What’s happening? Without a lot of warning, the favoured few are kicking the ball out on the full. Geelong, St Kilda, real estate. The certanties are suddenly less certain, the confidence evaporating.
How can we tell?
- Those vendors whose expectations have moved higher than the market are lonely as shags on rocks.
- The lemons are being passed in (ignore the statistics – they’re made to make markets).
- Expressions-of-interest campaigns are failing to arouse.
- The temperature at inspections has fallen in line with the weather outside.
- Post-auction negotiations are now stretching out again. Two or three weeks ago we’d try to wrap things up as quickly as possible and leave no time for other bidders to have 2nd thoughts. Now, if you know the ground-rules (that is, mostly, knowing the true value of the property and being able to make a fair estimate regarding the depth of those other pockets) and are patient, there are significant savings to be made.
- Unusual settlements and deposit structures are now being accepted more readily by agents and vendors.
They’re all signs that the ratio of genuine bidders to properties on offer is declining; and that in turn should lead to pressure on prices. Glen Stevens’ and Kevin Henry’s words of wisdom over the last week may also be leading to an outbreak of sense.
And then there’s quality; which is always another story. Those which tick all the boxes still have queues wanting to tick them. At the very top end there are still not enough sellers to meet the demand ? and those who are considering selling are now not often in a hurry. They will move if the price is as high as their expectations, but otherwise are comfortable staying put.
And, as in all things, there is news from China. (When the Chinese government’s own house organ is reporting on top end Australian real estate, you can assume their interest is not in a one-night stand.)
Good homes found good buyers? Consider:
- 78 West Toorak Road sold for $4,010,000 against a mid- to high-3s expectation and four bidders. Toorak Road. With four bidders. Amazing.
- 17 Glenbrook Avenue, Glen Iris sold before auction for nearly $4 million. $4 million on the east side of Bourke Road. More amazement. Has someone lost their compass?
- 49 Wentworth Avenue, Canterbury. Modern. $3,053,000.
- 40 Denbigh Road, Armadale. A good Victorian, two bidders ran out of puff at $1,920,000 but it sold soon after for $2 million.
And then a reality check:
- 65 Heyington Place, Toorak failed to get a buyer after an expression-of-interest campaign. Rumour has it the owner is looking for something that starts with a two. That works out to more than $470 a foot at the bottom of Heyington Place and opposite the railway line. Dream on.
And it was on again for investors vs 1st-home buyers at 72 Donald Street, Prahran. Quoted at $800,000, seven(!) bidders fought it out to $1,017,000. (We always thought it would reach $1 million.) It demonstrates again the market’s appetite for quality.
Next week? Close to 700 auctions and maybe faltering confidence. We’re buying shares in litmus paper.
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Bayside: most biz is in the Brightons
Most of the action in Bayside over the past week centred on Brighton. There were no auctions in Beaumaris or Sandringham (although Sandringham did have two sales prior to advertised auctions) and not a lot more happening in Hampton.
Black Rock bucked Melbourne’s 80%+ clearance rate of the past few months with a 100% pass-in rate. Three out of three are still looking for buyers.
And then there was Brighton, and Brighton East: 16 sales for the week and half of those through auctions.
The highest price was 59 Bay Street, Brighton. A well and extensively renovated timber Edwardian with a pool on 825 sq m, it was passed in on a solitary bid of $2.25 million before later selling for $2.36 million ? that’s a fairish price, but considering the property was listed earlier this year by another agent at around a somewhat ambitious $3 million, it looks like Brighton Bay Cellars will not be running out of champagne any time soon.
103 Martin Street, on 786 sq m, sold for a more respectable $1.7 million.
A quality brick period house at 1 Westley Avenue changed hands for $1,584,000.
The real action? Private.
A seriously well built new house at 39 Black Street, on an average size allotment, sold for $3.42 million ? a sizeable discount to its initial expectation in the high threes. Being close to public transport (next to Middle Brighton station) didn’t work in this case; it’s a lot of house for the money.
The double-act of the week was the pigeon-pair at 90 and 92 Male Street: cleverly designed and well finished, they’re side-by-side town houses with a common wall; each on no more than 500 sq m. Even before completion of an EOI campaign, number 90 sold to an interstate buyer for a remarkable $3,050,000. Just to show that wasn?t a fluke, the losing contender for number 90 stumped up an offer the same owner of adjacent number 92 could not refuse. Yes, $3,050,000. If you see a new Ferrari parked in Male Street, you may assume there’s a smiling vendor not far away.
And then …
In November last year, in the depths of the GFC, 17 Byron Street, a nicely renovated and extended 1930?s home on generous land with four bedrooms, two bathrooms and assorted etc, was passed in – not a buyer in sight – on a vendor bid of $1.55 million. A month later a bargain basement offer of $1.3 million was reluctantly accepted. On Saturday, the same property was sold at auction for $1,735,000. That’s a cool $435,000 premium ? a lift in value of 33.4% ? over 9 months. Maybe it is timing, not time in the market, after all!
And now the weekly homily …
We note with interest how various players in the industry are dealing with the hot topic of the moment: quoting.
Some of the majors have issued constructive protocols on how and why they have arrived at a particular figure. While some of these are a little clumsy, there are at least some genuine attempts being made to increase the transparency of information given to buyers. The problem is that different agencies have differing methodologies and these can produce different results. A simple and universal pricing convention would make things so much simpler for buyers, sellers and their respective agents, but that may be asking too much for the moment.
And then there are agents who cannot or will not provide estimates at all; which only adds to the confusion. These are agents who are risking the ire of prospective buyers, and ired buyers are less likely to attend auctions or make offers; and ired buyers can have long memories.
Until next week.
M&K in the news:
Family to sue over $7.3m Brighton auction – The Age – August 15 – Buyers’ advocate Damian Taylor, who was at the auction, said bidding was hot for the five-bedroom mansion in Cole Street, Brighton, with spectacular views …
Crack down on real-estate underquoting – Herald Sun – August 8?- Buyers advocate David Morrell said: “Only the very dumbest agents would advertise below that price – and clearly there are many of those– but the rest are …
Spotlight on reserves as clearance rate hits 88% – The Age – August 3 – ?… mid-campaign increase to $1.4-$1.6 million, and an early prediction?from buyer’s advocate David Morrell that the house would go for close to $2 million…
Spring growth forecast for property – The Age – August 2?- … in Hawthorn sold for $1.92 million after being declared on the market by Jellis Craig for $1.48 million, according to buyers’ advocates Morrell & Koren …
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