At 6pm on Saturday, the James Clearance Rate for $M+ was 55% on the 31 auctions we attended, down on last week. The Weekly Review Bidderman, our demand indicator, was steady at 1.6.

Market Summary:

From the results over the past few weeks, it could be easy to conclude that the market is a bit all over the place – up one week, down the next.  But we don’t believe that the market is as inconsistent as it may appear. It’s just very picky at the moment when it comes to stock and price.

Before Easter we had good stock and we had vendors prepared to sell at market price. The result was solid clearance rates. After Easter things got quiet again – was it was because of the economic news or was it the lack of quality stock? Things improved last weekend when we saw some solid results across the board on quality market priced stock. And then this weekend we were back to slightly weaker clearance rates. Why?

We believe the inconsistency really is down to stock quality and seller pricing.

Two very public cases this weekend demonstrate why:

61-63 Alfred St, Kew (Richard James) – This was a huge 2300 sqm block that sold under the hammer with 6 bidders for $4,850,000 in May 2009 in front of a big crowd (see our auction report of the day). This time around another 100 strong crowd saw two bidders fight it out to $5,300,000. But instead of being sold under the hammer, it was passed in. The market has been up and back down since 2009, but overall pretty flat in growth terms between then and now, yet here you have a 10% increase, with nothing done to the home and the home is passed-in. We are not saying the agent acted inappropriately or that the vendor shouldn’t want more. But the thing is, the market will record this as a pass-in, even though all things being equal it was a good result.

6 Caroline St, Hawthorn East (James Tostevin) – This is a good little single fronter investment home. We gave it a James Home Rating of 662/1000 and have bought this type in the street before (2006). In 2010 this sold for just over $1,300,000 at auction and the market has shifted down a little since then on a number of homes – but probably not so much on these types of homes. So even though it passed in at $1,230,000 after 5 bidders – a ‘volcano’ – does this mean the market is a poor one?  The buyers were within 10% of last year’s figure. If the seller wanted to sell today they could have.

Some may look at those pass-ins and see a market in trouble due to no sales. Yet there were 7 bidders, and a pass-in price not too far away from the previous sale prices.

We think the market is an active and efficient one at the moment, especially in Inner Melbourne.

Yes, there is weak bidder interest for overpriced and/or low quality offerings. But there is strong bidder interest on well priced and quality homes – sometimes the level of that interest doesn’t quite match the expectations of the vendor.

Stock levels are historically low (and nothing looks like changing any time soon) and this is helping keep demand tighter and prices firmer than they otherwise might be if the current bidders were spread over a wider array of stock. BUT the market is doing most of what is asked of it.

Footnote: We were out at Bradleys Lane Warrandyte this weekend purchasing a $M home at a public auction. The agents were Chris Chapman of Fletchers and Ian Reid. They quoted the home sensibly to begin with, they then had an offer above their range mid campaign and consequently lifted their buyer range to incorporate that. At auction they had a great turnout and with 3 bidders the home was pushed over the quote and the home was put on the market when asked. A great result was achieved for the seller and the buyer. Isn’t that how auctions should work?

$3m+ Summary: Two more over $8 million

• 35 Hampden Rd, Armadale (Jeremy Fox) had been on the public market for a week and sold somewhere between $9 million and $10 million. The Art Deco home with tennis court on 1800+ square metres had a James Rating of over 850/1000.

• 129 Domain Rd, SouthYarra (a block of high end apartments) was sold through (Andrew Baines and Jock Langley) for more than $8 million. See more in our $3M+ Market article, main page and below in our Highest Auctions

Jenny Dwyer, Hocking Stuart (Sandringham): ‘There has been a noticeable pick up in buyer numbers over the past fortnight in certain segments of the market. The young families are out in force in Bayside looking to purchase homes in the vicinity of $1 million to $1.5 million in particular and within close proximity of amenities.  The prevailing attitude seems to be that prices have stabilised, interest rates have lowered and quality stock is still holding its appeal.

Jeremy Desmier,Fletchers (Balwyn North): “We have certainly observed a significant rise in activity and confidence, not just in the past week, but building over the past 6 weeks or so. Solid clearance rates across the Eastern Suburbs are indicative of a general quiet confidence which was clearly lacking in the last quarter of 2011 and early part of 2012.  We have also noticed a larger proportion of auctions attracting competitive bidding from multiple buyers, which the Bidderman index shows. As well as more competition at auctions, we have also observed larger numbers of buyers attending open house inspections, and a number of private sale properties have attracted offers that were previously overlooked by prospective buyers. It would be easy to attribute this increased confidence and activity simply to the recent interest rate reduction, and whilst I am certain this has contributed, I also believe that many buyers had already reached the conclusion that the market now represents value.”

Sam Wilkinson, Kay & Burton (Hawthorn): “I have definitely noticed confidence returning to the market in recent weeks. This has been in some part due to the marketing of some high quality homes in A grade positions and their subsequent sales for strong prices at competitive auctions. A number of substantial properties that had been on the market for a considerable time have also recently found their buyer and sold. I feel the correlation in the perception of market value between buyers and sellers is the strongest it has been for the past year. In other words, the market has found a level at which both buyers and sellers are prepared to transact.”