Auction results, clearance rates, statistics that mislead. The media quote agents speaking of rallies, rising clearance rates and more aggressive bidding.
Not at the auctions we attended over the weekend.
The REIV spruiks the line that buyers have a positive reaction to the drop in interest rates.
They’re representing agents, not buyers. Agents need to talk the market up. Buyers have to live with reality.
You’re an agent? Good. Now sit on my knee and I’ll tell you something you need to know: it’s not interest rates that are scaring buyers off, it’s confidence in the prices you’re quoting.
And don’t tell me about all the people you’ve heard about who are “thinking about property” and suggest that means there’s another boom around the corner.
Kids, you can believe that if you want, but don’t say we didn’t warn you that there is no Santa coming down that chimney.
So what really happened?
Yes, there were properties which sold. Was there multiple bidding? Not often.
Most properties that we bought on the weekend were passed in and negotiated afterwards; yet if you were to believe the talk of clearance rates, it all happened under the hammer and with hot competition. We can tell you that wasn’t the case.
There were a couple that had great results – as many as four bidders and reserves exceeded. Those were, however, extremely rare and it was usually an AAA property which was in some way unique.
At the top end, again, the real action has been off-market. Those who chanced their hand at auction didn’t fare particularly well.
4 Burnie Street, Toorak a period home on 13,500 square feet and in need of a serious renovation sold prior to auction for in excess of $3.7 million. (Rewind a couple of weeks and you’ll catch sight of the vendors knocking back an offer iof more than $4 million.)
171 Powlett Street, East Melbourne a 2 storey Victorian terrace in a good position failed miserably: a vendor bid of $2,220,000 and a reserve of $2,650,000. That’s a big gap between what the agent thinks it’s worth and what the vendor wants.
53 Power Street, Hawthorn a well renovated double fronted Victorian with pool, but on a busy road, sold where it should have: $1,980,000 against a $2 million expectation.
5 Avenel Road, Toorak wound up an expressions of disinterest campaign on Saturday. Sold sticker nowhere to be seen.
And a couple of trophy properties are still for sale despite intense advertising: 9 Barnsbury Road, Canterbury and 52 Hampden Road, Armadale still can’t find buyers. Each has issues, but that’s not their real problem.
It’s the price, kids. It’s the price. When you get real, so will the buyers.
Bayside buyers obviously chose to tune into the action at the Games this weekend rather than attend mostly indifferent auctions. Both potential bidders and onlookers were hard to find.
Although the metro-wide clearance rate was reported at 66%, local results slumped to 46% – just 13 sales in 28 auctions.
There are pundits who will tell you buyers are waiting for interest rates to fall. Not so. They’re waiting to buy something worth buying (how can we be sure? – they’re our clients).
At the top end, the pickings are less than slim. Have been for weeks.
The only significant property auctioned in Brighton was 8 Young Street; a 10-room family home with five bedrooms, two bathrooms, 850 sq m of land and 150 metres from the beach. It was passed in at $2.1 million with a reserve of $2.25 million. That sounds like reasonable value, and may be achievable, but it’s a reproduction period home and not the real deal.
The other noted sale reported from the weekend is 28 Normanby Street, Brighton at $3,010,000.
Rumour is that a $3.4 million offer was refused only months ago. Further rumour is that the eventual buyer was the rumoured offerer. Suspicion is that the vendor is now to be found weeping quietly in a corner somewhere.
Beaumaris? As bleak as the weather: two sales from six auctions. 16 and 17 Beach Road – on the Deauville Estate – both passed in on an undisclosed vendor bid and with an undisclosed reserve. Why the cone of silence?
In a form departure, Bentleigh proper stumbled: one sale from five amid much vendor bidding.
This Winter of our malcontent has just a couple of weeks left to run. The big question is will Spring see a recovery in activity?
We’ve said it before: that will only happen when quality properties begin to emerge; and those are priced to reflect today’s values.