Time to re-set the speedometer? In thirty-something years, we have never seen a market as unpredictable as this. Not at the top end.
Yes, it’s booming and if it’s a good property it can hurt to get in. But why? Who is buying these houses? And why are so many top-end properties suddenly on the market prior to Christmas?
And is excess the new norm?
The highlight (probably of the year) is last week’s sale of 13 Albany Road, Toorak for north of $18 million. Yes, it is a good house, but there’s no room for a tennis court and, any way you look at it, this transaction is extraordinary. If the vendors are not singing the agent’s praises from the top of the Eureka Tower, they should be. We ran our ruler over it and there was no way we could justify paying anything like $18 million. And there was another party who just missed out.
First question for the crystal ball: Is this a one-off, nailed at the top of the market, or is a re-calibration due?
While, suddenly, there is a plethora of properties available at the top end, high price does not always translate to high quality. There are still more lemons than gems, so there’s cause to tread warily.
One of the signs that this is a running market is the re-birth of expressions-of-interest campaigns seen over the past four weeks. Be warned: if you’re a buyer, expressions-of-interest can be a minefield:
- they allow vendors to avoid the public scrutiny of an auction while keeping the price they will accept private
- because you don’t know who you are competing with, there’s a great temptation to over-pay
- there’s no guide to what the real market is
- they’re the equivalents of an agent saying “Show me your wallet.”
- your bid is due by a certain date, their response is not
- the vendor may be testing the market and not a genuine seller at all
Yes, the tide is high. But there are always some swimming against it:
- 2 Brookville Road, Toorak passed in on a VB (not the beer, a vendor bid) of $2,750,000, reserve undisclosed (echoing our associate, Damian, why? Are they afraid that if they publish the reserve, there’ll be someone prepared to pay it?)
- 17 Dunraven Avenue, Toorak passed in on a VB of $2,500,000, reserve $2,950,000 (given the $450,000 difference, it’s likely they’ll be drinking VB at Christmas)
- 103 Caroline Street, South Yarra VB $3,100,000, no reserve.
- 25 Hawksburn Road, South Yarra VB $2,000,000 but the reserve is a more digestible $2,150,000
Come down a rung and you’ll find a market which is also re-defining gravity: between $1 million and $2.5 million there is huge competition for quality houses and it’s not just one or two bidders going hammer and tongs, it’s six or seven in a feeding frenzy. Logic and reserves left in tatters.
Why the panic? Christmas looming has to be a contributor. Families with kids at school and in need of a back garden or an extra bedroom have to buy before the man in the red suit shows up or it will be May or June before they can move.
And now to our second preoccupation: cleaning up the industry.
Another round in our war on underquoting finally got to court and resulted in an agent with a blood nose. Bennison McKinnon “… has promised a court that it will ensure it does not underquote on properties it auctions.” (Herald Sun, Nov 19) An interim order has been granted to Consumer Affairs Victoria following allegations the agency underquoted on properties in the Eastern suburbs. Civil proceedings are pending for breaches of the Fair Trading and Estate Agents Acts. Interestingly, the same agency is again in court over a disputed late bid. Do their lawyers offer seasons tickets?
Buying before Christmas? Good luck. You’ll need it.
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Bayside: busy, busy, busy.
Just when it seemed that buyers were showing the first signs of caution, along came the weekend.
Bayside was particularly active. Brighton in the lead, with all but six of 24 auctions finding buyers, followed by Bentleigh with only three passed in from 15 scheduled.
The sense we get is that concerns about higher interest rates and job security are well and truly offset by fears that the burgeoning Melbourne population and consequent fierce competition for property will continue to drive prices. Better to dig deeper now rather than move inland a few suburbs to meet a budget? The attraction of living near the beach with good choices of schools, public transport, shopping facilities and even a decent coffee are not new; it’s just that lifestyle factors come at a price and that price has spiralled very rapidly, catching many unawares.
That said, all was not roses in Brighton. Those still waiting at the altar include:
- a sprawling builder’s house at 17 Huntingfield Road failing to secure a buyer. On 850 sq m in a quiet cul de sac near Church Street, the best on the day was a vendor bid of $3.65 million against a reserve of $4.15 million. $500,000 is a fair bit of daylight between vendor bid and vendor desire.
- 3 Maysbury Avenue was another property not troubled by a real bid when it was passed in at $2 million on the auctioneer’s bid; but with the vendor’s expectation within range at $2.15 million.
- A very prettily renovated Victorian cottage at 113 Male Street did attract one bid of $1.42 million, but that was insufficient on the day and the reserve now sits at $1.48 million.
It will be interesting to see the results of other top-end auctions and private sale campaigns over the coming weeks. As we remarked last week, there’s a rush for the exits and an awful lot of property to clear before the Christmas stumps are drawn.
The appetite for new house and building sites in Brighton continues unabated with the very strong result of the 645 sqm at 7 Armfield Street. With a North facing rear, in a court and overlooking a park, it ticked all the boxes and was sold for a tickle over $2 million; that’s $3120/sq m; or $290/sq ft in the old money.
40 Black Street also surprised. A would-be knockout opening bid of $2 million (against a quote of $1.55-1.75 million) farewelled most other bidders. Not quite all, however, as the final price was $2.05 million. All for an unrenovated Victorian on 600 sq m.
127 North Road, an attic-style period house on 700 sq m sold for its predicted $2.18 million. Around the corner at 21 Montclair Avenue, a solitary bid was enough to secure negotiating rights after the property was passed in at $1,410,000. It sold soon after for $1,445,000.
29 St James Park Drive was sold for $1.7 million. It has 11 main rooms but only 500 sq m.
Another land-only sale was made at 121 South Road, on the corner of Roslyn Street. For 645 sq m, it realised $1,445,000. That’s $195/sq ft, or just over $2,000/sq m. Certainly main road value.
An unusual property at 2 Wellington Street was harder to assess. A reasonably current single level villa on just 375 sq m, it boasts a 6-car basement garage. It’s directly opposite the Brighton Savoy Hotel, a position which appears not to have fazed the ultimate buyer who paid $1.85 million; a marked premium to the quoted estimate.
Three sold prior to auction:
- 10 Byron Street for $1.65 million
- a two-storey townhouse at 6/57 Carpenter Street for $1.65 million
- 94 Dendy Street for land-only value (645 sq m). It brought a modest $1.2 million.
A lesser number of private sales were made during the week. One of the more notable results was at 74 Halifax Street. It sold for $2.58 million.
Land sales were the flavour of the week in East Brighton:
42 Comer Street finally found a buyer. A vacant allotment of 710 sq m backing onto Brighton Golf Course, it sold for $1.5 million just on two years ago at the giddy heights of the then market. Patience was rewarded with a face-saving offer of $1.45 million being gratefully accepted. At $190/sq ft or $2042 sq m, while obviously not a record, it is the highest rate per sq m/ft in the current market.
An unusually wide allotment at 5 Lysander Street had the builder/developers salivating. Suitable for two town houses side-by-side, it has a frontage of 23.5m and an overall size of 715 sq m. Several bidders competed before the property was knocked down for a respectable $1.28 million.
Not so successful was the auction at 14 Churchill Court on 725 sq m. Again being close to land-only value, the site was squeezed into the bowl of the court and its South facing rear garden obviously didn’t excite. It was passed in with a reported later offer of $1.22 million against an asking price of $1.28 million. Close, but no cigar.
The standout offering in Hampton for the weekend was a strikingly coloured two storey residence at 26 Avondale Street. Extravagant and luxurious and probably overcapitalised, the property was passed in at $2.4 million with a later offer of $2.45 million. The reserve is yet to be revealed and the painter is nowhere to be seen.
And in private:
Sandringham had a mixed day and relatively modest turnover.
Surprisingly the prime offering for the day was a fizzer. “Veronique“, an imposing Victorian on 1200 sq m with great spaces and potential to update, failed to excite. The highest bid was the auctioneer’s at $1.9 million and from there it’s still a long way to the vendor’s reserve of $2.2 million.
A superb new house opportunity or a major, major renovation project awaits the buyer of 46 Sims Street. It’s an old house that has survived more seasons than it cares to remember, it’s on a generous 808 sq m with an extra wide frontage which obviously appealed. It sold, as expected, for $1.65 million in a private transaction.
As ever, we close with the obligatory mention of the ongoing resilence of Bentleigh. Ever since we dared to suggest a few weeks ago that its slip was showing, just to prove us wrong, this area continues to defy.
A sale prior to an auction scheduled for the very busy 28th November at 31 Lilac Street, EAST Bentleigh has had the neighbours choking on their Weeties. Apparently a record price for this part of town, the buyer made sure they finally snared a property with the classic Godfather offer. $1,355,000 was proffered and very sensibly accepted by a grateful seller. Sounds of sleigh bells and ho ho ho’s were also heard.
And so to next weekend, when a much larger number of properties will be offered. After that it’s almost all over for the year for some.
Recent activity suggests that most will sell, but the jury is still out on the very top end and its capacity to absorb all that is currently available.
M&K in the News:
Home buyers fevered as year draws to a close – The Age – Morrell and Koren’s David Morrell, who bought the home for a client, said demand in the $1 million to $2.5 million range was intense…
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