June 4. The silly season continues…

One wonders what substances some buyers must be on. Once again the market on Saturday has continued to move forward, however with the Vizard sale at $18 million for a property that was arguably worth $14 million, one has to question what is motivating some buyers.

Last Thursday 6 Coppin Grove sold for $5.6 million after being passed in for $5.51 million – yes passed in at $5.51!!! Remember, this is not Toorak. However, if you delve into the sale, it was bought by an expat who reputably hadn’t even seen it. The local money, including some local agents in attendance, all thought $5 million would be an exceptional price, given there were problems with the floor plan.

Another example of how quickly the market is moving was seen in the resale of 29 Mercer Road, Armadale. This property was sold approximately six months ago, in a bullish auction, for $4.4 million with everybody believing the buyer had overpaid by at least 10%. Last Saturday it was sold again – for a staggering $5.1 million. Not a bad gain for doing absolutely nothing for six months.

However, Saturday also produced signs of the market being fickle. 63 Kensington Road, South Yarra (good house on 10,000 square feet of land) was passed in at $4.21 million and sold later for $4.3 million. One could argue that this house should have been worth at least $4.5 million. Go figure.

Each week we have been seeing different signs of a strengthening market. 2 French Street, Northcote, which was due to be auctioned next week with a reserve of $850,000 saw nine parties attend a boardroom auction (never before seen in Northcote) – it sold for a staggering $1,160,000. What is of concern and suggests where the market will be going is that eight other parties still have no roofs over their heads.

Again, the inner suburbs were particularly strong across the board. 13 Packington Place, Prahran (a single fronted weatherboard without a car parking space) was quoted at $680,000 plus and sold for an amazing $1,100,000 – only $300,000 over the reserve!!

What is of concern at the very top end is, after Vizard’s sale, some vendors in Toorak have been overdosing on greedy tablets. “If Vizard can get $4 million more, why can’t we get …?” If we see some properties passed in over the next few weeks this will be a sign that greed is being recognised in the marketplace.

But the message overall this week is quite clear; fasten your seatbelts, the market is still taking off.

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