Right now we know of seven properties, each valued at more than $6 million, and two at more than twice that … all sitting on offers 10-15% below numbers which would entice their vendors onto the dance floor.

$66 million. You can buy a car race for that and still have enough for a coffee.

The question? Who is making this market? Buyer? Seller? Agent?

We’re still hearing of agents who promise vendors the earth to get their listings (and their advertising) and go on to deliver only disappointment. We see vendors expecting they’ll need to go no lower and buyers who will go no higher.

Impasse.

And then over the weekend there was joy in the streets. Record prices! Record crowds!

Really?

Kids, a couple of good results do not make a market (and all the joy was below $3 million, so it’s not exactly top end).

And we’re facing Easter and a long weekend.

In real estate there’s reality and there’s self-interest and the two are rarely on speaking terms (“Hello, Julia.” “Hello, Kevin.”).

So what is really happening? Some hard facts should begin to emerge with the results of expressions-of-interest* for:

• 11 Bates Street, Malvern, $6 million plus
• 33 Kooyongkoot Road, Hawthorn, $9 million plus
• 46 Canberra Road, Toorak, $4 million plus

Another hint? One of last year’s wallflowers, 21 Isabella Grove, Hawthorn, sold over the weekend for under $6 million. Sounds good, until you learn that the original expectation was over $8 million.

With 10-15% bridges to jump – percentages which can translate to millions in real money – there’s a lot of pressure on agents to perform and some are significantly better than others. And, yes, there are those agents who have painted themselves into corners by promising the impossible in the hope they could wear their vendors down on the way to a sale. They’re typically agents with short use-by dates.

At the top end, the word gets around.

* Agent’s term for: “My game, my rules. You’re the mushroom.”

David Morrell

Bayside: Big but?

A big weekend for auctions. A clearance rate over 60%

But.

Despite the joy being trumpeted by some Bayside agents (I’ll have what they’re having), there is no clear evidence that the market has turned the corner. It’s still a multi-speed market. Some areas doing well, others don’t ask.

Generally inner-ring suburbs with attractions to young professionals and investor appeal are where the joy is most apparent. Move out to middle-Melbourne and it becomes hit-or-miss; while the upper-crust of Bayside and the Eastern suburbs are short of quality stock and still cluttered with the over-hang of the unsold from last year.

As noted last week, sellers with good properties are, in the main, yet to be tempted back. There’s an obvious lack of middle- to upper-range choice. Anything half-decent at up to a million is likely to have a number of hands up, homes from around $1.5 to $2 million are selling but there may be only one or two real buyers; and anything over $2 million is likely to have a task on its hands.

And so to the weekend’s sport report:

2/829 Hampton Street. A modestly-sized villa which was always going to attract plenty of attention, particularly when “quoted” at $580-630,000. It was declared on the market at just over the top of that range and – multiple bidders and countless bids later – was knocked down for $711,000. Despite the obviously shy quote, it suggests there’s still demand for well located and presented properties.

28/1-3 Carre Street, Elsternwick – a well located top floor apartment with Bay views – was quoted in a similar price range. At least four bidders competed and it was noteworthy that the property was not declared on the market until $700,000 by which time most bidding was exhausted and another $1,000 bought it. The lesson? Well located, good presentation, keenly sought.

Meanwhile, further down the Bay …

In Black Rock’s well regarded triangle area, 1A Eliza Street – a cutting edge new house on a modest 633 sq m – sold for $2,520,000.

Hampton and Sandringham were busy. 12 auctions, 8 sales over the weekend plus 8 private sales during the week. Signs of life, but a question still hovers over whether that can be sustained.

The Bentleighs, usually among the higher clearance rates, sold fewer than one in two.

Similarly the Brightons, even though there was nothing on offer at or above the suburbs’ medians. Highest on the day was 25 Montclair Avenue, which sold for $1,360,000.

Housekeeping

Sales made from late last year to late January which we should have included last week:

• 10-12 Yuille Street. House court and pool on about 1670 sq m. Sold for $4.25 million
• 9 Manor Street. Old period weatherboard at land value (1338 sq m.)  Sold for $3.32 million
• 2 Collins Street. New town residence with big basement on about 500 sq m. Sold for $3.1 million
• 69 Outer Crescent. Single level townhouse, one of two. Sold for about $2.125 million

There were also some quiet transactions, but quiet they must remain.

Damian Taylor

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We’re back.

Yup. The zoo has opened its doors and the wide-eyed are buying, or not buying, their tickets. What’s new? What’s changed? Will there be more of the same?

Short answer: Sorta.

Some of those who prowled the lion enclosure are now walking with the elephants; and there’s an occasional dinosaur to be found among the fossils. (If you follow the agents, you’ll see where the action is.)

What’s carried over from last year? Buyers wanting to pay less and sellers still asking for more; and that’s a gulf that many won’t bridge. A number of those big trophy homes offered in November are still waiting for even a cheeky offer. Christmas cheer? Not here.

What’s different? Vendors with $30-40,000 to promote their wares are nowhere to be found – if this keeps up, agents may have to start paying for their own ads.

For the two months since the curtain came down, $4 million + transactions have been missing in action. That’s had a knock-on effect resulting in those who may have been thinking of selling banishing all such thoughts. (We usually see a lot more on offer than we’re seeing this year.) Our instinct is that $3 million + people are waiting to see which way the wind is blowing and putting off deciding whether to sell until after the Easter break.

Looking for clues to support that? Look down the coast. The lack of activity in the beach market suggests that owners and even the better agents knew that the prices they were hoping for were simply not going to be there. The great homes just did not appear.

Yes, there were a few exceptions (there always are) but even where there were sales it was common to have only one real bidder at an auction.

And so that miasma has spread up the bay. A damp grey fog obscuring much, punctuated by some of last year’s wallflowers given new paint jobs and new agents and hoping to be asked onto the floor at last. Unlikely. Not now. Not unless the ex-agent really didn’t know how to dance.

But, remarkably, quality buyers are still there (we know because we’re competing with them). When sales are made it’s because both sides are working at it – there’s no such thing as an easy sale and those who are selling have learnt that the days of premiums are behind us. Those who haven’t are tabling valuations which suggest that some valuers are living in a different century. Those who haven’t are looking at taking the rental option for another year.

And still some investors are popping up in inner city areas. There were auctions with five and six people bidding.

Next weekend looks like being a big one, but it’s all quantity and not a lot of quality. Last weekend had an air of desperation (why else go to market in the first real weekend of February?) – the sense that vendors and agents felt they must deal or face 12 months that look even harder. Anyone for renting?

Which suggests … opportunities. For those who know what they are doing, not all will be losers in the year ahead.

And then there’s the inexorable transformation of the media landscape.

Mrs Rinehart’s newest toy, The Age, is looking more and more yesterday as a real estate medium. We speak to enough buyers to know that most (at least at the top end) are not reading the Saturday classifieds. Agents we talk to report being reached by email, not phone. The internet is a rising tide, submerging all else, and the waste is horrendous. Seas of ads which no-one looks at (and how long before agents start asking for your email address rather than your mobile number?).

David Morrell

Bayside: a change in the air?

We are over the Greek and European debt crises. We are most definitely over Kevin vs Julia. So thank the powers that be that we at last have the property market back for our amusement.

Winding back a little, you will recall that November/ December finished limply and that plenty of Bayside properties remained unsold, in turn providing a real challenge to those agents still on duty in January to clear the decks of old stock.

While a handful of soon-to-be-stale properties did clear last month, the low level of activity seemed to discourage would-be sellers from piling into the market in February and, as a result, there’s no heap of interesting and appealing choices out there.

Fast-forward to the week just past; the first real look at the market for 2012.

With the one or three exceptions, most selling agents would be a little disappointed with the results on the day, having been encouraged in the preceding weeks with the turnout to the open days and apparent renewed buyer interest.

Having said that, in Bayside there is a perceptible change in buyer sentiment in the air. The doom, gloom and negativity of late 2011 seems to have lifted somewhat.

While fence sitting is still popular, there are early signs that buyers are preparing to move – though this may not happen immediately. There’s a likely tipping point in the coming months when buyer confidence builds and one buyer’s action leads to another and the sudden impact of many raising their hands will see the pendulum move from nervous to positive.

What’s stopping that now is lack of choice for quality properties at realistic prices. Once prospective sellers become confident that buyers are back in the market, supply will start flowing and transaction numbers will increase.

And so the cycle continues …

Now back to those one or three exceptions.

1 Farleigh Grove, Brighton, has been in one family virtually since it was built 90 years ago so it does qualify as a “rare” offering. It’s in a quiet court between Church Street and the beach on 700 sq m. It’s a toss-up between a major renovation and a complete rebuild, so it had wide appeal. To prove the point, at least half a dozen bidders competed, pushing the price well past the apparent reserve of $1.85 million, to eventually sell for $2,222,000 or just over the magical $300 per sq ft (sorry, $3253 sq m). Prime property, sensible reserve = great outcome.

Curiously, a similar offering at 20 Birdwood Avenue, Brighton, an older brick house on 820 sq m with a Northerly rear orientation was passed in at $2.7 million (a tickle over $300 sq ft) with reserve of $2.9 million. The difference is that BIrdwood Avenue is in the blue chip region of Brighton’s Golden Mile, which has always commanded a premium of at least 20%, so given the previous result, this seems fairly priced.

Neighbouring Elsternwick recorded a strong result with the auction of a signature Victorian era house at 9 Staniland Grove. On 738 sq m and offering plenty of modern family accommodation, it sold for $1,925,000.

Further south in Bayside, Hampton and Sandringham generally had a forgettable day with only two results from the 10 offered.

The well-located 10 Victoria Street, Sandringham was one of the two that got over the line. Quoted between $1.7-1.8 million, it had plenty to offer and in such a prime location was always going to have interest. The final result at $1.935 million did not surprise.

The Bentleighs had a very good start to the season proper – only one passed in from the ten scheduled.

Highest on the day was 16 Coates Street, which easily broke through the seven figure barrier. It sold for $1.185 million.

Next week? We hope for a real sense of where 2012 is heading.

Damian Taylor

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