Land in Toorak. It’s still the litmus test of how prices are moving at the top end – it’s the land, not what’s on it, that is the true indicator of where the market is heading.
That’s the logic. The illogical (we’ll get to it) is more difficult to explain – quantum theory doesn’t come close.
First, the logical:
- 1 Selborne Road. It sold last year for $3.6 million and last week for $3.3 million. At about $450 sq ft, it’s spot on for the area.
- Irving Road. Last year it would have brought $500+ sq ft, this year, $467. Right again.
The logical conclusion (one we have been reporting all year):
The direction of prices points down.
And now say hello to the illogical.
When you wander those leafy streets, you’ll count the boards of at least nine top end no-sales. Some of those boards have been up so long the National Trust may be the only remaining party with any interest.
Why? Where’s the logic? It’s well known they’re for sale, it’s well known for how much. It’s well known they’re asking too much.
So let’s pay the piper and play the same tune? Right. Bound to work this time.
Here is the news:
When a market is in decline, sellers go to meet buyers. That’s how it works. Defying gravity succeeds so rarely that it’s not worth the time or money.
Then what is working?
The two properties above are examples at the not-quite top end. We’re also buying off-market a lot more than on. And on-market only when prices have come to meet us. We’re not chasing – in a number of cases, we’re being chased.
Below $4 million the story can change when the property is a good one. There, competition is possible but runaway prices are hens’ teeth.
25 Huntingtower Road is an example. Five people putting their hands up but it still sold where it should have.
And the games continue.
8 Rose Street, Armadale. Quoted at $1.5 million, passed in at $1.51 and the reserve is … $2,050,000?
A 25% difference? And no-one cares?
No wonder people hate buying houses.
Bayside: Spring doesn’t
The Spring flourish that appeared in the first weekend of September had largely wilted by its second. Not many sales at auction and not a lot more sold privately.
Yes, there are agents who will tell you of their great successes off-market (that their clients do not want reported), but the impression we get is that these are occasional sales rather than regular occurrences.
That said, a fortnight does not decide a market. The next couple of weeks will see a modest increase in auction and private sale listings, but it will be October before we get a real sense of where the Bayside market is headed.
If Spring is to really sprout, agents should be busy appraising and listing properties now. We know that a few are but others are still waiting to fill their listing books and for them lean times are probable.
There are some encouraging signs that more sellers and potential sellers are now living in the real world and have adjusted their price expectations accordingly. Those yet to get that message are doomed to become less than vital statistics as buyers go past them.
But there are also buyers and potential buyers who have their own versions of what is really what. Some see the market as stable and are ready to move while others are predicting there’s a way down left to go.
Time, as always, will demand that we wait until it tells us who is right.
Then there is a number of would-be buyers who have already sold and are now sitting on piles of cash which they are, effectively, gambling. It’s unlikely the market will move up in a hurry so their bets are reasonably safe and if there are further falls they may be well ahead.
There’s always a but. Trying to pick the bottom of any cyclical market is as much good fortune as good management.
In the midst of all that, from time to time the twain is still meeting: Realistic sellers are finding realistic buyers of homes and investment properties and sales are being made.
While B and C properties can anticipate up-hills ahead, when all boxes are ticked there are buyers who are ready to form (now much more orderly) queues.
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