Aug 10: Lies, damned lies and clearance rates

The weekend’s news from the very top end? There was none – at least none north of Brighton. And what action there was lacked the passion of previous weeks.

But clearance rates are still soaring?

Yes. Sure. Providing you include houses which were passed in (often with no sign of a bid) then sold later and others which were simply not reported. This is an industry which survives on dazzling, and nothing dazzles more than talk of a market that’s rising. Clearance rates soaring off the Richter Scale are all part of the window dressing.

Eventually, everything returns to the long-term trend and at the moment that’s far below us. As Shane Oliver from AMP Capital Investors describes here.

Meanwhile, back on the ground:

  • 23a Marne Street, South Yarra A townhouse with problems. Vendor bid $2.7 million, reserve $2.790 million (suggesting there’s a real seller trying to tickle some interest).
  • 37 Armadale Street, Armadale Double fronted Victorian, 4 bedrooms, 2 bathrooms and a pool. Passed in at $2.2 million.
  • 7 Bowley Avenue, Balwyn The surprise of the weekend. A good family home, north facing and, given what has gone on in the last month, should have had a lot of interest and then … nothing. A vendor bid of $2.45 million for a house worth over $2.5 million of anybody?s money. Has the agent overcooked the pricing?
  • 23 McKinley Avenue, Malvern Opened with a vendor bid of $1.9 million followed by one bid from the crowd of $2 million and then … silence. Passed in.
  • 24 Royal Crescent, Armadale Sold, but for rather less than expectations.

If that is all you heard, you’d say the market had (again) hit the skids, but where there were quality properties in good positions, off they went:

58 Berkeley Street, Hawthorn A good 4 bedroom 30?s family home on Scotch Hill within a 9 iron of the junior school. “Expectations $2.5 million.” Yeah. Sure. We expected it to have a 3 in front of it and lo and behold it did. (The under-bidder was a well known real estate agent hoping to buy his own family home; and you would expect that he knew what he was doing.)

What’s the message? If it’s good and ticks all the boxes, there’s still phenomenal interest.

And then, particularly West of Bourke Road, and particularly among members of the Chinese community, there appears to be new interest in land on which to build new homes in Boroondara:

33 Cole Street, East Hawthorn sold for $1,467,000 which easily scales $200 per sq ft. The last comparable sale at auction was just over $170/ft. Four under-bidders suggest a valuation that is not going to disappear overnight.

Who is at the inspections?

Particularly below $800,000, investors are everywhere. Where were they late last year?

What will Spring bring?

At the top end, there’s not a lot coming to auction. There’s a little more going on below the surface, but the lack of quality on offer will still be a concern in coming weeks.

David Morrell

Something to say? Your comments are welcome. Click on ?Comments? below.

Visit the Morrell and Koren website

Bayside. Bonanza by the beach.

Do you have lingering doubts about the health of the very pointy end of the Bayside market? Get thee to 2 Cole Street, Brighton. In brilliant sunshine with the bay a shimmering backdrop, four bidders competed for this substantial waterfront house on 852 sq m. The house, while comfortable, requires a complete make over and it is understood the buyers intend to renovate the home for their own use.

Initially promoted at $5.5 million plus, the selling agents, perhaps reacting to the market sensitivity regarding misquoting, upped the ante in the week before the auction to a range $5.8 million to $6.7 million. It was ultimately knocked down at $7.31 million, although the reported contract price was agreed at $7.3 million.

The only sour note in what was an impressive sales campaign and result, was a hiccup towards the close of the auction: the auctioneer appeared to have sold the property at $7.25 million and then accepted what the crowd clearly thought was a late bid of another $50,000. A further bid of $10,000 again secured it amid rumblings of discontent from the buyer and a number of onlookers.

Elsewhere in Brighton and Brighton East, buyers were plentiful: 13 sales from 15 offerings.

In Brighton:

  • 63 New Street: $2.11 million
  • 26 Elm Grove: $1.61 million.
  • 29 Whyte Street: $1.59 million
  • 12 Lindsay Street: $1.53 million.
  • 6 Edgar Street: One bid of $1.3 million, passed in, sold later for $1,355,000.
  • 13 Lasswade Court. Passed in on a vendor bid of $1,050,000. Reserve? Mystery.
  • 19 Meek Street sold privately: $1.85 million
  • 30 Grandview Grove sold privately: $1.364 million.
  • 12 Foote Street, available for private sale for 12 months, changed hands for $2.61 million.

In East Brighton:

  • 23 Camperdown Street, a knockdown weatherboard on 900 sq m with a 20m frontage. Sold for $1,457,000. Developers and builders swarmed over this. Their presence and bidding suggests continuing strength in this sector of the market.
  • 292 North Road was sold for $1.24 million.
  • 13 Connor Street finally sold for a respectable $2,050,000.

Hampton was relatively quiet:

15 Olive Street a new town house, failed to hit the spot and was passed in with no reported bid and no reserve disclosed; although interest in excess of $1.2 million had been anticipated.

Sandringham was also quiet with 12 Heath Street the exception. A crowd of over 150 people saw bidding start at the quoted figure of $1.5 million and continue until the property was knocked down $300,000 later for $1.81 million.

Yes, it’s a good home in a solid and safe court location in Sandy, but this is still well over what is reasonable value. No supply and plenty of demand and a result at least $150,000 over the reserve.

And finally to venerable Beaumaris where private sales dominated.

  • 432 Beach Road, a typical 1950?s Beaumaris style brick home on 851 sq m overlooking the bay, with a quoted price range of $2.1-2.2 million, sold for exactly $2 million.
  • 16 Reserve Road, a near-new town house, lingered for some time and has now changed hands for $1.55 million
  • 10 Hutchison Avenue sold for $1.42 million.

The surge in prices over the past few months appears both unsustainable and unhealthy. With the cost of money still very low and buyers confident the worst of the financial crisis is past, the issue of the supply of property to the market is crucial.

If the seasonal abundance of properties does not eventuate in the Spring, then buyers will be forced to pay more than is reasonable value and banks will be under pressure to review their lending and valuation criteria to avoid potential problems when the crunch does come … and come it must.

To those vendors thinking of listing in the Spring: your time has come.

Damian Taylor

Something to say? Your comments are welcome. Click on ?Comments? below.

Visit the Morrell and Koren website

Scroll to Top