What's going on here? Great property, 12, Goodall St, Hawthorn, passes in for $3,750,000, 1 bidder. Richard Earle (Jellis Craig)

At 6pm on Saturday, the James Clearance Rate for $M+ was 59% on the 32 auctions we attended. That figure has been fairly consistent all through May. The Weekly Review Bidderman, our demand indicator, was 1.6 bidders per auction, which has also been consistent throughout May. $M Auction Stock levels were around a very low 75 – again a consistent May number.

Market Summary:

Back in our first February edition we said it would take till the end of May to know what was really happening in the market. Now we’re here, we think the picture is pretty clear. The market is going about as well as it could be, given all the negative outside influences.

1. Buyers are out there and not afraid to act when the price is right. Look at our Bidderman – steady at 1.6.
2. We are in are in an extremely low stock environment. There were between 70 and 80 scheduled $1m+ auctions this weekend. That’s about half  what we saw on a typical May weekend in 2010. However there are still an incredibly large amount of stales (long term unsolds) sitting on the internet, doing nothing except gathering cyberwebs and waiting for the magic price fairy to come along (they rarely come these days).
3. Speaking of price – price is OK . Yes it continues to drift downwards – and particularly so on the overpriced, the inferior, those intertwined in the Australian dollar and the poorly marketed. But if the seller and their agent gets it right, the market is still performing positively when it considers the product good enough and the asking price fair.

By way of example , take 57 Sutherland Road Armadale (Jeffrey Wilson). A lovely period facade and front rooms, but it had a number of issues with regards to renovation. Some buyers were looking at this to bulldoze. That means the 3 bidders who took the price to $2,900,000 were valuing 795 sqm of Armadale land at more than $3600 per sq metre, hardly a drop on previous years. In fact it was actually an increase on the generally accepted $3,000 per sqm we have been quoting in commentary over the last few years. Even if you said the existing home was worth $400,000 (which we did), the land still sold above the 2009/2010 value of $3,000 per sq metre.

4. From left field: In 2012 you may have noticed the person greeting you at the door has changed. Read our special $3m+ report below.

$1m+ ‘Round the Grounds

Boroondara – 67% clearance rate
Port Phillip - 57% clearance rate
Stonnington – 89% clearance rate
Bayside – 46% clearance rate

This weekend’s biggest action was at the biggest $ Auctions:

Brighton, 43 Seacombe Grove, Jack Bongiorno (Marshall White), under hammer, $7,770,000, 3 bidders
Was this going to be the auction of the year or even the auction of the decade? Who knows when you are dealing with absolute Brighton waterfront? And this is the best of the best of Brighton waterfront (position wise – opposite the dog beach). The tricky bit was calculation what it should go for. Brighton waterfront has been going for $10,000 a square metre; but not all of this land is waterfront. It’s about half and half, so our calcs were 600 sqm at $10,000 per sqm and the rear 600 sqm at $3,000 per sqm, giving a fair value of $7,800,000 and a range from $7,500,000 to $8,000,000.

Anyway the crowd has gathered on this blustery day and it’s bloody cold – so Jack c’mon, get on with it. And he does – when you are the biggest game in town, you don’t need to spend a lot of time crapping on and Jack knows this these days. He is the right man for the occasion. We are away with a vendor bid of $6,000,000 and before you can even breathe two bidders are at $6,400,000 in $100,000s. A pause and then a jump to $7,000,000 from bidder 3. Impressive but it had zero effect as bidder one bounced back and two quick bids later it’s on the market at $7,200,000.

Can I say at this point, hooray, well done buyers and sellers. This is an open and fair market. Some more rapid fire bidding, but in lesser amounts, and then another pause at $7,500,000. It looks like it’s all over but it’s not; another hundred, then a fifty and then five – thousands that is. Even bidder one is looking nervous – well as nervous as you can look in trakky dacks. So we are all at 7s – $7.77m and its over – the biggest auction for the year and the biggest I can remember for some time.

The market sure aint dead for the well priced good stuff.

Malvern East, 17-19 Coolgardie Ave, Jack Bongiorno (Marshall White), under hammer, $3,020,000, 5 bidders
Right on cue the clouds passed to bathe auctioneer John Bongiorno in sunshine, as he promptly opened proceedings with a vendor bid of $2,100,000…(See More in Auction Reports)

Armadale, 57 Sutherland Rd, Jeffrey Wilson (Little Residential), under hammer, $2,923,000, 4 bidders (see Auction Reports)

Biggest Bidderman Auctions

Brighton, 2 Birdwood Ave, Nick Johnstone (Nick Johnstone), under hammer, $2,430,000, 6 bidders
What a cracker auction! Great crowd? Check. Bidders? Check. Entertainment and theatrics? Check. An auction hammer coming down to raptuous applause? Check…(See More in Auction Reports)

Hawthorn East, 34 Invermay Grove, Mark Dayman (Marshall White), under hammer, $1,340,000, 5 bidders
Auctioneer Mark Dayman’s loud and booming voice never fails to impress and he immediately had the attention of the crowd at the start of the auction…(See More in Auction Reports)

Brighton East, 36 Glencairn Ave, Steve Tickell (Hocking Stuart), under hammer, $1,510,000, 4 bidders
An exciting auction in a tranquil street on a mild and pleasant Saturday afternoon…(See More in Auction Reports)

Biggest Pass Ins: Hawthorn, 12 Goodall St, passed in, $3,750,000, 1 bidder
Landmark property and the turnout of of around 120 was solid here…(See More in Auction Reports)

Hawthorn, 23 Hilda Cres, passed in, $3,100,000, no bidders…(See More in Auction Reports)
Honest Grace Park property this one, with good land content and only a short stroll away from Glenferrie Road Oval and shops…(See More in Auction Reports)

Brighton, 23 Manor St, passed in, $2,875,000, 2 bidders
Growling Jack was down on his new Bayside patch in front of a smallish crowd (40) extolling the virtues of this middle of the road period home but one in an excellent location…(See More in Auction Reports)

Biggest Game In Town: Jack Bongiorno (Marshall White) sells 43 Seacombe Grove, Brighton, under the hammer for $7,770,000, 3 bidders

$3m+ Market Special Report – Playing the Man

The market at the $3M+ level has very much moved from process marketing to man on man selling. Gone are the days where agency principals could hide behind marketing, juniors and PAs. These days if the agent doesn’t have their hand on the levers then things aren’t going to move. And if things aren’t moving then they and their company ain’t eating. So just as in football where there is forced change every few seasons, the market downturn has forced agent change.

This change started in 2008, but the market was a bit slow to grasp it after so many boom years. Then the 2009 rises came before agents had time to react en-masse, so there wasn’t really any agent change. This time around some of the market has again been very slow to change and you can see the tired old firms, the once colossuses  of the industry who are now just shells of their former entities. They haven’t changed with the times.

The change has been the need for principals to come back out and stand on homes. They have to. In this market you can’t send a boy or girl to do a man or woman’s job. Some buyers are savvy and will eat the inexperienced agent for breakfast. Some buyers need nurturing to get them to act. Either way the easy sale is now the rarity rather than the rule.

Buyers also need to recognise this change. What it means is that in many cases they are up against a far higher calibre of agent than when the market was booming. So if you as a buyer are to take advantage of the improved market conditions (lower prices and less competition), you also need to move with the times and have strategies or professional representation to deal with the improved calibre of agent you are facing across the negotiation table.

For our money some of the bigger franchises are really teetering on the edge right now and if they don’t have the leadership then they and those within them will be hitting the rocks pre Xmas. Buyers in the market need to recognise this and take advantage of these situations where they can.

Agent Survey: Do you agree that stock levels have been well down for May, and does June look like having more after the long weekend?

• Tom Aylward, Jellis Craig (Hawthorn): I felt May actually saw some very good homes brought onto the market and that was reflected in the upswing of homes north of $3 million, often producing multiple bidder auctions. Overall the number of homes put up for sale has reduced a little which is possibly a reflection of the owners reacting to a particularly bearish media. Inversely we are seeing buyers contesting for well positioned homes. June will see the usual increase in our area of those looking to sell before the school holidays in July and the end of the financial year.
• David Hart, Buxton (Brighton): There is no doubt that stock levels in May have been as low as they have in years, which has a resulted in some really competitive bidding at many auctions. Listings for June are increasing, although not to the levels of the previous few years. For those keen to sell, supply and demand is in their favour.
• Kaine Lanyon, Marshall White (Albert Park): May is traditionally one of the busiest months of the year and it has been business as usual for us, perhaps a touch down on stock levels but very minimal change. June listings appear to be steady but I certainly wouldn’t say busier than May.
• Peter Kennett, Hocking Stuart (Brighton): In 26 years of selling properties in Brighton, I have never experienced such short supply for ALL local Agents. Luckily there are some motivated buyers and some realistic vendors coming together to meet the current market sentiment. If a vendor is not in touch with today’s market and not that motivated, then they will stay on the market for a long time, which is cluttering our market and playing into the astute buyer’s hands. There are a lot of top end properties that should be removed from sale in order to cleanse the supply. Prolonged sales are not sending the right message to buyers and set unrealistic expectations to serious vendors. That said, this shortage of realistic sellers is going to continue through out the next 3 months and will really test some of the new agents’ ability to survive, especially if they don’t have a rent roll and even more especially if they haven’t experienced these conditions before. Auctions are still the proven and most successful method a closing a sale, especially now that the cooling off periods have come into play.

Big Issue Video and Buyer Masterclass - New editions this week on the game has changed (up now) and kicking the ball into play (out Monday).