May 14. Logic defied

The surge continues …

Another weekend when the top end took the market into unknown territory. Results which continue to defy logic and surprise us and valuers alike.

This was lead by the sale of 19 Barry Street, Kew, for $5.8 million. A totally renovated Victorian on 16,000 sq ft. and a sale which is definitely “out there” as the land would only be worth around $160 per foot. It was passed in for a little over $5.6 million and sold later with the purchaser also buying the rear property. So now we have properties changing hands in not the best part of Kew for in excess of $8 million.

Toorak, again, was strong with the sale prior to Auction of 176 Kooyong Road for around $5 million – again indicating the growing demand as a block of land only two doors away sold four weeks ago for $2.6 million.

Clearly, people are willing to pay a premium for something that is already renovated and ready to move straight into.

Land prices in Toorak have long been the litmus test of where the market is and again we have seen it highly sought in a private transaction on Friday. 14 Kent Court sold for $2,275,000 for 6,000 sq ft with a frontage of only 25 feet – demonstrating that, now, a month is a long time in real estate: next door sold for $1,920,000 and a month ago the vendors of Kent Court would have been happy with $2 million.

Of the 12 Auctions we attended, only one property was passed in, with the others exceeding their reserves by 10-15%.

Underquoting is still rampant and a problem. The one property that was passed in was at 13 Beach Road, Brighton Beach. It was quoted at $1.8 plus, passed in at $2,150,000 with four bidders and the reserve was $2,250,000. Yes, we are seeing a sign of vendors getting greedy. Needless to say, we didn’t pay that.

Hawthorn again provided strong results, particularly for a small two bedroom Victorian at 9 Churchill Grove, which was quoted at $600,000 plus (at that price a good investment) and which sold for a staggering $932,000. Then there was a small outbreak of sanity at 11 Goodall Street, Hawthorn, where a double fronted Victorian – attractive from the street but which had some fundamental issues with the floorplan – sold for $2,220,000.

The market generally is still on the up. And, still, we’re seeing signs of unfair manipulation, perhaps collusion, between some agents and vendors. We would be happy to provide evidence if called on.

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