There’s one school of thought which suggests that scarcity props prices. There’s another which argues that prices and incomes are related and a shakeout is inevitable.
Whichever proves correct in the long term, for now Melbourne is continuing to defy the gravity being felt elsewhere.
We have just experienced another more than interesting weekend. The contrast with 12 months ago in the inner suburbs is extraordinary.
Clearance rates at 85%? How does that happen?
Vendors are one factor: they (and their agents) have reaquainted themselves with reality and are now much closer to the market in their price expectations.
The other side of the equation is the buyers. Among them, confidence has been creeping back; particularly at the upper end. The sense is that, if you haven’t lost your job by now, you probably have a good chance of keeping it. Put that alongside low interest rates and the (only sometimes correct) sense that prices have fallen and it’s not hard to see why the crowds at auctions have been growing.
The blow-by-blow:
16/77 Caroline Street, South Yarra. Bidding started at $2.6 million, it was on the market at $3,020,000 and two bidders pushed it to $3,070,000. Perhaps reflecting the FIRB’s rule changes, the under bidder appeared to be new to these shores.
5 Montalto Avenue, Toorak (which seems to have been for sale forever) one bid of $3 million, passed in, and sold shortly thereafter. Around 50 witnesses.
138 Kooyong Road, Toorak Four bidders. Opening bid $2.65 million, passed in at $2.9 million and sold soon after. Around 60 witnesses.
4 North Street, Richmond, a converted warehouse next door to a tyre shop. At least six bidders. Got started with a vendor bid of $1,550,000, was on the market at $1.8 million and sold for $1.87 million. 120 witnesses.
Around the corner at 29 Waltham Street, Richmond Passed in on an optimistic vendor bid of $2.1 milion. 40 looked on.
A pretty double fronted timber Victorian at 20 Stanley Avenue, Hawthorn East Three bidders, on the market at $1,025,000 and sold for $1,135,000.
32 Brunel Street, Malvern East Got underway at $1.4 million and sold for $1.79 million.
How long can the strength of auctions be maintained? Left to the market, and providing that vendors are realistic about prices and the pent-up demand (the number of properties on offer has been low, low, low) it’s likely that auction clearance rates will remain high. It’s the ex-market factors which may upset the applecart: if the budget doesn’t achieve its projections and unemployment rises, the market can quickly come off again. If that happens, you can expect to see even more off-market dealing being done.
CK
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Bayside: Is this really happening?
Auction clearance rates above 80% over consecutive weeks. Consistent levels of private sales. Even the most hardened market critics (surely, not us) (OK, us) have to concede there may be merit in the “green shoots” theory; that what we are seeing may be the beginning of a sustained recovery in property activity.
Equity market analysts are still divided on whether the current share rally is sustainable or a dead cat bouncing and there are property analysts who are still predicting property prices will fall further this year.
But buyers, it seems, aren?t buying that theory; they’re buying property.
There’s a palpable buzz in the air at auctions. Agents are walking tall again. (We preferred them with hunched shoulders and defeated airs, but you can’t please everyone.)
When we see expressions of interest campaigns replaced with good old fashioned auctions, then we will know it truly is really happening.
The May 30 weekend is going to be the busiest it’s been in years (this is not usually a hot season for auctions). The high clearance rates we have seen recently can perhaps be explained by the relative lack of choice. Not next weekend. With around 700 auctions scheduled it will be a true test.
Our prediction: the Bayside market will hold up.
Last weekend? Crowds were up and bidders were present and bidding.
Bentleigh continued to shine: 12 sales from 13 auctions (and not one private sale reported for the week).
22 Strathmore Street was the highest: $875,000
11/2-4 Mcarthur Street found the other end of the spectrum: $363,000.
The growth area of Cheltenham was also busy. Eight sales, equally divided between auctions and private sales.
Brighton auctions were varied on low numbers: five sold out of seven auctions; including some strong results.
20 St Ninians Road (in the Golden Mile, blue ribbon, an agent’s fantasy in adjectives) was the standout: three bidders pushed the price well over the expectated. It sold under the hammer for $2.74 million.
39 Whyte Street a brand new and sharply presented town house, sold after auction for an uppish $1.71 million. It had been passed in to the ultimate buyer at $1.65 million.
8 Hayball Court an unrenovated maisonette, did things remarkably differently and may have demonstrated the resurgent power of the auction. The previous Saturday, boards went up offering it for private sale. 45 people duly trudged through. Heartened by the interest, the agency – no doubt with its client’s agreement – decided to run an on-site auction last Saturday. No long campaign, not even any ads, and no prior offers being considered because the agent would have had to call too many would-be buyers back. The quote was $690,000 +, the expectation was $725,000 and the result was $838,000. A new sales strategy is born?
Less action at 108 Dendy Street Passed in at $1,090,000 and a later offer of $1,100,000 was considered insufficient, it’s now available at $1,200,000.
Equally unsuccessful was 274 St Kilda Street $1.65 million was knocked back and the reserve remains undisclosed. Not disclosing reserves post-auction is a strategy we find more than a little puzzling. Are they afraid that a buyer may want to pay it?
A new spec home at 21 Foote Street on a compact 610 sq m and featuring an enormous basement garage and cinema, sold for $3.9 million after a relatively brief marketing campaign. No “expressions of interest” in sight. Rather, “Here is my asking price, make me an offer.” Welcome back, Real Estate 101.
Further down the Bay, Hampton had a very good week.
11 David Street was reportedly sold prior for $1.2 million and there is at least one disgruntled would-be buyer who was not referred to even though they had registered their interest and made an earlier offer. The excuse? Too many people to ring! It’s an excuse unlikely to amuse the client.
7 Lansdown Street was sold for $1,401,000, a whopping $351,000 above the latest published quote of $1,050,000+. A mere 33 % above the “estimate”. Surely we can get closer than that ?
8 Retreat Road was due to be auctioned next Saturday but has sold already for $1.4 million.
Finally to Sandringham’s stately Royal Avenue where number 2 sold the night before the auction for a price a little over $1.7 million. A seller with stage fright or a lack of buyer interest seems likely.
Until the next instalment.
DT
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