A chill has descended. A chill unlike others; for this one has a sound track. It can be heard in the more and more desperate tones of auctioneers making more and more vendor bids.
Goody.
Smiles are appearing on the faces of buyers. Their choice is growing while their competition is lessening. There is, as reported, a perfect storm brewing; one intensified by the fun and games of the equities markets, but one we predicted would occur even without that (dis?)stimulus.
It’s long-awaited news for buyers. Tradition holds that the overall market starts and stops at the top end and the weekend’s immoveable objects of Toorak suggest that truffle-hunting season looms:
- 12 Flintoft Avenue – Passed in (vb $2.1 million)
- 5 Merriwee Crescent – Passed in (vb $3.5 million)
- 172 Kooyong Road – Passed in (vb $7.5 million)
- 13 Devorgilla Avenue – Passed in ($2.1 million)
- 7 Power Avenue – Passed in (vb $3.6 million)
The properties which did sell were mostly first passed in – with the balance of negotiating power thus passing to the buyers. Every property we bought over the weekend was first passed in. In the negotiations which followed, in some cases we bought for less than the vendor bid.
Message for vendors/agents? Get ahead of the market and you’ll have to get used to the silence. The days of idiot prices are (mostly, see Bayside below) over.
Yes, in the case of exceptional properties, there will always be exceptions: 159 Victoria Road, Hawthorn had five people bidding and sold under the hammer for $3,460,000
When the vendor bids
Changing times prompt changing tactics. As noted above, especially at the top end we’re seeing more and more vendor bids. But that doesn’t mean that the logic behind them can always be seen (assuming there is logic).
The more astute agents will make their bid for just a little less than their vendor will accept. The negotiations which follow then have a reasonable chance of success.
Then there are agents who will go low; often as part of a ploy to “condition” their vendors – to persuade them that their price expectations are impossibly high (expections which are often fanned by the agent when competing for the listing). This can prompt buyers into bidding against themselves.
Stop. Be patient. Give the vendors time to reflect, to panic. Wait for them to adjust their reserve.
Dot points:
- Care to add up the hundreds of thousands of dollars in wasted advertising over recent weeks? When there’s no sale it all goes for nothing except building agents’ brands.
- Has anyone seen a copy of the agents’ newest ploy in picking their vendors’ pockets? The Weekly Review appears more like The Weekly Absent. We can’t find a copy, nor can our clients.
- Sharemarket volatility and the announcement of resource taxes will prompt investors to re-visit property. We won’t be surprised to see a lot of activity, not necessarily overnight, in the sub $1 million bracket; which should keep ticking along at a greater rate than we will see at the top end.
- Will sharemarket volatility infect the top end real estate market? History suggests that a serious fall in shares will be reflected, especially at the top end. That said, good properties will always attract interest. While we’d love to tell our clients we can steal them the best, in practice it takes a lot of luck to pinch a good property.
David Morrell
Bayside: winds of change strengthen.
Don’t you love the Bay? Hot northerly one minute, southerly buster the next. And that’s just the real estate.
A couple of weeks ago, everything was selling and no price was too high. Now – unless it’s very special – forget paying a premium.
For the past nine months, Bayside has been mostly tracking with Melbourne’s unsustainable 80% plus clearance rate. With the exception of its lower-end ‘burbs, that link has now broken.
Last week:
- Brighton/Brighton East: 22 offered, 11 sold (50%)
- Beaumaris/Black Rock: 14 offered, 8 sold (57%)
- Hampton/Sandringham: 12 offered, 8 sold (66%)
- Bentleigh: 24 offered, 18 sold (75%)
- Carnegie: 9 offered, 7 sold (77%)
What happened?
- Is our top end now fearful of GFC aftershocks spreadinbg from the EU?
- Are six successive interest rate rises adding up to enough to scare the horses that more are on the way?
- Is the sudden increase in the number of available properties adding up to over-supply?
Whatever the reason(s), the truth is that this change has been inevitable. It was only a matter of when the switch would be flicked in buyers’ minds.
Yet amidst the numerous properties passed in, there were still several standouts. Generally speaking, the well renovated/extended family home in the right street is still keenly sought; more so now with a softening in the market which always leads to a flight to quality.
For example …
28 Amiens Street, Hampton. A stunningly presented 10 room timber house. Contemporary. Plenty of wow. Sold for a not inconsiderable $2.4 million.
A similar story in Carnegie: four properties sold for over $1 million, including:
- 13 Reserve Avenue: a near-record $1,431,000.
- 19 Holywood Grove, a timber Edwardian on less than 500 sq m, an exceptional $1,320,000,
- 156 Leila Road, nicely renovated timber bungalow, only four main rooms, only 523 sq m, quoted at $800,000 -$880,000 and with a reserve close to that upper figure, finally knocked down for $1,120,000 or a mere $240,000 above the top end of the quote. Must be sitting on an oil well because in a faltering market a price like that simply doesn’t make sense.
Oddity of the week:
The Expression of Interest campaign (where the agent says show me your wallet and I might tell you what you have to pay) for 900 sq m of vacant land at 16 Mulgoa Street, Brighton. There were four in the running at the end of the day, so the clever agent sat all around a table and auctioned it. No place for the inexperienced or fainthearted, it sailed past the indicated “near to $4 million” and went for $4,525,000.
Still Brighton, still land only (836 sq m) 76 Carpenter Street sold after a contested auction for $2,220,000 or $2,655/sq m.
Highest priced pass-in on the day was 27 Arthur Avenue, an unusual attic-style house overlooking the Whyte Street Reserve. A bid of $2.36 million did not interest the vendor. The reserve? Mum’s the word. The need? Sellers who realise that the light may not be out, but it’s certainly dimmer.
Should be an interesting month ahead.
Damian Taylor
In the news:
Home crunch to hurt us all – Herald Sun – Buyers’ advocate Christopher Koren says the Government badly miscalculated the effect and in some suburbs 30-40 per cent of buyers were foreign citizens. …
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