Tis the season of polls, polls, and more polls. Even worms are being asked for their opinions. And for every question, you get to choose the answer you like.

Jeremy Grantham pontificated on Oz and continued his stirring of our property market, suggesting that we’re at the height of a bubble and home price falls are “a near certainty”. So what did the polls accompanying that story tell us?

When people were asked what their outlook was for median prices over the coming year, 11,938 of them failed to agree:

• 6% expected a rise of 10% or more
• 18% expected a rise of 0-10%
• 27% thought there would be little change
• 19% figured a fall of up to 10%
• 30% expected a fall of more than 10%

So around half are expecting a fall versus about a quarter who expect the rises to continue.

Need more cause for caution? The Economist Magazine this month said, “Australian property is the most overvalued of any of the 20 countries we track.”

But markets aren’t made by statisticians, economists, pollsters or pundits. Two or three people can “make” a market by putting their hands up at an auction. Yes, there are trends, but they’re overridden by individuals. Ask any of the bidders we were up against on Saturday. They were firmly in the camp of Rory Robinson from Macquarie, who said “…structural differences in Australia would prevent the steep falls seen in the US and European markets following the financial crisis.” Yup. Same Rory Robertson who won that bet with Steve Keen.

Where do we stand in all this? Same as always. The surveys and the stats can provide no more than broad overviews, it’s down on the ground where the realities rule. Good properties, well priced, arouse interest. Always.

We attended seven auctions of good houses on Saturday; and we were not alone. Amid all the doomsaying, six people took one of those properties several hundred thousand dollars past its reserve. All had two or three people bidding.

At the top end – $3.5 million plus – the pickings are thinner and the crowds thicker. At one of the few on offer, Moorakyne Avenue, Malvern, you would have thought they were giving away passes to the Emirates Marquee

What rules, amid the ebbs and flows? Sentiments such as this, heard on Saturday: “I have to put the family somewhere. It’s where we sleep most nights. It’s where we live our lives. It will be the best place I can afford.” That, and the tax laws relating to the principal place of residence, also serve to underpin residential property values.

And then, to underpin the irrationality which can also rule, came 4 Grace Street, Malvern. Four bidders and passed in, whereapon one of the underbidders rushed inside and paid a sum which we believe was way over the odds. In a few minutes, it had suddenly leapt in value so far beyond what anyone else was prepared to pay?

Too much reality?

7 Ardrie Road, Malvern East . Sold for $1.92 million in February. Could not get a bid at $1.5 million over the weekend

Old games are on again …

Pass-ins? Yes. Many. Signs of vendors out of touch with prices and/or quality that is less than impressive. It’s then that the dummies begin to emerge, some as obvious as a man without a tie having lunch at the Melbourne Club.

How does that look? One recent high profile property was passed in on a “genuine” bid of $3.3 million; with a reserve of $3.6 million. And then we learn, despite a wall of confidentiality clauses, that it went for a trickle over $3 million. Um. They knocked back $3.3 million so they could take $300,000 less? Yes. Right. Happens all the time.

So those games continue. It’s wrong, it’s deceitful and it will only be stopped when reserves are published. More here.

A longer debate – over at last?

While Julia and Tony were meant to be going hammer and tongs last night, another debate came to an end over the weekend. In a story in The Age about vendors’ agents, this cat was let out of the bag: “After initial resistance from the real estate industry, buyer’s agents have become well-established players on the Australian real estate scene during the past decade.”

We’ve always preferred to call ourselve advocates rather than agents, but you get the point. Thank you linespersons and ball kids, when even Jonathon Dixon “admits begrudgingly” that we can be useful, we believe it’s game, set and match.

David Morrell

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Bayside, briefly …

Overall, Bayside staged something of a recovery this weekend with strong clearance rates and some very creditable prices and even some (drumroll) competitive bidding!

In Brighton, out of 15 auctions, 13 sold. Beaumaris/Black Rock saw 8 from 10. Bentleigh returned to the winner’s circle with a 90% clearance rate.

The highest on the day was 23 Murphy Street, Brighton, a well renovated and extended period house on over 1000 sq m with a lot of appeal. Three people competed from $2.9 million until the property was knocked down for $3.35 million; a price very much at the top of the value range.

Half an hour later it was a completely different scenario at 52 Head Street, Brighton. Another fully renovated and extended period house – on an average-size block of land – did not quite hit the spot. Good on paper but missing the wow, a large crowd was ominiously silent. A single and very lonely opening bid of $2.45 million and then it was passed in. The reserve? A towering $2.9 million.

A competitive and entertaining auction ensued at 16 Lynch Street, Brighton. Two equally determined bidders slogged it out with multiple and varied bids before it was knocked down at $1.37 million; with another couple of early bidders left well behind.

The most curious non-result was that of a land only auction at 8 Carrington Grove in Brighton East.  A standard size allotment of 650 sq m with an original 1940′s bungalow, it attracted an ambitious opening bid of $900,000 before being passed in on a vendor bid of $1 million. The reserve is for some odd reason undisclosed. Curious because, only an hour before, an near-identical allotment at nearby 27 Plantation Avenue attracted three bidders and sold under the hammer for $1.326 million.

The village gossip is that the most talked about property in Brighton at 323 St Kilda Street (corner Bay Street) on the edge of the Golden Mile has finally sold. Local chat suggests about $6 million, but the selling agents were obviously under strict instructions not to comment. Our belief is that it was well into the $6 millions.

Damian Taylor

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Silence. Expensive silence.

The top end has been out to lunch, on hols, nowhere to be found. Gone missing.

Top end vendors, however, have been found looking over fences, in bushes, under carpets – wondering where their agents have gone.

Amazing. You  spend $25-30,000 on a sales campaign and when that falls on its face your agent disappears on holiday and you’re left to deal with a 20 year old cadet.

We’re buyers’ advocates, not agents for vendors, but we’re getting calls from more than a few people with stalled top end properties who are asking for our advice on what to do next.

And then there are those considering selling who are asking us whether they should be donating their hard-earned to the estate agents’ new ad mag, whether there’s a market for their property, whether there are quality buyers still looking, whether their sales campaign budget is best spent in print or whether the internet is all they need.

All questions they could ask their agents, if their answers were trusted.

Short answer: good property, fairly priced, will sell. If it’s flawed or if the price is out of line, no $30,000 advertising campaign is going to change anything.

Yes, there’s still a market, but it is no longer desperate, no longer prepared to pay beyond the reasonable or for quality that isn’t there.

That said, the pickings are particularly thin and now the Julia and Tony Show has hit the road they will become even thinner. There’s nothing like an election to cause people to put things on hold and even before this one was called, stock levels at the top end were close to critically thin.

How critical? Over the past three weeks there has been only one top end sale worth reporting.

After an endless expressions of disinterest campaign 17-19 Huntingtower Road, Armadale, finally found a buyer. It went for, we believe, $8.3 million, well shy of the vendors’ hoped-for $10 million or their later asking price of $9 million. No heroes here. Reality rules again.

That’s the top. Step down a rung to the sub-$2 million market, particularly close to the CBD, and we have been seeing one or two other bidders. They are reserved – they have caution lights flashing – but they are less concerned by the market’s weekly fluctuations and are prepared to put their hands up for properties which tick all the boxes.

Long may reality prevail.

David Morrell

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Bayside snores on.

The Bayside winter hibernation was hardly disturbed over the weekend. Auctions were scarce and the few real bidders to be found were welcomed with open arms.

Expect more of the same until the election. As noted above, experience suggests that until Laurie annoints Julia or Tony, real estate activity will hit the pause button.

That, combined with the yearly seasonal low, may help explain the rash of “out of office” auto replies received from many agents. More on that above, too.

Bentleigh, as usual, provides the exception. It bounced back from last week’s hiatus to score 12 sold out of 16 auctions. Highest among them was 51 Mortimore Street at $1,172,500.

The sub-million dollar market is still active, but it’s a different story at the pricier end of the scale.

3 Barkly Street, at $1.33 million, topped the half-dozen auctions in Brighton.

A number of top end sales have quietly taken place in Brighton over the past fortnight, but agents (and owners?) are being very coy about the prices paid.

We understand that 31 Martin Street sold for around $4.25 million, ditto 19 Wellington Street. A third major Victorian, at 37 Black Street, changed hands at “well in excess of $3 million”. Given the correction in the top end in recent months, they’re all reasonable results and reinforce our contention that patient buyers and realistic sellers will be rewarded.

The times …

In this newly constrained market it is becoming abundantly clear that the hit-and-run three week auction campaign is generally insufficient time to attract a buyer looking to spend above $2.5 million.

Average days on market have more than doubled. As a consequence, agents will be under more pressure to justify the extent and price of their recommended marketing strategies and their initially advised price expectations. The double whammy of a big hit on the price promised followed by a $30,000 advertising bill must be testing the equanimity of even the most reasonable vendors.

Damian Taylor

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A big weekend of sport with Spain finally triumphing in the beautiful game, Cadel Evans donning the yellow jersey in Le Tour and Saint Nick back to lead St Kilda to glorious victory in September.

Melbourne’s other winter sport – property watching – yielded little to get excited about. Real bidders and live bidding the exception rather than the rule.

Anything over a million dollars was largely ignored in the prime Bayside suburbs and when venerable Bentleigh turns in a miserly six sales from fourteen auctions, that may be an alarm bell rather than an auctioneer’s that you are hearing.

The only bright spot for the day was the result of 29 Tennyson Street, Sandringham. A “palatial period classic” timber house on 960 sq m. With 10 main rooms and bay views, it sold for $2.375 million. Sound enough, but only a couple of months ago a reasonable expectation would have been somewhere north of $2.5 million.

In all of Bayside, the only other auction to top a million dollars was at 10 Trafalgar Street, Brighton. It crept up to $1,110,000.

Some of the casualties:

• 2 Westley Avenue, Brighton, passed in at $2,075,000 with, apparently, a later offer of $2.1 million. The reserve is undisclosed but probably not far away.
• 85 Carpenter Street, Brighton, passed in on a vendor bid of $1,900,000. Its reserve is a sensible $2.15 million and value buying at close to this figure
• 6/11-13 Well Street, Brighton, passed in at $2,350,000 on a vendor bid, reserve undisclosed. Expect at least $2.5 million.

There is, however, some quiet movement at the station. We are starting to hear reports of successful negotiations being concluded following both passed-in auctions and lapsed EOI campaigns – in some cases many, many months after the cessation of active marketing.

13 Wellington Street, Brighton, was among the latter. It was passed in at auction in December last year after a bid of $3.5 million was knocked back. Six months later a change of agent and a changed market finally saw a result “close to $3.5 million”, as reported by the selling agency; although our respective definitions of “close” are … not noticeably close.

7 Grosvenor Street, Brighton, has also been sold with the sale price variously being speculated as $3.05 million, $3.1 million and “close” to the asking price of $3.5 million depending upon who you trust. In these guessing games, it probably pays to take the middle ground.

Word has it that at least two other significant Brighton properties have contracts about to be exchanged and we will update you as confirmed information is available.

Any lessons in all this?

• Sellers’ patience will be rewarded.
• Buyers’ patience will be rewarded.
• A property expecting more than the median price for its area has to tick every last box (right location, all the usual fruit) and have a realistic July 2010 reserve or its owners would be better advised to take the advertising budget and splash out on a holiday. Spain is cheap and, now, very cheerful.

Damian Taylor

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