May 7. Buyers chase quality

It was business as usual with the market continuing to move forward, exceed expectations and break new ground. The weekend started badly for purchasers with the 5.00pm Friday night boardroom auction of 2 Rowland Street, Kew (south side and not AAA). The land was only 8,280 sq ft and $200 per foot yet to be achieved for a similar address. It sold for $237 per foot with four bidders! Again, the demand for land is very strong. This was confirmed on Saturday at 28 Embling Road, Malvern, which sold for $3,020,000 against a $2.55 million reserve, achieving a record $270 per foot for the street.

Again, the very top end was healthy, but not stupid. 20 St Georges Road, Toorak sold for $6,010,000 with 3 bidders. Land again was the priority with 20 Kent Court, Toorak selling for $450 per foot, which underlines the incredible appetite for land in Toorak at present.

Buyers are chasing quality addresses. For example, a totally unrenovated terrace at 35 Leopold Street, South Yarra with a $950,000 plus quote, sold for an incredible $1,438,000 with seven bidders; which makes valuing property not an exact science as a totally renovated similar property sold only 3 months ago in the same street for $1.4 million. Clearly buyers are not taking into account comparable sales when bidding for property.

Brighton also continued its healthy upwards trend with a small house at 11 Vista Road, Brighton Beach selling for $2.55 million against a $2.1 million quote.

The trend seems to be that quality properties are exceeding their reserves by 10-20%, which is confounding valuers and buyers advocates alike. We expect this trend to continue because of the number of underbidders at each auction. If there was only one underbidder, there could be an argument that it was a bit of a “one-off” result – but when you have six you just have to realise that the market has moved up a cog. Even suburbs that were once thought of as “bridesmaids” are experiencing strong results.17 Wills Street, Kew was quoted at $1.1 million plus and sold for $1,720,000 – $420,000 above the vendors reserve! Surely the market hasn’t moved that much?

Investors continued to appear on the landscape, however from Saturday’s results many were being beaten by the owner/occupier market, who are chasing the “wow factor” with incredible dollars. A prudent investor realises that you shouldn’t chase much beyond a reserve, especially more than 10%.

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