$3,000,000 in McKinnon - Yep McKinnon - well almost, $2,930,000 with 3 bidders. Phillip Kingston and Adam Joske from Gary Peer.

At 6pm on Saturday, the James Clearance Rate for $M+ was 56% on the 32 auctions we attended. However we think that bare statistic understates the quality of the $M+ market, given we included a number of fringe auctions today and that current stock levels are swollen right now. All in all we think it’s a borderline balanced market.

The Weekly Review Bidderman, our demand indicator, was a healthy 1.6 bidders per auction. One in three auctions we covered had three or more bidders. However 1 in 3 auctions were ducks (no bidders) and the other third were somewhere in between.

Market Summary

Decisions are being made again. It’s as simple as that. Both buyers and sellers are making decisions again and as a result market activity has been picking up all month.

Most agents are reporting a good March with good results and this is happening because:

1. Sellers are saying – OK let’s focus on meeting the market rather than getting “my” price.
2. Buyers are saying – let’s buy a home rather than worry about the future.

These assertions have been supported by a number of sales, particularly in the $2m to $4m bracket, over the last few weeks.

Other evidence is the fact that our company has been involved in four more purchases this week, averaging over $2m in Brighton, Hawthorn, South Yarra and Hawthorn East.

Why?

Life goes on. We don’t believe it’s any more complicated than that. Children are still being born, growing up and leaving home.  These things aren’t going to be stopped by the Greek economy – and Melbourne is a healthy place at the Top End to be and in which to own a home in March 2012.

The last fortnight has had limited auction results on low quantity/quality offerings. However this weekend with around 100 auctions $M+ in Inner East and Bayside we have seen the continuing public signs of positivity in the market of late February. Sure, this weekend’s clearance rates weren’t stellar but then the number of auctions were up significantly.

Next Week, the last auction day before Easter, is a Super Saturday with around 150 scheduled auctions over $1m in Inner East and Bayside. This is our first for the year (which just shows how the market has contracted since last year). The market really only has one more hurdle before Spring before we can confidently say that some positive life has returned. That hurdle is the late April to late May market – really the last run before things quieten down for Winter.

Price

Yes, there is increased activity but if you think that necessarily means prices have increased then as a buyer you may be overpaying and if you are a seller you may not be selling. Increased activity in early 2012 means more buyers and sellers agreeing on price and those agreements are largely occurring because sellers are meeting the market.

$1m to $2m – This market is now officially solid on any A grader or reasonably priced B grader. And prices may even be firming a tad. Look at the Highbury Grove Prahran (Andrew McCann) auction report, where we saw another strong auction on the back of a big price next door a few weeks ago.

$2m to $4m – This market has had a real lift in activity this month. A few stales (long term unsolds) have been cleaned up, such as 4 Hampton Grove Camberwell (James Redfern). This property went to auction last year and three bidders took it to $2.4m. The home was then  offered at $2.75 million post auction, even though $2.4 million seemed the right number. But the vendor stuck to his guns and sold mid week to a new buyer for $2.55 million (hats off to him). We think the reason this price segment is doing well is prices are coming back and vendors are meeting the market. But it’s not all one way.

$5m and above – This market has had a smattering of action, with a couple of $6m plus sales through Abercrombys this week and a huge one on the Hawthorn Horizon seemingly wrapped up. But that is about it. We have been through a couple of quiet $10m+ homes mid week (off market) and the big question is whether these and a few others sneaking onto the market will actually get some real buyers through. Our opinion is that the market is very iffy on price where the air is thin and that those floating the big numbers will remain owners rather than sellers. But we’ve been wrong before.

Risk

This is something many buyers don’t take into the equation when buying. However this market must surely be showing observant buyers that risk is just as important an element in home buying as cash flow and capital growth. And while people think we have been giving Black Rock a hard time in recent times it is simply to show what can happen to a great but fringe suburb when the market starts to feel pain. We covered 3 auctions in the area this weekend – all good sized circa 1000 sqm blocks.

1. 21 Iluka St, passed in, $1,925,000, no bidders
2. 40 Middleton St, passed in, $1,800,000, no bidders
3. 48 Second St, passed in, $1,200,000, no bidders

This is a graphical representation of how the boom markets of 2007 and 2009 worked, compared to the two tiered normal markets of 2011 and 2012.

$3M+ Summary
It’s neck and neck for the strongest areas this month: in Brighton 7 properties have sold for over $3m, in Hawthorn, Kew and Canterbury there were also 7 and in Toorak 6 have sold for the month so far.

• East Melbourne, 125 Gipps St, the newly married Nathan Waterson should be able to pay for his wedding with this private sale at slightly below $4 million. This was a great terrace home and a good result. But it was below the initial asking price and it took a fair while for the vendors to come into line. Next door’s ask now seems even more courageous than when we first heard it. But I have had the taste of humble pie this month once or twice so will wait and see.
• Kew, 5 Tregarron Avenue, Sam Wilkinson – Expressions of Interest in the mid $3 millions. Now with Sam who has deservedly a good reputation at this price level, is he not the young Brains on the Thunderbirds!
• Hawthorn East a quiet one away for Nicholas Franzmann and hopalong Walter Dodich in the over $3m category. New home build – good result in the end.

The Abercrombys Private Auction – possibly the new Expressions of Interest. Private Auctions are where a home is advertised usually for a mid week auction and only those who register interest are allowed to attend.

11 Bates St Malvern East was a great example of how it works. A number of pre arranged private inspections were organised during the course of an advertised auction campaign. A few days before (Thursday) all potential buyers registered interest and were required to indicate a starting bid. In this case $5.9 million was the written starting bid (I’m not sure what that proves, but anyway).

Read our full report on Private Auctions and all results in our $3m+ plus section.

A word from the experts: When will the market start up after Easter, as we have little new stock this week?

Alastair Craig, Jellis Craig (Hawthorn): Traditionally Easter and the school holidays are always a quieter time for transacting family homes, whereas apartments, units and townhouses sale activity remains fairly constant. In our experience “the early bird catches the worm” meaning that people who are ready to place their home on the market, with the first ad appearing on the 14^th or 21^st April, and therefore auction on the 5^th or 12^th May, will experience less competition. In most cases this relates to a stronger price. In my opinion 26^th May and 2^nd June will be extremely busy as they are the last two prime Saturdays prior to winter and School Holidays.

Iain Carmichael, BenMac (Armadale): Two schools of thought on this one:  Most people have been happy to carry the Easter Weekend in weeks two and three of their four week campaigns and  auction on Saturdays 14 and 21 April; whereas others are choosing to give Easter a wide berth and select Saturday 5 May and beyond so that all weekend Open Houses fall after Easter. There will be a large number of auctions held in May so sellers will have to weigh up the whether a June date is preferable.

Greg Hocking, Greg Hocking (Albert Park): Supply is tight and as such propping up the market to a degree. The market is quite robust for properties up to $1m but as you approach $2m and above the market is patchy. People are seeing opportunities to move up the food chain as they are realizing discounts of 10 to 15% on the new purchase.

Brighton, 8 St Ninians Crt, David Hart (Buxton), under the hammer, $4,900,000, 3 bidders

‘Round the Grounds:

• Stonnington – Nothing that special on sale but all you can do is sell them – 80%
• Boroondara – Big numbers on offer so 66% is pretty solid
• Bayside – Sandringham is on fire over the last month and Brighton and Hampton not bad either – the rest so/so – 61%
• Port Phillip – Stock is still very low so 75% maybe a bit flattering

Biggest Auctions:

Brighton, 8 St Ninians Crt, David Hart (Buxton), under the hammer, $4,900,000, 3 bidders
Don’t Brighton people like the smell of a mortgagee auction in the afternoon and they have come in droves at the smell of blood – and when I say droves I mean that…(See more in Auction Reports)

McKinnon, 41 Rose St, Phillip Kingston (Gary Peer), under the hammer, $2,930,000, 3 bidders
I’ve never seen so many people at an auction before! Normally when I go to an auction there is a car park with 200 meters of the property and today, when I couldn’t even turn into the street, I suspected that this wasn’t going to be a normal auction…(See more in Auction Reports)

Toorak, 9 Fairbairn Rd, Gowan Stubbings (Kay & Burton), under the hammer, $2,505,000, 3 bidders
Gowan ‘Hollywood’ Stubbings leads off proceedings for this beautiful mid-sized Victorian in front of a crowd of about 40…(See more in Auction Reports)

Top Bidderman Auctions:

Hawthorn East, 39 Auburn Grove,  Glen Coutinho (Hocking Stuart), under the hammer, $1,520,000, 5 bidders
Like a conductor is to his musicians, so Glen Coutinho was to his bidders as he skilfully orchestrated 5 of them in a furious battle…(See more in Auction Reports)

Hawthorn East, 7 Station St, Steve Abbott (Jellis Craig), under the hammer, undisclosed, 5 bidders
A real buzz to this auction and the weather was pleasant as auctioneer Steven Abbott conducted proceedings in his usual no-nonsense manner in front of over 100 people…(See more in Auction Reports)

Top  Pass Ins

Brighton, 11 Alverna Grove,  passed in, $3,000,000, no bidders
A big crowd turned out to have a look at this impressive 7 year old home overlooking parkland at the end of a dead end street….(See more in Auction Reports)

Balwyn, 26 Metung, passed in, $3,000,000