Clearly there was a distinct improvement in the number of minds meeting in terms of price this weekend. But we believe that in June 2012, despite lower stock levels, many deal prices are cooling noticeably from expectations earlier in the year.
It’s also worth noting that given the very low market we are in right now in terms of low stock levels, low interest in homes, low quality on offer and the low number of $M+ deals, the true situation of the market may not be accurately reflected in stats and commentary. Currently, as advocates, we are relying more on what our eyes see and instinct rather than on the stats.
Welcome to our Bumper Mid Year Issue. This is the last Market Insight and Auction Reporting for a month due to significantly reduced auction activity because of school holidays, the traditional winter hibernation and the general lack of excitement with what’s on offer.
- Glen Iris, 21 Scott Grove, Mark Wridgway (RT Edgar), after auction, $2,700,000, 1 bidder
Despite the best efforts of auctioneer Mark Wridgway this was very much a lacklustre auction in front of 40 people for a home with court that had been on the market (quietly with a number of agents) for a long time…(See More in Auction Reports)
- Kew, 405 Barkers Rd, Alastair Craig (Jellis Craig), under hammer, $2,600,000, 2 bidders
One of the quickest auctions of the day…(See More in Auction Reports)
- Malvern, 17 Staniland Ave, Lachie Fraser-Smith (BenMac), after auction, above $2,300,000, no bidders
There was quite a buzz in the air as the neighbours congregated to watch this auction…(See More in Auction Reports)
- Elsternwick, 2 Shoobra Rd, Bill Stavrakis (Biggin & Scott), under hammer, $1,125,000, 6 bidders
Three auctions for this property in as many years must have given auctioneer Bill Stavrakis some concerns as to what might happen today. With a strong crowd in attendance, and after an opening bid $850,000, things were looking up. Two parties were now trading bids before half time was called at $1,085,000. After a short interval the property was re-offered to the market. The break worked a treat as we now had four other bidders who saw value in the property and entered into the competition. Several agents from Biggin & Scott moved among the bidders, but it seemed to take forever between each bid. With only two bidders left at the pointy end of auction, a brave bidder stood head and shoulders above the rest and the property was knocked down to him at $1,125,000 ($55,000 less than what it was sold for earlier in the year and approximately $300,000 less than the auction covered in James Market News around 3 years ago).
- Glen Iris, 16 Vincent St, Andrew Hayne (Marshall White), under hammer, $2,020,000, 4 bidders
A healthy crowd witnessed an entertaining auction conducted by Andrew Hayne..(See More in Auction Reports)
- Surrey Hills, 3 Wharton St, James Tostevin (Marshall White), after auction, $1,672,000, 3 bidders
Auctioneer James Tostevin didn’t need to work too hard in his preamble, ‘flawlessly presented and centrally located’, was almost sufficient in front of a good turn out..(See More in Auction Reports)
Biggest Pass Ins:
- Canterbury, 34 Maling Rd, passed in, $3,950,000, no bidders
One of the last auctions of the day and there was a good crowd here for auctioneer Steve Abbott and campaign agents Tom Ryan and Geordie Dixon…(See More in Auction Reports)
- Balwyn, 13 Palmer Ave, passed in, $1,950,000, 1 bidder
‘You can’t build it for $2 million…(See More in Auction Reports)
- South Yarra, 60 Tyrone St, passed in, $1,800,000, no bidders
A friendly team of agents from Kay and Burton were present at this auction led by the affable Michael Armstrong…(See More in Auction Reports)
Mid Year Report for $M+ Inner Melbourne:
- Overall we feel the High End market has performed about as well as anyone could have expected for the year to date.
- The A grade market is still getting some reasonably impressive results – look at our May $3m+ report.
- A graders and B graders priced correctly are selling (but with seemingly less depth of demand). The rest, the C graders and the overpriced A and B graders, are not getting any interest at all.
- Once a property has been rejected by the market in its initial marketing phase, it is rarely selling afterwards. If it does, it is almost always for less than the original asking price.
- New Stock Levels are at historic lows and new, well priced, quality stock levels even lower.
- Pricing – has been drifting downwards since Anzac Day 2010 with sharper falls late last year. This year we felt prices were stabilising on the good quality homes. Given the lower stock levels, we felt prices may hold up over Winter. However June has been a lot frostier than we expected and the market zip that emerged briefly over Autumn appears to have disappeared.
- Many people (buyers and sellers) have simply left the market for now and $M+ Inner Melbourne is now a lot smaller than 2010.
Report on the Wider Market:
On Friday we attended the REIV (Real Estate Institute of Victoria) Principals Luncheon. All we expected was a bit of lunch, to get our mandatory professional development points (yes we have to do them) and get out. However there was an excellent presentation from Robert Larocca of the REIV. Below are some of the key points he presented about Melbourne’s Wider Market, with pointers to our more insulated $M+ Inner Melbourne Market. In 2012 the REIV is to be congratulated for presenting this kind of information, rather than the spin of previous years. Below are key slides from the talk.
Turnover is well down in 2012.
Overall sales across Melbourne are down about 20% from 2010. But if you look at the 2012 auction sales year to date (which is the preferred selling option of $M+ Inner Melbourne) you can see that sales are down 41% since the high-water mark of 2010. This confirms our observation that stock is at a historically low level and that there has been a lack of price matching between buyers and sellers on overpriced and low grade homes. The 2007 and 2009 figures prove that Melbourne markets in the last five years have been far from steady ships – more like roller coasters.
Why is this happening?
The REIV puts forward two key reasons.
- Falling confidence. This was demonstrated by a graph that mirrored the close relationship between the drop in Westpac’s Consumer Confidence index and Melbourne’s Auction Clearance Rate.
- A drop in Victoria’s Population growth (this stat surprised us a bit)
A Quick Synopsis of the Buyer Masterclass Article:
- How to Avoid the Winter Home Hunting Blues
- How a person who bought a $1 million home well in 2007 could be on almost the same financial footing as someone who bought a $2 million home poorly.
- The Argument for Renting
- The Argument for Trading Up Now
- Some Good Goal Tips.
Check Out Buyer Masterclass now!
The Big Issue Video for June is Up – check it out!
We are still open for business, however this is our last Marketnews for a month. See you in Mid July!