More answers than questions?

Tis the season of polls, polls, and more polls. Even worms are being asked for their opinions. And for every question, you get to choose the answer you like.

Jeremy Grantham pontificated on Oz and continued his stirring of our property market, suggesting that we’re at the height of a bubble and home price falls are “a near certainty”. So what did the polls accompanying that story tell us?

When people were asked what their outlook was for median prices over the coming year, 11,938 of them failed to agree:

  • 6% expected a rise of 10% or more
  • 18% expected a rise of 0-10%
  • 27% thought there would be little change
  • 19% figured a fall of up to 10%
  • 30% expected a fall of more than 10%

So around half are expecting a fall versus about a quarter who expect the rises to continue.

Need more cause for caution? The Economist Magazine this month said, “Australian property is the most overvalued of any of the 20 countries we track.”

But markets aren’t made by statisticians, economists, pollsters or pundits. Two or three people can “make” a market by putting their hands up at an auction. Yes, there are trends, but they’re overridden by individuals. Ask any of the bidders we were up against on Saturday. They were firmly in the camp of Rory Robinson from Macquarie, who said “…structural differences in Australia would prevent the steep falls seen in the US and European markets following the financial crisis.” Yup. Same Rory Robertson who won that bet with Steve Keen.

Where do we stand in all this? Same as always. The surveys and the stats can provide no more than broad overviews, it’s down on the ground where the realities rule. Good properties, well priced, arouse interest. Always.

We attended seven auctions of good houses on Saturday; and we were not alone. Amid all the doomsaying, six people took one of those properties several hundred thousand dollars past its reserve. All had two or three people bidding.

At the top end – $3.5 million plus – the pickings are thinner and the crowds thicker. At one of the few on offer, Moorakyne Avenue, Malvern, you would have thought they were giving away passes to the Emirates Marquee

What rules, amid the ebbs and flows? Sentiments such as this, heard on Saturday: “I have to put the family somewhere. It’s where we sleep most nights. It’s where we live our lives. It will be the best place I can afford.” That, and the tax laws relating to the principal place of residence, also serve to underpin residential property values.

And then, to underpin the irrationality which can also rule, came 4 Grace Street, Malvern. Four bidders and passed in, whereapon one of the underbidders rushed inside and paid a sum which we believe was way over the odds. In a few minutes, it had suddenly leapt in value so far beyond what anyone else was prepared to pay?

Too much reality?

7 Ardrie Road, Malvern East . Sold for $1.92 million in February. Could not get a bid at $1.5 million over the weekend

Old games are on again …

Pass-ins? Yes. Many. Signs of vendors out of touch with prices and/or quality that is less than impressive. It’s then that the dummies begin to emerge, some as obvious as a man without a tie having lunch at the Melbourne Club.

How does that look? One recent high profile property was passed in on a “genuine” bid of $3.3 million; with a reserve of $3.6 million. And then we learn, despite a wall of confidentiality clauses, that it went for a trickle over $3 million. Um. They knocked back $3.3 million so they could take $300,000 less? Yes. Right. Happens all the time.

So those games continue. It’s wrong, it’s deceitful and it will only be stopped when reserves are published. More here.

A longer debate – over at last?

While Julia and Tony were meant to be going hammer and tongs last night, another debate came to an end over the weekend. In a story in The Age about vendors’ agents, this cat was let out of the bag: “After initial resistance from the real estate industry, buyer’s agents have become well-established players on the Australian real estate scene during the past decade.”

We’ve always preferred to call ourselve advocates rather than agents, but you get the point. Thank you linespersons and ball kids, when even Jonathon Dixon “admits begrudgingly” that we can be useful, we believe it’s game, set and match.

David Morrell

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Bayside, briefly …

Overall, Bayside staged something of a recovery this weekend with strong clearance rates and some very creditable prices and even some (drumroll) competitive bidding!

In Brighton, out of 15 auctions, 13 sold. Beaumaris/Black Rock saw 8 from 10. Bentleigh returned to the winner’s circle with a 90% clearance rate.

The highest on the day was 23 Murphy Street, Brighton, a well renovated and extended period house on over 1000 sq m with a lot of appeal. Three people competed from $2.9 million until the property was knocked down for $3.35 million; a price very much at the top of the value range.

Half an hour later it was a completely different scenario at 52 Head Street, Brighton. Another fully renovated and extended period house – on an average-size block of land – did not quite hit the spot. Good on paper but missing the wow, a large crowd was ominiously silent. A single and very lonely opening bid of $2.45 million and then it was passed in. The reserve? A towering $2.9 million.

A competitive and entertaining auction ensued at 16 Lynch Street, Brighton. Two equally determined bidders slogged it out with multiple and varied bids before it was knocked down at $1.37 million; with another couple of early bidders left well behind.

The most curious non-result was that of a land only auction at 8 Carrington Grove in Brighton East.  A standard size allotment of 650 sq m with an original 1940’s bungalow, it attracted an ambitious opening bid of $900,000 before being passed in on a vendor bid of $1 million. The reserve is for some odd reason undisclosed. Curious because, only an hour before, an near-identical allotment at nearby 27 Plantation Avenue attracted three bidders and sold under the hammer for $1.326 million.

The village gossip is that the most talked about property in Brighton at 323 St Kilda Street (corner Bay Street) on the edge of the Golden Mile has finally sold. Local chat suggests about $6 million, but the selling agents were obviously under strict instructions not to comment. Our belief is that it was well into the $6 millions.

Damian Taylor

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