There are trends and there are exceptions. When the exceptions cease to be exceptional, that could be a new trend emerging or, like waves on a beach, it could quietly disappear into the sand.

All of which is of casual interest to the casual observer but is in the you-bet-your-future category if you are buying or selling.

So how do we make sense of today’s volatility?

Firstly by acknowledging that there will always be exceptions; and then by looking at the market as a whole and augmenting that view with our own observations – often made in private – of what is happening at the top end.

The market as a whole? That’s easy. It’s now faltering against the sandbars of over-supply and bubble-pricing (by vendors still living in bubbles), by the threat of increasing interest rates and buyers’ fears of paying too much now for what may be devalued later – and who are in no hurry while their choice is as wide as it is now.

And then there’s the top end. Always a world of its own, but not wholly unaffected by happenings further down the beach.

Here the exceptional – in terms of the quality of property and its scarcity – is closer to the norm. Here the fears of missing what may be once-in-a-long-while opportunities still count. Here the bubble is still to pop. Here, in some cases, the market is still ahead of where it was a dizzy 12 months ago.

• 88 Mathoura Road, Toorak, sold prior to auction for $6.5 million – that is $650 for each square foot – and this is not a AAA address
• 2/155 Domain Road, South Yarra (no link), sold privately last week. A good first-floor apartment – but $7.5 million? $20,000 for each and every square metre? Pass the smelling salts
• 50 Charles Street, Kew. Two-storey Victorian. Busy street. No garage. Sold via a boardroom auction for $4,379,000 (it sold only a couple of years ago in the high 2′s). What did it really have going for it? Schools.
• 2 Bromley Court. AAA land for $5.6 million or $550 per square foot. That’s up there.

So, at least at the top end, the right house in the right place is still seeing people put their hands up. Not as many hands as six months ago, but still enough to hold the market higher than we would like or believe to be sustainable.

Under $3 million? Different story.

The volume of pre-Christmas stock is huge and much of it won’t find a buyer before next year. Those vendors who committed to sell on the clearance wave of a couple of months ago must be now wishing they had placed their advertising budgets into their Christmas stockings rather than sending them in the direction of their estate agents. $20,000 or $30,000 or more for the pleasure of watching an auctioneer get no bid on a wet Saturday? All that stress for no result?  Paradise for masochists.

And the buyers? One we were competing with at the weekend was not alone: “Yes, I will have a go, but I’m not going to chase it because I don’t want to regret it in March.”

The goss.

That Boy’s Club, the REIV, had their AGM and a motion was put that auction reserves should be published – which would at a stroke end infinite market manipulation and distrust. As we could have predicted, the motion was thrown out and he who was brave enough to put it was chastised by the heirarchy for bringing the industry into disrepute. Nice one, REIV, you’re about as in touch with community views as our departing State government – and appear to be nailing your own coffin.

David Morrell

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Bayside. All wet.

The constancy of wet weekends interspersed with two elections and two football grand finals during the Spring selling season has played havoc with auctions – resulting in lower attendances and a predictable week-by-week ebbing of clearance rates. The expansion of supply of properties by those wanting to off-load their castle prior to Christmas has also made it harder for agents to clear even the new stock, let alone those properties passed in over the past weeks.

We are still seeing resistance from a significant number of sellers to the new order of real value; and this is largely to blame for the ebbing clearance rate – so it’s not only rain, elections, etc.

When you see agents reported in the media acknowledging the reality of a buyer’s market, rest assured the comment is directed fairly and squarely at sellers who are still living in hopes of what might have been. To those who intone the mantra “We don’t have to sell ,” we say, “Then don’t! Take your over-priced property off the market and stop wasting everyone’s time.”

Genuine buyers want to and should only deal with genuine sellers who have priced their property accurately for these times; or who are prepared to negotiate sensibly from a realistic expectation.

If this is not the case, buyers will and are walking on by.

The Brightons had a miserable day with the eventual clearance rate barely saved by no fewer than six properties being recorded as sold prior. From the 27 scheduled only 8 found buyers on the day.

Top of the heap was 10 Menzies Avenue. An almost-original Queen Anne on 1100 sq m, it needs a significant injection of funds to restore and extend and so the early expectation of close to $3 million was never going to be achieved. To the owner’s and agent’s credit this initial wish was quickly modified and a sale resulted to the one bidder at the auction at $2.6 million.

The auction of 52 Carpenter Street was a little more contentious with the agent’s quote of between $1.15-1.25 million ensuring genuine interest. Five people took the bidding well over the top of the quote range with the agent twice referring the bid. At $1.32 million he still did not have instructions to sell and, somewhat chastened, quickly passed the property in amidst mumblings from the gathered throng. A final sale price of $1.36 million was achieved – a good result for the client but somewhat on the nose for the aspiring buyers.

The highest priced pass-in was that at 12a Manor Street. Essentially land only (1380 sq m), the auction was lackluster with the highest bid the auctioneer’s $3.8 million. This was apparently matched by a genuine later offer of the same amount but it’s still a lazy half a million dollars shy of the reserve of $4.3 million.

At the other end of the scale, the auction of a bargain basement villa unit, 4/14 Brickwood Street, surprised all at the lack of interest at this level. Only a few months ago, first home buyers, supported by mum and dad, would have been all over something like this. On Saturday the only bid was $490,000 and that was again the auctioneer’s. Reserve is set at $520,000.

On the post-auction front, 8 Kent Avenue, passed-in at auction about a month ago, has finally been tidied up with a sale reported at $2.55 million, just $50,000 more than was offered on the day.

Hampton and Sandringham had a better week: all but 4 of 13 sold.

3 Lorraine Court (Brighton Beach if you’re selling, Hampton if you’re buying). A new contemporary house with mandatory multi-car basement garage. The price was undisclosed but understood to be between $3.1-3.2 million.

23 The Avenue, Hampton. Described as “all new”, it’s an imitation period-style timber house which ticked all the right boxes from location to accommodation and quality of finishes. It sold for $2.375 million.

Sandringham was generally very busy, with the exception of 26 Kirkwood Avenue. A contemporary house in a blue chip location, it didn’t quite hit the mark and was passed in. Reserve is $2.7 million.

Some others which did better:

• 45 Gladstone Street sold at $1,503,000
• 39 Sims Street sold at $1,555,000
• 7 Holzer Street sold at $1,767,500 (prior )
• 10 Gladstone Street sold prior at close to $1.5 million

Beaumaris struggled with just the solitary success on the day from six offered: 5B2 Dalgetty Road sold for $1,710,000.

Black Rock managed to stop the rot with both offerings finding buyers, including 5 Ardoyne Street selling for $1,255,000.

With close to 2,500 auctions expected over the next two weekends, agents are praying for dry weather and crowds of bidders. At this stage more than prayers may be needed.

Damian Taylor

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Here, there, everywhere you look there’s another pundit with the definitive view on what the market is up to/will do next/has done. Whatever.

Here a boom, there all gloom and did you see the number of people (or the absence of people) bidding/attending inspections/putting their heads in their hands and deciding to go to the pub?

So far no-one is using the State election to explain anything, but that can’t be far off.

Kids, it’s always the same: you can sell lemons in a boom, but when the fear shifts from buyer to seller, the keys remain position, house and price. Line up those ducks and a sale will follow. And price, now, is often the hurdle sellers are not setting where buyers can jump it (metaphor counters, how are you going?).

And so to the effervescent:

• 116 Stanhope Street, Malvern. A renovated Edwardian which had at least five bidders, some local, some imported. With an opening bid of $2.75 million, many hands chased it to $3.18 million where it was on the market and two local families fought it out to the end: $3.462 million. That, we suggest, is fully priced.
• 9 Nyorie Court, Ivanhoe, on the other side of the Yarra, getting on for 5,000 sq m on the river. Expansive park views but effectively only half the land useable as the rest is on a flood plain. Two bidders, one local, one imported, took it to $2.96 million before it was passed in. Later sold for $3.1 million. Great position, great opportunity.
• 7 Gavan Street, Portsea. It took just two bidders to push the price $70,000 over the $4.5 million reserve.
• 5 Verdant Avenue, Toorak. Sold for $1.895 million.

And then the worm turned – as worms do.

• 12 Munro Street, Armadale, languished on a vendor bid of $3 million and no takers at the reserve.
• 33 Yongala Street, Balwyn, passed in at $2.7 million against a $2.9 million reserve.

What we do know:

• clearance rates are declining
• record numbers of auctions are looming
• prices are stalling
• there are three weekends ’til Christmas

Looks like a happy time to be buying – and maybe even more so in the post-Christmas wash-up.

Christopher Koren

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Bayside bounces, sorta.

Although still well down on its usual clearance rate, Bentleigh bounced back over the weekend: 12 sales from the 21 auctions. The improvement may be due to the average price of the properties on offer being somewhat lower and thus more affordable. The range was between $320,000 at the bargain end and up to $880,000 at the top – with the noticeable absence of anything over a million dollars.

Beaumaris and Black Rock have gone AWOL over the past fortnight – ten properties on offer and only two sold; with all four of the Black Rock pass-ins only attracting vendor bids. Seems this compact beachside suburb has temporarily slipped off buyer’s radar which suggests that buying opportunities are brewing – the fundamental appeal of the area hasn’t suddenly disappeared. Keep an eye on the weeks leading up to Christmas.

Almost hidden among the desultry auction results was a rare positive: 374 Beach Road, Beaumaris. It sold privately during the week for $2,550,000.

The standout result for Hampton and Sandringham was at 13-15 Edward Street in Sandringham. A local landmark timber Edwardian with an iconic viewing tower and on 1565 sq m, it was reported as sold with its price undisclosed (we believe it was $2.75 million).

The Brightons had a mixed day: 3/9 Glyndon Avenue, Brighton was passed in at $3.1 million (two bidders). The pre-auction quote was $3.3-3.5 million, so a reasonable presumption is a reserve in that range.

Brighton East was busy: seven sold from the eight on offer.

Two houses a few doors from each other sold withing a few hours of each other: 7 Cambridge Street and 10 Cambridge Street, each with a different agency and both quoted at $1.35-1.45 million. Number 7 sold for $1.54 million and number 10 for $1.45 million. And the bragging rights go to?

This was a popular price point in the suburb: 24 Baird Street sold prior for $1.45 million and 7 Creswick Street for an unreported $1.435 million.

Reports of sales at the very pointy end of the Brighton market have been rare lately, so the news of the privately transacted 26 Hanby Street was well received. The selling agents report the property was sold to a locally-based Chinese buyer as of a result of an introduction to the buyer through the recent International Prestige Property Fair held in Shanghai. Although coy about the exact price, our suspicion is a tickle over $6.1 million.

And then …

We wait with ‘bated breath for news of the Expressions of Interest sale at 1 Bay Street which closed last Monday. The number they were looking for was over $15 million. If that’s how it turned out, there will be a number of discreet smiles at the top end.

Almost as impressive – and about half the price – is 50 North Road. EOI’s are due tomorrow.

The late surge (tidal wave?) in properties being offered before the Summer recess is now providing great choice for buyers. Whether there is an equally great number of buyers is a moot point.

Damian Taylor

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… the times they are a changin’.

Along with all the other terms we import from the U.S., “gazundering” is a recent arrival – and it signals a market in turnaround. Gazumping occurs in rising markets – gazundering is its evil twin (OK, they’re both evil). The gazunderer makes an offer which, when accepted, is then lowered – and if that’s accepted it’s a clear sign of a faltering market.

We, too, have supped from that cup; but in more ethical ways than some. Recent auction, passed in, we were the highest bidder. Post-auction negotiation revealed an outrageous reserve and away we walked. Three hours later we paid $50,000 less than our previous bid. Walking away can pay.

Over the weekend, 90 Canterbury Place, Middle Park. Passed in at $1.6 million and sold later for $1.59 million. Gazundered?

What a difference a year makes. This time last year Tiger Woods was in town and couldn’t put a foot wrong (well, not that we knew about), the clearance rate was around 80% and agents were looking wistfully toward winters on the slopes in Switzerland and new cars from Germany.

This year? You know about Tiger, agents are nervous and the value of sales at auction over the weekend – while auction numbers were not far from last year –  dropped from over $260 million to $115 million and that, fellow travellers, is a significantly large ouch.

Melbourne’s clearance rate is hovering around 60% (Sydney’s is even lower) which suggests that there is a very large number of vendors who are yet to lower their sights; but for most that must be just a matter of time. If frailty has a recipe, those numbers suggest it’s on the menu.

Our sense is that, with a very large number of auctions over the next three weeks, the market will struggle until Christmas and then agents will be praying for re-invigoration during the break. In the mean-time, buyers should not be in any hurry. The choice is yours.

And then, as expected, along come the unexpected. There are still good properties being found, and sold. More and more it’s happening behind closed doors, but…

• 32 Linlithgow Road, Toorak. Passed in, then sold for $3.9 million
• 16 Millicent Avenue, Toorak. Expected $2.2 million, three bidders took it to $2.290 million

But they were the exceptions. More and more, vendors are rejecting agents’ suggestions of multiple bidders soaring way above and beyond reserves and are choosing low-key, low-cost alternatives. If a buyer emerges, they will sell, but they’re not prepared to punt $30,000 or more on a failed auction.

Case-in-point:

• 50 Hotham Street, East Melbourne. Seriously grand Victorian, arguably one of the best houses in the area. Zip. Nada. Zilch. Nope. Passed in on a vendor bid of $7 million, well short of what they paid for it some time ago.

As for the open for inspections on the weekend, given the weather you had to be a real estate junkie to attend them. Crowds? Not there.

David Morrell

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Bayside. Locusts descend

Wet Saturdays and poor results are a common theme this Spring but the inclement weather can no longer be blamed for the market’s malaise.

The prospect of further interest rate rises over and above the Reserve and persistent chat about the high level of Australian property prices vs the rest of the world are making some buyers nervous; and they are becoming increasingly conscious of what is and is not fair value.

The best quality properties are still keenly sought and are being priced accordingly while the rest are being marked down. The problem is that many of the “rest” are still above where buyers are prepared to move – they’re just not biting.

The outlook for the next 12 months or so suggests minimal price growth. It’s understandable that buyers baulk at paying even 5% over their perception of current value.

Party ends in Brighton.

Last week saw a rarely seen 90% clearance rate in Brighton, this week the party came to a sudden end: only 9 of the 22 offerings finding buyers. The highest result reported to us was 35 Cole Street in the Golden Mile. A stately Edwardian that appears to have a past including a number of flats, it’s on almost 1000sq m. While still in need of a pile of money, it sold for $3.45 million.

1/188 the Esplanade, a new ground floor apartment(one of two) was the priciest pass-in for the day. The highest bid was the auctioneer’s $3.5 million. The reserve is undisclosed but believed to be close to $3.8 million.

93A Martin Street provided the most notable gap between buyer and seller. Passed in to the auctioneer at $1.3 million, it then attracted a genuine offer of $1.4 million. The reserve is still almost a quarter of a million dollars away at $1.625 million. The cigars remain in the humidor.

Even the bargain basement offerings failed to excite: 7/16 Warriston Street. Vendor bid $370,000, reserve $405,000.

A private off-market sale of note was transacted for a new house on 800 sq m at 1 Holmwood Avenue: a more than respectable $4,325,000 (the link will take you to an old listing for land).

Beaumaris and Black Rock recorded a modest three sales from nine offerings (including one sold before) with Black Rock failing to trouble the scorer.

Highest under the hammer was 440 Beach Road, Beaumaris: $1,635,000. Highest priced pass-in was a 6-room weatherboard house on 1026 sq m at 19 Ebden Avenue. The only bid was the vendor’s $1.75 million, the reserve is an optimistic $1.995 million.

Hampton and Sandringham sold two from eight. 25%. Fail.

Bentleigh again battled: six sales from 13 auctioned. A victim of its recent success as more and more properties have expectations close to and above the million dollar mark.

Although buyers are cautious, there are opportunities provided they know where to look and understand the circumstances of the sale. A bit like seeing the locust in the swarm.

And then a locust was found on a car in Brighton.

Damian Taylor

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Snap! Weekend auctioneer stares at feet. Embarrassment? 100 in the throng and not a murmer? Not a whiff of a bid? What‘s his next trick?

Snap! Media – the recipients of the rivers of real estate advertising gold – now acknowledging that cracks are appearing in the market.

Snap! More and more, the top end is becoming the off-off-market market (no agent required).

Snap! Jeremy Grantham (who we have time for) musing that our market bubble may fail to burst.

Snap! 63 St Georges Road goes for just under $8 million. A year ago, that would have been sneezed at.

Snap! 6 Benson Avenue, Toorak, good block, flies half a mill past its reserve and well above where we were prepared to fly.

Snap! Quality still very thin on the ground – one-in-twenty if we‘re lucky.

Snap! Déjà vu. Again. Right house, right area, close to friends, schools, etc – and a forest of hands will still go up. 300 sleeps/year (“I‘ve got to live somewhere, I‘d better enjoy it.“) still rules, regardless of interest rates or, at times, sense.

Snap! Déjà vu demonstrated at 18 Currajong Road, Camberwell. Half the people bidding had already moved in.

Snap! Deals being done when vendors move to meet the market – including some who a year ago were offered a ransom more than they’ll accept today.

Snap! Agents caught parading results when vendors want privacy. Short-term glory, long-term regret.

Snap! Corporate bonuses being felt on the Peninsula. Many on the prowl. Early start to holiday house market?

Snap! 2nd-tier agent ossification spreads: “The internet is bad for business.“ Yes, it‘s cutting your chances to promote yourself with your clients‘ advertising money, but ignoring it has all the future of ignoring a tsunami.

DM

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Bayside: Tipping Point?

Brighton excepted, it looks like the Reserve Bank‘s play on Cup Day has had an immediate effect on the hip pocket of buyers in Bayside.

Bentleigh‘s clearance rate went into free-fall: only 6 from 18 properties sold. The common theme was a pass-in on a vendor bid followed by a slightly increased real offer and then lots of blue sky to the reserve. After Bentleigh’s long dream run it seems that buyers have now dug in, leaving a lot of vendors stranded on the rock of optimistic expectations; and with interest rates odds-on to rise again post-Christmas, the weekend’s disappointment levels could well continue.

Of those that sold, 42 Vickery Street at $1,275,000 was one extreme 4/29 Pell Street at $429,000 the other.

Everywhere from Hampton to Beaumaris struggled. Just four sales in 13 auctions.

Among the unsold:

• 1 Hunter Avenue, Black Rock. Passed in to the vendor at $1,950,000 and saw a later offer of $2,025,000 but with a reserve set at $2,150,000 there is still work to do.
• 33 Avondale Street, Hampton. Passed in at $1,475,000, its reserve is within reach at $1,560,000
• 44 Tennyson Street, Sandringham. Another pass-in on a vendor bid ($1,800,000). Now asking $1,980,000.

The highest published price for the weekend was the very sold $3,535,000 paid for 45 Dickens Street, Elwood. A large red brick Edwardian, it ticked most of the boxes and is on, by normal Elwood standards, a very generous 827 sq m.

And then came Brighton.

Its (rare) 90% clearance rate eclipsed the Melbourne-wide number of 61%.

But apart from the rare 800 sq m block at 15 Hammond Street ($1,915,000), the rest of the sales were well under Brighton’s median. It confirms what we have been saying for some time: the auction market is brisk enough up to the high $1m‘s but – with an occasional exception – regularly stalls above that.

That occasional exception – last week – was 11 Kent Avenue in the Golden Mile. A fine example of the Spanish Mission style, what the buyers really wanted was its 1077 sq m with lane access to the adjacent street. It sold for $4.1 million.

DT

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