
Damian Taylor
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