The market this week has continued to defy logic. The sale of 24 Huntingtower Road, Armadale for $6.8 million prior to any advertising shows the incredible appetite for quality property.
This is on the back of the recent sale of the townhouse in St James Court, Toorak which again shows that the public will pay an extraordinary price for something new and ready to go. If you were to break down the sale in land per square foot and cost of squares you will see what a premium is presently being paid in the market place. Sale price at $5.8 million, land being 4,000 sq feet at say $400 per sq foot, land content is then $1.6 million, leaving $4.2 million divided by 50 squares. The cost of the structure itself then comes to an unbelievable $84,000 per square.
It?s our company?s firm belief that quality top end properties have already gained 10% in value since Christmas and with the lack of choice, regrettably we see this trend continuing.
What is of concern is some of the panic buying we are seeing at the coalface. For instance, last Saturday’s auction at Balmerino Avenue, Toorak. The property was passed in for $1.85 million with the underbidder declining to go any further and the reserve was set at $2.250 million (which means it could have been negotiated for around $2 million). Within five minutes, after the auction, a new party emerged who had not seen the property and agreed to pay the asking price, an unbelievable $400,000 more than the market was prepared to pay five minutes earlier. In our opinion, that?s just plain stupidity.
Land values in Toorak are the litmus test of where the market is at or heading. We are now experiencing a wide range, between $300 to $450 per foot with the average block selling at between $350 and $375.
The unit market however still remains softer than the housing market and caution should be used, especially with the cost per square we are seeing paid. Agents are mooting $70,000 per square as reasonable. It?s our experience and opinion that you can buy for a lot less – depending of course on position and quality.