The world’s been watching re-runs of Hill Street Blues: “Let’s be careful out there.”
Capital preservation is the new mantra. We have been shouting that for months; and the weekend suggests we’re not alone.
However and but.
Just when you think you?ve got the market’s direction nailed down, some giddy optimist comes along at 180º.
A quiet sale on Shakespeare Grove, Hawthorn. Well-renovated Victorian on a postage-stamp block of land. We thought the vendor would be lucky to see $6.5 million. Ahem. $10.5 million bought it. In this market. Strewth.
And then there’s land in Armadale …
56 Adelaide Street, Armadale sold the night before auction for approximately $290 per foot. On Saturday afternoon, some who may have missed out in Adelaide Street went to war over 7 Erskine Street. Developer territory. Five bidders. Sold for $2,685,000 against a low $2 million expectation. Again around $290 per foot.
These against a background of the funeral for the auction system. Lots of people looking, no-one talking and definitely not a lot of bidding ? bids as scarce as we have seen. Even auctioneers dropping vendor bids as much as 40% below reserves couldn?t raise a sign of life.
Plenty of people ? many of them neighbours and window shoppers ? all paying close attention to auctioneers sobbing their hearts out from here to the horizon (OK, benefit of the doubt, a few of them do have hearts, but before you rush for your sympathy cards, do remember that these were the people who were happy to take your hard-earned millions only last year).
It was like watching concrete set at some auctions we attended.
8 Kooyongkoot Road, Hawthorn actually got a bid (they got a bid!) of $2,050,000, but the owner wants $2.5 million plus; which is something of a chasm to cross before any deal is done.
Chasm? You want chasm? 4 Matthews Court, Toorak. Vendor bid $1.4 million. Reserve $2.1 million. Whoops.
Elsewhere the open-for-inspections had people in droves (and real estate website traffic is also trending up). Numbers were huge, but we doubt whether those numbers will translate to bidders. We have spoken to a great many people and the sense we get is that interest rates dropping is not going to persuade them to move. It’s confidence that’s lacking.
There are also many waiting to see whether or not prices will drop further in the short term, hoping to peg the bottom of the market. But they still have to live somewhere and as those few sales over the weekend confirm, if it?s a good property, they will still go for it with their ears pinned back.
Bayside: the flood to come.
The last big push for 2008 has started. Bayside’s agents are being inundated by vendors wanting to sell before Christmas. All eyes will be on December 6th, now expected to be the busiest auction day for the year.
Given the odds that the majority of these properties will not sell at auction, or even attract serious buyers, the question must be asked: Why are all these sellers about to put themselves through such pain for so unsure a result?
They couldn’t possibly all have margin calls to settle by the end of the year, so why do it ?
Properties under a million dollars are still attracting varying degrees of interest, but anything with seven figures is mostly being ignored at auction.
An example of this is the auction on the weekend of 17 Byron Street, Brighton. A well renovated and extended single-level period home with a north facing rear garden on 700sq m in a quiet street near the Bay Street shops. It ticks all the boxes, but raised nary a sniff at the auction. Result? Passed in on the auctioneer’s bid of $1.55 million. The asking price is $1.65 million.
129 Cochrane Street, Brighton was finally put away for $1.2 million some weeks after a failed auction. The vendor’s initial expectations of something north of $1.5 million were well and truly shattered. This may be why a similar property at 36 Orchard Street was sold before auction for exactly the same price.
There was better news for the sellers of 181 Were Street, East Brighton where a bid of $1,150,000 was gratefully accepted.
Hampton appears to have hit the wall. Anything over a million has been ignored for the second week in a row. All three attracted only vendor bids; any real buyers went missing in action.
Further down the Bay in Beaumaris, 74 Tramway Parade, a 10 room house on 865 sq m was sold for $1.72 million.
The top of the top end in Brighton will be severely tested over the next three weeks. There’s a swag of properties over $3 million being offered either at auction or by what used to be called a private sale and is now the much more salubrious Expression of Interest (a euphemism for agents trying to claw back some kind of control).
43 Kinane Street (vicinity of $3.4 million)
180-182 The Esplanade ($3.5 million+)
24 Hanby Street ($3.1-3.4 million)
11 Gould Street ($3.6-4 million)
… all go to auction before the end of November.
Expression of Interest private sale campaigns are closing over the next couple of weeks for “Blair Athol” at 5 Leslie Grove ($8 million+) and 49 South Road ($4. 5 million) and then there is “Camrock” at 25-27 Elwood Street for sale ($6.5 million+), “Tandragee” at 70 Halifax Street ($7.5 million+) for sale and “Nithdale” at 316 St Kilda Street ($6 million+) for sale.
There will be some long and anxious hours being put in to clear all of these major holdings and Santa can’t come quickly enough for some.
Meanwhile, it has been reported to us that a modern beach front property at 6 Brandon Road, Brighton, on 1250 sq m has been sold for around $7.1m.
Maybe Santa did come early !