Race to the bottom?

This is a market every bit as fascinating as a 3am debate about who will win the wooden spoon. No choice, no zing, no heartbeat. And more school holidays only a month away.

Agents are now spruiking a flood of properties about to come onto the market; but even if that’s true (we suspect not), there are too few buyers around to soak up any tsunami.

An astronomer’s view: agents are on a different planet (“Just wait, the Spring market is around the corner!”) while a colony of vendors have moved into a pie in the sky where time has warped and it’s still 2009 (“The place up the road sold for $X last year, mine must be worth $X-plus this year.”)

Meanwhile, down here on earth …

Saturday’s auction of 11 Moorakyne Avenue, Malvern. Family home, Stonnington Estate, good spot in the heart of the school mafia, north side. Ticks a lot of boxes. Original expectation: $4.5 million or more, but the highest three bidders would take it was to $4 million. Sold … for $5,000 less than it brought in 2007. So much for the incredible gains you have heard about over the past year or two.

And that wasn’t a one-off. It gets worse. Drip by drip, vendor bid after vendor bid.

  • 2/3 Martin Court, Toorak, vendor bid $2.7 million, reserve undisclosed
  • 2/45 St Georges Road, Toorak, vendor bid $2.5 million, reserve $2.9 million (20%!?)
  • 36 Chrystobel Crescent, Hawthorn. Seems like it’s been for sale since Collingwood last won a flag. Huge advertising campaign. Lonely vendor bid of $3.6 million. This is the same property that was for private sale last year between $4.5-5 million? A 30% hit?
  • 29 Tivoli Road, South Yarra, vendor bid $2.4 million and surprise, surprise, reserve undisclosed.
  • 34 Grace Street, Malvern. One bidder, passed in on a vendor bid of $1.65 million, reserve undisclosed (OK, it’s $1,980,000. Is the vendor dreaming?).

Passed in on a vendor bid. Meaning?

It’s not rocket science. An auctioneer can’t get a bid and so makes one on the vendor’s behalf in the hope of getting the ball rolling. OK. But when a property is passed in on a vendor bid, you may reach the reasonable conclusion that the vendor’s expectations are above what the market is prepared to pay. What should flow from that? The price is reduced or the property doesn’t sell.

But then …

Even post-auction, vendors are becoming more and more coy about what they will accept. There are now more undisclosed reserves than published reserves. Tread carefully.

Heard on Saturday:

“If I walked over there and asked him for $40,000, firstly he wouldn’t give it to me and if he did he would want a personal guarantee. However vendors seem to be opening their wallets without question.”

What’s that about?

The extraordinary amount of money being spent in advertising properties which go on to be passed in without a bid. You have to ask whether advertising to a wilting market is really a useful strategy or simply spraying money up against a wall. If it was our money, we’d spend $400 on the web and take a little holiday with what’s left over.

David Morrell

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Bayside asleep at wheel?

Bayside is in cruise mode, meandering along with the occasional rise and fall in the road, forever hopeful of something big around the next corner.

Buyers, sellers and agents all waiting and expecting something to happen. More choice? More bidders? More commission?

Yet the darkest cloud still looms: Are Australian property prices sustainable? If it’s true that moods make markets (and do they explain ours?), where will our moods take us?

It may not get to a debate but each week the rumblings are there and where there’s smoke …

Last week?

Not particularly noteworthy or newsworthy. Mostly plain vanilla properties recording similiarly flavoured prices or being passed in with no real bidders.

The few exceptions included a contemporary family house on Beach Road, Black Rock. On 880 sq m, overlooking Quiet Corner and offering bay views from the rooftop deck, it sold quietly for $2.55 million. In fact it sold so quietly that we are not permitted to divulge the exact address.

In Brighton, 10 Tovell Street sold at auction for $1.85 million and a town house at 6/6 Stanley Street enjoyed rare competitive bidding before being knocked down for $1.46 million.

Then there was apartment 4 at 36 The Esplanade. Located in Brighton’s first and only five storey apartment building, it feels like this property has been about forever. It was auctioned without success at least two years ago and had a repeat performance on Saturday: passed in on a vendor bid of $1.6 million against a reserve of $1.8 million.

There’s also a chequered history developing at 836 Hampton Street. It was recorded as sold for $1,244,500 in March this year. Over the weekend it struggled and was passed in at $1.1 million with a later offer of $1.05 million. The reserve is undisclosed but expect some pain when it does sell.

And then, in Brighton East:

Hampton had a better day: five sales from five offered. 16 Highett Road at $1.5 million the highest on the day.

Bentleigh had mixed success on low numbers. Five sold in eight auctions. Bentleigh, usually, has the highest or close to highest clearance rates in Bayside. It’s currently a contrast to Brighton which appears to be saddled with a swag of top end property that buyers are treating with great caution.

And finally, under-the-radar Elsternwick recorded one of the stronger results of the week:  $1.95 million for 12 Erindale Avenue.

Oh, alright, we’ll say it again: Good property in the right location equates to good price, even in less predictable times.

Damian Taylor

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