If you needed any more proof that we live in volatile times, you need look no further than the streets of Melbourne during the last weekends of March, 2011. The loudest sound (not counting some itty bitty car race) was every auctioneer’s nightmare: silence.

A year ago, anything that wasn’t condemned (and some which were) had umpteen anxious people reaching for the sky.

Stalemate: People living in AAA houses won’t sell because they worry that if they sell first the available choice will be no choice, people who want to buy won’t put their hands up for less than the quality of the AAA houses those in the AAA houses won’t sell.

Meanwhile, the would-be authorities continue to insist that all is well (expensive) and can only become more so (outrageous) (so you’d better buy whatever we’ve got now, today, this minute) while the reality remains their dirty little secret: low supply of good real estate is working to keep top-end prices on an even keel – anything which is overly ambitious in price or marginal in quality is destined to remain on offer for a long, long, long time.

Next test? The first two weekends of April, before school hols and Easter put all back to sleep.

Blips …

• 266 Danks Street, Middle Park. A substantial house on about 1300 square metres. Sold for slightly less than $7.5 million.
• 26 Chaucer Crescent, Canterbury, where autumn leaves fall, sold for $2.6 million
• 367 Beaconsfield Parade, St Kilda West, Victorian mansion, sits at $4.95 million and is again looking for a new owner

To watch …

• 11 Grosvenor Court, Toorak
• 2 Iona Avenue, Toorak
• 19 Huntingfield Road, Toorak
• 4 Weeroona Avenue, Portsea. “Corsair” on Fishermans Beach. Includes a boatshed+ and with plain old vanilla boatsheds now selling for over half a million and cliff-top Portsea being actively pursued by those with $8 million plus, it will be one to watch.

Doldrums …

A number of Victorian mansions are languishing quietly off-market in Kew. Prices? Over $8 million. It will be interesting to see how long it takes for some people to show some interest.

Alliteration …

Procrastination, prevarication, agents’ protestation, unsold accumulation – all current features of the market while determination and stabilisation give buyers the upper hand.

Goss …

$3.4 million taken and run with for a substantial Richmond house – seller was a local TV personality who now calls Hollywood home.

Revelation …

Agent reports a new set of skills is now being employed to put deals to bed. It is called t.h.i.n.k.i.n.g. Thinking! Who woulda thunk it?

Christopher Koren

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Bayside: Damian should return next week.

In Real Estate World, they love a label (OK, they’re not alone). So what happens when a reasonably consistent flow of properties coming to market is interrupted by school holidays or a long weekend? There’s a catch-up surge in subsequent weekends.

Super Saturdays!

Seems like there are more and more of those each year.

While the weekend just passed had some agents crowing of 80%+ clearance rates, the reported 66% seems about right (but that’s a figure which is likely to fall when the unreporteds finally report in).

Our experience over multiple auctions? Crowds are thinner but bidding was reasonably steady. That said, there were pockets which should have roused no-one from their slumbers – auctioneers left gasping for breath like trout on a river bank.

There has been talk that vendors are driving the market; but that’s not what we are seeing. There are vendors who have sipped at the cup of reality and who have priced their properties to sell; and buyers whose hands remain firmly in their pockets when the price is not right.

At least something is right with the world.

What went?

• Armadale: 1026 Malvern Road. Passed in at $3.4 million. Eventually sold for just shy of $3.7 million.
• Hawthorn: 123 Riversdale Road. Drawn swords between an overseas developer and an owner occupier. The owner occupier prevailed, saving a fair-maiden two storey Victorian from the wicked demolishers.
• Malvern East: 19 Kingston Street. On 1635 square metres directly opposite Central Park. Passed in at $4.25 million. A Dutch auction led to a Sold sticker half an hour later.
• Toorak: 737 Orrong Road. On 543 square metres. Sold for $2,510,000.
• South Yarra: 3/31 Marne Street. Nicely renovated 2-bedroom art deco. Sold for $1.425 – typical of South Yarra over the weekend: nothing to be seen among the trophy homes, all the action was in apartments.

What didn’t?

• Toorak: 17 Lansell Road. Passed in with nary a whimper. 
• Toorak: 44 Heyington Place. Still on the market after an expressions of interest campaign failed to root out a buyer prepared to offer more than $5.5 million.

Rumours:

A couple of properties purchased over the last 3 to 4 months not yet settled. Have some purchasers raised their hands a little too high?

The crystal ball:

A question put by many of the nervous involved in the equity markets: “What is going to happen to Australian property, taking into consideration what is happening in Japan, Libya and the melancholy that this often produces with investment? It seems as far as Melbourne is concerned (Sydney is another storey for another day), it is steady as she goes.

Opportunities around for the patient; and heartburn, dyspepsia and acid stomach for the hurried ones.

Expressions of (Phantom) Interest

As buyers, we’re no lovers of Expressions of Interest as a means of selling. Vendors and agents hold their cards to their chests while buyers are required to put theirs on the table. As suggested in last week’s Top End Trends, the invention of phantom bidders is just too easy. It’s time for the REIV to work out a fair and proper process for closing EOI and private sales; or would they prefer that the government came in and did it for them?

And a note to vendors: We know of buyers who are wary of this whole process and refuse to be involved. Before taking the EOI route, you might like to consider that; and the fact that you will hear only what your agent chooses to tell you.

Christopher Koren

Bayside: All going well, Damian will return next week

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Property Prices Not a Trend

Buyer’s advocate David Morrell, of Morrell and Koren, said on his website that the sale proved quality Victorian period houses in Boroondara were always … Waverley Leader

 

The goss …

Innocent Party (IP) meets Top Agent (TA), “I have a house to sell, it should fetch $8 million.”

“Ah!” says TA, “Let’s have an expressions of interest campaign. We can spend $80,000 on advertising!”

“But what if there’s not much interest? What if there is just one person?”

 ”No worries!” says TA, “Expressions of interest are the leading-edge 2011 top-of-the-range dummy bidding opportunity. We tell buyers whatever we like and there’s nowt a chance of getting caught.”

Unless …

Unknown to TA, IP was also endeavouring to buy a property through that very same agency – also through an expressions of interest campaign.

The last we heard IP was in touch with Consumer Affairs. Life is about to become a little bit more interesting for TA.

The lesson for today? The new dummy bidders are no longer just up trees and invisible in crowds, they’re also making silent phone calls and telepathic offers which only agents can decipher. IP’s experience illustrates a point we have made here before: To all but the agents running them, Expressions of Interest are impossible to understand.

Warren Buffett refuses to invest in things he does not understand. Warren Buffett is rich.

The (in)action …

Much ado about nothing at the top end. Nothing over $5 million. And the first test of the $10 million plus bracket shied at the hurdle: Fairlie Court ended up as an expression of no interest – at least no interest at a level that would interest the vendors.

The top end paddock grows smaller with each passing year. Fewer transactions and (unless someone is dancing to the tune of the Family Court) a tendency for people to stay in their homes longer.

Looking for trends is like trying to predict where the wind will blow at the top of the Rialto. In one auction there will be six bidders going to war, at the next the silence will be leaden.

Reports in the media? They depend on what they are being fed and most of the cooks are cheerleaders. Ask yourself who will most benefit from a rising market and then look at those who are being quoted. Same is true for clearance rates (Sydney story, but the principles apply to Melbourne).

What does seem clear is that Melbourne is no longer divided into the top end and below. A third layer has emerged. There’s the top end at $3-4 million plus, the mid-range at around $1.5-3 million and the “affordable” below that. Surprisingly, when fools and their money are parted, most often that now seems to happen at the affordable end.

David Morrell

Bayside: Damian’s report held over