We’re back ? truffle-hunting as usual, but this winter the treasures appear to be a mite more elusive.
The most common question we have been asked over the last few weeks? “Has the property bubble finally burst?”
We don’t believe so. There’s no real evidence to suggest a head-on crash, but with media reports of the sky falling in and the equities meltdown, the market has certainly cooled. The mood is not unlike what it was back in 1990: fence-sitters waiting for bargains or sure signs of which way the world is heading.
This is especially true at the lower end where buyer sentiment is very sheep at a gate: one stops and they all stop and if one goes through, it’s a stampede. Right now, thoughts of interest rates have stopped them in their tracks.
The top end, as usual, is a different world. We’re yet to see forced sales, but off-market transactions are becoming more and more common. For those outside the circle, it has to be almost impossible to get a reading on what’s really happening.
Take a quick cruise around the web and it still looks like there’s a drought at the top end and it’s not hard to conclude that many vendors are holding off ’til Spring; but in fact there are a number of serious, and seriously quiet, sales being made. This, we submit, will continue.
Among the few, 201 Kooyong Road, Toorak a family house on 20,000 square feet, went to auction last year with a vendor wanting north of $5.5 million. No takers. Another agent sold it last week for $6 million. While it wasn’t the original strategy, it paid to wait until there was little opposition from other properties.
Again, the lack of choice helped sell 35 Stonnington Place, Toorak. It had been on the market for some time, albeit significantly overpriced at $6 million; and has finally sold for $4.9 million.
Meanwhile, outside Toorak in the wilds of the school-belt – Hawthorn, Kew, Canterbury, Malvern and Brighton – there is not a lot happening. It’s the start of a new term of school (fees) and property is not high on the agenda. That could all change in a week or two.
There’s a handful of auctions coming up, but the real action is still off-market. Settlement is a big issue for many vendors at the moment. Many of the properties we are buying have settlements stretching out to the end of the school term or the end of January. A fair number won’t come into the market before those settlement dates are a lot closer.
Will it be a big Spring? We don’t think so. The quiet word from many agents is that they don’t expect any significant upturn (in volume or prices) before the year’s end.
After that, it’s crystal ball time.
Bayside’s Softest Winter in 12 years
The three weeks of school holidays just past have contributed to the current malaise of the Bayside property scene: sales turnover slumped in July with buyers and sellers continuing to sit on the sidelines.
Buyers aren’t buying because sellers aren’t listing and sellers aren’t listing because buyers aren’t buying (at least not at sellers’ preferred prices).
Would you like a chicken with your egg? Which first?
While the real estate market is a little like a carousel – it is made to go around and around – it now needs something to crank it up. That could be Spring, or there could be a longer period of adjustment.
We’ve had 12 years of growth in property values; can we now expect three to five years of little or no gain?
While it looks like good news for buyers, in any volatile market it’s especially important to stick to principles which have been tried and are true:
- cherry pick the position A properties
- pay no more than today’s real value
- take a 10 year view.
In the midst of the drought, the sale of 78 The Esplanade, Brighton shone more than a little. Originally listed over two years ago at $8.25 million, the trophy property has at last changed hands at a figure close to $7.7 million.
3 Tennyson Street, Brighton has also finally sold; for close to $3.5 million. A contemporary home on 1100 square metres, the property was sold with a permit for five apartments.
34 Lynch Street, Brighton, a new house with a multi-car basement garage sold for $2.02 million while 59 Elwood Street, Brighton brought $1.755 million. Both properties were passed in and sold shortly after.
Again Bentleigh was the best performer in Bayside: 65% clearance with 9 from 14 sales under the hammer.
Hampton through to Mentone can politely be said to be “quiet” with auctioneers having a rare day off in both Hampton and Sandringham with no auctions conducted.