April 21. Singing the blues.

Look at Saturday’s real estate reports … and wonder. Because you won’t find the real story there.

What really happened? In four words: “passed in” and “vendor bid”.

Agents are now doing it hard. Many of them over-quoted prices to vendors in order to win the business (see Why can’t you get the truth about price?) and are now finding that the market just isn’t that silly any more. No, it’s not a crash, but nor did it fly and a lot of agents are now having to work on vendors to lower their expectations rather than terrifying purchasers with stories about what’s expensive today looking cheap by next week.

And, even while the landscape has changed, the deniers are still out there: while industry bodies such as the REIV will claim that clearance rates are good, they should know that is a near-useless statistic. What really matters is how those rates are being achieved and, more and more, it’s because sellers are having to come down to where the buyers are.

Evidence? Try:

9 Ranfurlie Crescent, Glen Iris Auctioned last year and back on the market for six months with two offers of $2.6 million on the table. When put to auction again over the weekend it was passed in for $2.2 million and sold (believe it or not, to the previous selling agent) for $2.35 million! In six weeks, that’s a $250,000 reality check.

With results like that, who needs a margin call?

Need more?

23 Henderson Avenue, Malvern passed in on a vendor bid of $3.4 million with a reserve of $3.750 million and a vendor who is presumably still reading last year’s papers.

65 Elizabeth Street, Malvern another a vendor bid ($3.6 million) and an agent quoting in excess of $4 million. Orange Bellied Parrots would be easier to find than bidders around there.

401 Glenferrie Road, Malvern a thumping big house on 22,000 square feet, which owes the current owners $6.5 million. Again a vendor bid ($6 million), again … nothing.

17 Iona Avenue, Toorak passed in on a vendor bid of $3 million with a reserve of $3.5 million ($370 per foot). While that’s not expensive, it is on the south side and a sloping block.

53 Huntingtower Road, Armadale. Going for land value with a vendor bid of $3 million and reserve $3.15 million. How much? In that position? No, it’s too much.

But …

When something unique is offered, it can create a market of its own.

6 Young Street, Kew near the river, sold for $3.8 million with a mid-$2 million reserve.

168 Mont Albert Road, Canterbury sold for $4.8 million, which was in line with expectations.

While we haven’t yet seen solid evidence of margin-call forced sales, there’s a lot of talk around. What we can say for sure is that there is still strength at the top end; but only if the quality is there.

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Bayside blues

Auctioneers in Brighton and Brighton East certainly had to work very hard to coax reluctant bidders to perform this weekend.

Of the 26 auctions conducted, 10 sold under the hammer or shortly thereafter and the rest are still looking for buyers.

We attended six auctions and saw just one (failed) bid.

Hampton and Sandringham had a better day with seven from eleven and Beaumaris cleared exactly 50%.

Black Rock featured with a respectable result at 283 Beach Rd for a corner site of 981sq m with (in agent-speak) panoramic bay views. It realised $2,120,000.

Mentone was warmer: two from four at auction and seven recorded private sales.

Bentleigh and East Bentleigh were busier: nine from sixteen.

Brighton’s disappointing clearance rate (about 40%) was a lowlight even in a market which was already generally down. What we’re seeing a lot of is auctioneers who are opening the bidding with vendor bids at too-ambitious levels and thereby snuffing out any chance of a real bid.

When a renovated period home in Brighton’s heartland of Sussex Street fails to attract a solitary bid, then it must be back to the drawing board for both vendor and agent. Keep your eye on 42 Sussex Street (passed in on a vendor bid of $2,450,000 and with a reserve of $2,650,000).

20 Collington Avenue, Brighton had a second shot after being passed in only two months ago. Result? Ditto. No takers.

29 Seymour Grove, Brighton sold for $2,160,000 for basically land value; but at 10,900 sq ft (1014 sq m) this is just shy of $200 /sq ft and is good buying.

No doubt there are some late nights coming up as agents attempt to clear their backlogs before the onslaught of the 3rd and 4th May.

Stay tuned !

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