What a funny lot we are at auction! Check out the Expressions! Malvern 4 Grace: Marcus Chiminello and Justin Long: 4 bidders, Bought After Auction

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 59% for the 31 auctions we attended.

Bidderman was at 1.5 – a more representative number than last week’s 2.2 we think. 

Main Points:

• A significant, but largely expected, drop in activity and dollar value
• 3 Longstaff Kew East – sold by Glen Coutinho of Hocking Stuart, had a crowd of 80 with 5 bidders and was bought for $1,413,000. This one was all about the renovation and not the position, home rather than location. See our report and click onto our ratings below.
• Albert Park – I got an interesting answer when I asked Michael Szulc of Cayzers why we had such huge stock levels early in the year. His response was the most original I have heard: With the GFC a number of investors took out 12 month leases. All those leases lapsed about the same time, just as we had come into a significantly better market, and were all put up for sale around the same time.

Guilty – Last Week we were harsh on The Early Million Market

The market has corrected both in terms of price and activity. However, as we put on our winter coats, we should also put our hands up and make our apologies: there is one segment of the $M+ market that seems to be exempt from our blanket market price-drop statement.

We think the market for $1 to $1.5 million-ish quality homes hasn’t really dropped as we first hoped it might have over the holidays.

Yes, there has been a major drop in demand across the Melbourne Top End. And yes, prices are off by as much as 10% since April. And yes, the gains for 2010 have dissipated in most market segments – especially for the unsolds that need to become solds. But the mounting evidence over the last week indicates that such a blanket statement is too strong when talking about quality homes in the early $1 million dollar range.

This segment still has a strong wave of demand – with new buyers taking up when other buyers drop off, albeit at lower numbers than May, but still at three and four deep. In this quieter July market, the evidence is strong (in fact it’s being pushed into our faces) that, even with the reduced stock levels, we may see prices increase faster than we thought possible even a fortnight ago in this early $1 million segment.

So, after a polite battering from some avid selling agent readers, as well as some of our own unsuccessful auctions and some relooking at sales and private sale basket lists, we’ve reworked our blanket statements to:

Reduced activity and price that started from late April, up to now and possibly continuing into Spring for:

1.  Poorer quality million dollar homes (weak 3Ps – price, property and position characteristics)

2.  Many homes over $2 million-ish

But this does not apply to the early $1 millions price segment for good homes. That market has survived the significant market adjustment better than we implied last week.

With the benefit of six more auctions under our belt this week, we’re already thinking that nirvana may be shorter lived than we initially hoped. But it is winter, and we are dealing in a lot smaller numbers stock wise. Even so, the mood at this level is positive and seems to be rebuilding quite quickly.

Our overall last week auction strike rate was 3 from 6 in this $1 to $1.5 million dollar quality homes range. Bidders have been 1-6-2-3-3-3 respectively.

The above $2 million market

The market above $2 million is, as we stated last week and in previous reports, solid on a few good properties and limited on the rest. There are large numbers of stales and unsolds in this range, and it seems that most of the limited demand is for new and quality auction stock, which is itself limited.

The last two weeks has shown little improvement in this area, particularly as you go further up the food chain dollar-wise – unless of course it’s for a first rate home.

Sales at $2m and above (not all are reported) were running at three (3) a day in May 2010. In July they are reported at being down to one (1) a day.

Compare this to the $1m – $2m range in Boroondara, Bayside, Port Phillip and Stonnington. These were at eleven (11) a day in May and while they are down, they are still up at five (5) a day in July.

Of the more than 140 sales over $1 million in those four markets this month, 5 out of 6 are mopping up the early $1 million overhang and new auctions, while just 1 in 6 are mopping up the over $2 million overhang.

Activity is down across all sectors or segments of the market (to be expected, given it is winter) but things are holding up far better in the quality $1million range than in the $2 million+ range – due to significantly stronger bidder depth. This is leading to less overhang than we may have implied through last week’s blanket statements.

Glad to have cleared that up.

166 Bank St South Melbourne. Crowd of 60 saw Gerald Betts Pass In at $1,330,000

We love auctions

Enjoyable auction No 1

Antony Woodley and Peter Mitchell of Marshall White – well done. The three bidders – well done. For me this is how you run an auction: a bit of argy-bargy and a bit of old fashioned fair play.

The quote during the campaign had been conservative, and when the first bidder opened with $1,700,000, at the quote, he asked: is it on the market? “No”, was the agent’s answer, “and I’ll take $25,000s”. A second bidder bumped it up another $100,000. Wow! The first bidder repeated the question to the auctioneer and Antony’s reply was ditto, requesting $25,000 bids. Again, bang, from a third bidder this time – another $100,000 rise. Now with the price up at $1,900,000, all three bidders asked the question: was the property on the market? The second bidder said he had more, but refused to bid unless it was on the market. In the spirit of auction it was put on the market. Another $10,000 and then the third bidder said $2,000,000. Wow – who says “on the market” doesn’t work? It was a great bid, which could not be matched – and the home was knocked down at $2,000,000.

That’s how an auction should be run: three bidders, five bold bids. It was a pleasure to report on. More power to buyers who work together to get a property on the market so they can battle it out fairly. And more power to auctioneers who respect those buyers playing the game.

Enjoyable Auction No 2

This was a boardroom auction with a James Market News’ favourite, Lachie Fraser Smith, and took place on Tuesday night at Bennison Mackinnon’s boardroom. Over the previous 48 hours Lachie had informed a number of buyers that a home going for around $1 million in Glen Iris had received an acceptable offer and that all interested parties were invited to attend an auction where the reserve was set at $1,050,000 and that the property was on the market. Sitting around drinking water, six (6) bidders fought it out pleasantly, with the property selling for about $100,000 more. Gee, it’s amazing what buyers will do when they are told the truth: a stated reserve and the property on the market with the first bid –  and six bidders still turn up.  Bennison Mackinnon continues to sets the ethical standards for inner Melbourne auctioneering.

We only buy homes

Mal

Brighton East 8 Carrington: Auctioneer Danielle Martin. Passed In on a Vendor Bid at $1,000,000