Another explanation …

Visit the Morrell and Koren websiteIf there was a Fruit Shop Theory of Real Estate, and there may yet be, the past few months may be understood more easily.

On entering the shop, you’re greeted by the fruiterer. Charming man. Beautifully dressed: tailored suit, gold watch and BMW tie-pin. He has a smile which makes you nervous.

The first thing which takes your eye is a magnificent display of lemons. People crowd around. Pick up one after another. Sniff. Squeeze. Something wrong? A bit old, a bit tired? The lemons stay on the shelf until the fruiterer, weeping, marks them down again and again and the people at last begin to see the possibilities of lemonade.

Peaches! Perfect peaches! Hands reach for them. They’re expensive, but peach-eaters will not be denied. They can taste those peaches. They reach for their purses. The fruiterer beams. He takes their money.

You turn to the fruiterer: “What else have you got? What’s really special?”

[pullquote]He looks glumly at his top shelf. Near nothing to be had.” [/pullquote]He looks glumly at his top shelf. Near nothing to be had.

And so it was over the weekend and has been for much of the latter part of this year. A tale of three markets:

  • Lemons – even with their faults – a year ago had queues of people grateful for the opportunity to bid on them. Unless keenly priced, now they’re left on the shelf.
  • Peaches, perfect peaches – those houses which tick all the boxes – are always highly sought after; some going for even more than last year.
  • And the top shelf is near-empty. While there were gems earlier in the year, some sat on the shelf for month after month and then almost all were priced to clear (wound back 5%, 10% or more), quietly wrapped up and taken home.

And shoppers? They’ve changed. No longer ready to grab anything within reach, they’re now sniffing, squeezing, looking hard. Asking others (us) to make expert assessments or doing much homework themselves.

And they’ll walk away from anything that doesn’t quite make it. Quietly confident that by March or April next year the choice will be just as wide as it is now and that prices are likely to have fallen.

And it’s not only the fruit, it’s also where you’ll find it which has come in and out of favour. The bridesmaids to the top end, suburbs including Hawthorn, Kew and parts of Canterbury, have held up when compared to, say, Malvern.

28 Fordham Road, Hawthorn, sold privately for over $5 million. (Is that the Scotch mafia we hear singing of cardinal, gold and blue?)

The Glenferrie Road railway gates may be forming a new dividing line. Opportunities to buy to the north, but precious few (at the top end) to the south. Jog the hills of Toorak and South Yarra and you won’t see any ‘For Sale’ signs while you’re running around all those skips signalling renovations within.

Then ponder 280 Beaconsfield Parade, Middle Park. Passed in on Saturday with a vendor bid of $4.4 million and an owner chasing what is rumoured to be nearly $5 million. And he bought it a couple of years ago for … about $2 million? Hope springs eternal.

Closer to earth:

  • 376 Glenferrie Road sold for $4,415,000 after being passed in on a vendor bid of $4.3 million.
  • 83 Clendon Road didn’t get a bid (we are not surprised, it had issues).
  • 17 Denbigh Road – not a great house but a good package – had four bidders and sold for $3.890 million

And so – unless there’s something unexpected to report from the top end – we farewell 2010.

The year in total? Fairly tough. Especially early in the year when there were some truly outlandish prices paid for some properties which were truly lemons; conversely, there were others which now look cheap. The key to much of the year was to know the fruiterers: it was a negotiator’s year.

While we love a good fruiterer, we have little time for some others. If practices such as dummy bidding continue, we’ll continue pursuing them through the courts and consumer affairs bodies. And we’ll continue to argue for disclosure of reserve prices; the only sure way to bring trust back where it is so sorely needed. It’s a pity (and a wonder) that so many of those who stand most to benefit – the agents – remain opposed.

See you on the water …

David Morrell

Something to say? Your comments are welcome.

Brighton Rebounds

Following weeks of below average clearance rates characterised by insipid bidding and a general lack of interest, the grand old dame by the sea came out punching on the weekend to, at least momentarily, silence her recent critics. Perhaps aided by the sunny conditions and sea breezes, buyers were out and about and prepared to bid and the end result was a clearance rate reminiscent of the headier days earlier this year.

[pullquote]the majority of sales occurred at price levels below initial expectations”[/pullquote]With 20 sales (including several sold before) from the 24 scheduled, the 83% clearance rate was considerably above that experienced so far this Spring and came on the back of a big lift in the volume offered.

However, with the exception of the odd result, it appears the majority of sales occurred at price levels below initial expectations, a reflection perhaps on vendors now acknowledging the market has changed and their preparedness to deal at these new levels.

The exceptions referred to occurred at the extremes of auctions offered on the weekend; although they could both be described as beach-front properties.

Beach Box 76 on Dendy Beach was offered at noon and sold for a not inconsiderable $215,000. With no power, water or sewerage and only a twelve monthly renewable licence to secure your tenure, you would want plenty of long hot summers ahead. And as for rising sea levels, perish the thought!

Also offered at noon was something more substantial and with all of the expected creature comforts. A luxurious beachfront apartment in a boutique development at 4, 23 St Ninians Road attracted multiple bidders. It sold for $4.825 million against a quoted price of $4.4 million+

Elsewhere in the Golden Mile, another apartment but not on the foreshore, was offered with the indicated range being $2.5-2.75 million. Apartment 2/1 Chatsworth Avenue was closer to busy St Kilda Street than to the water and this was perhaps reflected in the sale price of $2.525 million.

A renovation or rebuild opportunity was offered at 127 South Road. A solid but sound 1920’s brick house on a generous 1208 sq m, $2.25 million bought it.

Not so happy at 29 Sussex Street, a Victorian villa with an out-of-character older style extension at the rear. Notwithstanding its period charm and enviable location and land size (980 sq m), the best on the day was an auctioneer’s vendor bid of $3.35 million. A phone call to the auctioneer will be required to ascertain the reserve.

In East Brighton a modern two storey house at 3 Cecil Street remains unsold having been passed in on a vendor bid of $1.85 million. A later, genuine, $1.875 million offer was obviously not enough and the reserve is again a mystery.

Other parts of Bayside had mixed results:

Bentleigh, 7 sold from the 16 offered – wheels wobbly but not quite off.

Beaumaris and Black Rock cleared about half – 452c Beach Road is still available after a lone $1.85 million vendor bid. The reserve is a significant $300,000 away at $2.15 million.

Hampton and Sandringham had a better week: while eight were sold from the twelve offered, the top end in both suburbs remains a challenge. 109 Willis Street, Hampton, is still available. Passed in after a vendor bid of $1.725 million, there was a later offer of $1.775 million but with the reserve set at $1.85 million, more work is required. 70 Bamfield Street, Sandringham, on 1561 sq m, also struggled. Following being passed in on a vendor bid of $2.1 million, there was a later offer at the same level. The reserve of $2.25 million doesn’t seem far away, but in this market that gap may prove to be hard to bridge.

Damian Taylor

Something to say? Your comments are welcome.

Buyers’ market in Boroondara

David Morrell, of Morrell and Koren, said there were a lot of home owners who had to sell. But he predicted early next year was going to be even better for … Melbourne Leader

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