The penny has dropped. Explaining how the top end works all depends on your perspective. From one direction it’s chaos, from another everything becomes clear.
It’s been making sense to us all year. We’ve been explaining it all year. What we have found impossible to understand are the explanations coming from those who have been seeing it from different angles (or the wishful thinkers seeing it from so far away it’s hard to imagine what they can see).
OK. Money where mouth is. What have we been saying?
- With astoundingly rare exceptions, top end auctions are doomed to fail. $5 million+? Non-event.
- Under $3.5 million, if the quality is there (ready-to-move-in is prized) and the price is realistic, hands will be raised.
- There’s no demand there without demand here (chew on that, you economists – it’s not only about price). Yes, there are people at the top end who are ready to sell, but they won’t come to the party until there’s something they want to buy.
- Buyers make markets – it’s not agents or vendors who decide prices, it’s the people who come up with the money.
- There are agents who do and agents who don’t. The skills of some are invaluable, others’ abilities appear to be limited to spending their clients’ ad budgets.
Theory or practice? Make your own judgements:
- 7 Huntingfield Road, Toorak. Needs work, but it’s north-facing, AAA Toorak. Auctioneer opens the bidding at $8 million(!), tells the throng that’s within cooee of the reserve and then all that is heard is the distant freeway. Game over.
- 38 Cromwell Road, South Yarra. Big Victorian, well renovated but with overlooking issues that put us out of the picture. Auctioneer again puts his chin out ($5 million!) and again gets thumped. Nothing heard but the distant trams on Toorak Road.
- 10 Acland Street, South Yarra. Sold quickly and quietly after asking $5 million. No big ad spend, no three or four weeks of strangers gawking through.
- 31 Coppin Grove, Hawthorn. Land. Sold. $3,250,000. No hassles.
The ultimate sentiment test?
“You’re not going to believe this, but over the last month, none of my friends have mentioned houses.”
Valuers not hearing sentiment test
We’re seeing top-end valuations that ignore the sentiment downturn – so much so that sworn valuations which are usually so conservative that they’d be about the last thing a vendor or agent would want made public are now being quoted to justify out-of-date prices. We live in Strange Times.
What goes around …
Welcome back all those old offerings which were passed in two or three months ago and are now reappearing with new photos and sometimes new agents but are still the same old stories. Same unhappy endings?
This is Spring. Isn’t it?
No. Spring has now been officially moved back to pre-Christmas. It can’t be Spring. Nothing’s happening.
David Morrell
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