How often do you hear that phrase, rapidly followed by “… is up.” “… is down.” “… is directionless.” “… is (add your own description here).”
Truth is, Melbourne is not one real estate market. There’s a myriad pockets and the view you hear is very much from the perspective of the pocket of the viewer; and too-often distorted by wishful thinking or self-interest.
One of last weekend’s views: “Melbourne is the centre of the real estate universe!”
Yes. But only if you were at a certain property in Hawthorn; and especially if you were one of the five or six under-bidders. Pockets of Hawthorn may now be staring into the mirror and seeing Toorak North (3142 and-a-half?); at least in the prices being paid.
But that’s pockets, not trends. While there have been some extraordinary results, they are property-specific. Extrapolating from those could lead you to some very unkind places.
And while the sudden deluge of trophy properties has been getting a great deal of attention, that should be seen against a background of what came before the flood. There has been (and we have been remarking on it for much of this year) a virtual drought at the very top. Some catch-up is now in evidence, but in fact sales volumes are still well behind what is a typical year.
And then …
And then (at last) came the recent deluge of properties on offer, not just at the top but in pockets across the market. With deluges come new growth which is now sprouting new opportunities.
Vendors who have been persuaded that people will buy anything are suddenly staring at reality: the sale they are counting on may not happen before Christmas. At the same time, we know of people who are seriously ready to buy who believe the heat will go out of the market and are prepared to wait till next year.
That’s an equation that equals passed-in properties; and every property which is passed in presents an opportunity for someone.
Wait, watch, pounce.
Some recent life in the pockets:
44 St Georges Road, Toorak. Land, land, land. Prime land: 6,345 sq feet. A deceased estate, a motivated vendor and only two bidders. It sold for $2,710,000. That is $425/sq foot. In St Georges Road. Really. Based on recent results for similar small blocks, $500/sq ft would not have surprised.
Contrast that with:
14 Riversdale Court, Hawthorn. Good land, 10,060 square feet with a view. Five bidders. It sold for around $4,440,000. That’s more than $1.1 million above the reserve. Land in Hawthorn is worth more than one of the best streets in Toorak? Is that a trend or a pocket? Will it lead to an acute case of buyer’s remorse?
And while the tom-tom beat of agents’ chest thumping can be heard across Melbourne, consider some of the hollow rings of properties passed in on vendor bids:
- 121 Beaconsfield Parade, Albert Park. Vendor bid: $7 million
- 24 Clendon Road, Toorak. Vendor bid: $2.5 million
- 20 Central Park Road, Malvern East. Three vendor bids: passed in at $2.8 million.
And while we cannot see the logic of bidding against a vendor (that is, bidding agin yourself), from time to time along comes someone to make an agent’s day. 5 Ultimo Court, Toorak opened with a vendor bid of $4,800,000, which was then topped by $25,000. Why? It was (inevitably) passed in with the reserve yet to be disclosed.
And (we live in hope) our efforts to clean up the industry continue. As reported in the Financial Review last week, we are again asking the ACCC to look into another practice which we believe increases distrust in auctioneers while working against the interests of buyers. When an auctioneer suggests a call is a last call, we believe it should be as advertised. Not the charade some employ of calling a property down four or five times.
A little truth for Christmas. Is that too much to ask?
David Morrell
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Bayside: Bumper, with bumps.
As expected, the bumper number of auctions offered this weekend resulted in thinning crowds of both onlookers and potential buyers, with bids in many cases non-existent or lackluster. The frenetic bidding that has been commonplace in recent months was noticeably absent. Prices in most cases were about as expected.
Brighton had 28 properties listed for auction on the weekend. 20 sold, representing a more modest clearance rate of 71%.
The notable results were not so much the sold properties but several of the pass-ins.
23 Cosham Street, an extensively rebuilt 50’s style house on 1000 sq m, and with an impressive architectural pedigree, failed to raise a real bid. It was passed in on the auctioneer ‘s call of $5 million. This property has been available for most of this year and was first offered at a figure closer to $7 million. The reserve? Undisclosed.
A new single-level house at 49 William Street on almost 1100 sq m also failed to excite. It was passed in at $2.95 million without a real bid. We hear a later offer of $3.1 million was received, but there is still a lot of daylight between that and the $3.55 million the vendor is asking.
The vendor of 2 Ballara Court, a 1960’s single level house on a corner allotment of almost 600 sq m – with only pull-me-down-and-start-again appeal – probably thought they had timed their sale to perfection. Following runaway recent results at 3 Horton Close ($2.2 million) and 7 Armfield Street ($2 million odd), the expectation of close to $2 million may have seemed achievable. But on the day there was not a real bid and only the vendor’s own $1.6 million on the table.
Bayside’s priciest were both in East Brighton:
- 68 Shasta Avenue, a brand new townhouse on 400 sq m sold for $1.855 million
- 41 Binnie Street, a traditional clinker brick on 923 sq m sold for $1.85 million
Most other results were at or below the Brighton median level, indicating that lower range properties sold while the more expensive offerings were left at the altar.
They were not alone. It’s estimated there’s a queue at that altar which adds up to over $130 million in above-median properties and just three weeks to clear them before the door clangs shut on this season. For some, this will be a very good time to be buying.
Hampton had two standouts:
- 10 Beach Road, overlooking the bay, was 751 sq m of development potential. It sold for $2.45 million. That’s $3367/sq m or just over $300/sq ft; which is about where we expected it to be.
- A seven years old builder’s house at 52 Linacre Road with a basement garage and pool sold under the hammer for $2,437,500.
Sandringham notables were 27 Codrington Street, a rendered 10 room house on a modest 621 sq m which went for $1.82 million and, nearby, 4 Keats Street – passed in at auction last week and sold this week for $1,555,000.
Beach Road, Beaumaris and Beach Road, Black Rock both failed to attract buyers. “… four incredulous levels”* of townhouse at 21 Beach Road, Beaumaris fell heavily: the best-on-the-day offer of $1.75 million still a long way shy of the vendor’s anticipated $1.985 million. Also with more work to do is 340 Beach Road, Black Rock. Not a bid to trouble the auctioneer and the property passed in on a vendor bid of $2.4 million. The asking price is $2.575 million.
Less incredulous are the vendors of 9 Bayview Crescent, Black Rock. Their timber house on 741 sq m sold for $1,725,000.
Bentleigh continues to power along. Of 25 auctions, all but four found new owners. Within that, the number of sales topping a million dollars continues to grow.
29 Renown Street fell over the line at exactly $1 million, followed by 21 Wood Street at $1.055 million, then 14 Bruce Street at $1.1 million. Standout was the townhouse at 1/51 London Street: sold privately for $1.3 million.
*could we have a quick whip around and buy the real estate industry a dictionary?
Damian Taylor
M&K in the News:
Auction clearances steady despite big jump in stock – Australian Financial Review (subscription required) – Buyer’s agent David Morrell noted a change of mood: “It had a bit of a Panadol … you could see a caution…”
Enough already, drop that hammer – Australian Financial Review (subscription required) – …the practice has driven Melbourne buyer’s agent David Morrell to file a complaint with the Australian Competition and Consumer Commission. He says the “third and final call” often happens four or five times.
Flush with cash and loos – The Age – ??We are absolutely gobsmacked,?? buyers advocate David Morrell says. ??It isn?t worth that sort of money, any way you look at it.”
Toorak mansion sets record – Australian Financial Review (subscription required) – David Morrell said local buyers were again dominating Melbourne’s top end…
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