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Catch a falling star

Now, where has that rabbit and hat got to? Albert Park, 19 Canterbury Road, Passed In, $3,250,000, 0 bidders. David Wood and Michael Coen.

At 6pm on Saturday, the James $M+ Clearance Rate was 44% across the 25 auctions we attended.

The Weekly Review Bidderman was 1.4 bidders per auction.

Market Summary

The market continues to be unexciting in terms of stock levels. There were only 40 or so $M+ auctions this weekend in Inner East and Bayside, when 70 is a solid weekend. And it was singularly unexciting in terms of what was on offer at auctions.  Of the auctions we attended this weekend, there were:

  • 36% duck auctions (no bidders)
  • 28% lone ranger auctions (only one bidder)
  • 4% volcanoes (four+ bidders).

Boroondara (Hawthorn, Kew, Camberwell) did have a 86% clearance rate on approximately 20 auctions, which was notable. However the sample was too small to represent a clear trend in the overall market. Activity around the Bay (Port Phillip and Bayside) was weak (though again on a small sample) and there were no buys at the upper end of the market – that is, over $3 million.

Given these small samples we are keeping commentary to a minimum again this weekend. The sample size will improve next weekend, 11th August 2012, when we will have around 70 auctions to analyse.

In amongst this lack of action and excitement though, there are some big issues for buyers, which we discuss following the auction summary below

Biggest Auctions

  • Hawthorn, 9 Wellesley Rd, , under the hammer, $2,510,000, 3 bidders
  • Kew, 13 Edward St, Richard Winneke, under the hammer, $2,200,000, 4 bidders
  • Hawthorn East, 2 Nicholson Street, , under the hammer, $2,125,000, 6 bidders
    There was a genuine buzz at this auction and for good reason; the had a lovely feel and in a market where the pickings are slim …(See More in Auction Reports)

"Pretty Boy" Scott Patterson shows that Volcano auctions can still happen when the right property is combined with the right price. Hawthorn East, 2 Nicholson St, 6 bidders, $2,125,000, under the hammer. WOW!

Bidderbuzz

  • Hawthorn East, 2 Nicholson Street, Scott Patterson, under the hammer, $2,125,000, 6 bidders
    …(See More in Auction Reports)
  • Hawthorn East, 18 Clive Road, under the hammer, $2,005,000, 3 bidders
    A large, sprawling crowd gathers in the sunshine as auctioneer Scott Patterson rolls through a long list of pluses for this property …(See More in Auction Reports)
  • , 113 Middlessex Road Surrey Hills, passed-in, $1,742,500, 3 bidders
    Doug McLauchlan was the auctioneer here and the crowd of 40 was about as expected for this very solid family home. After a descriptive spiel…..…(See More in Auction Reports)

Biggest Pass-Ins (all by the bay)

  • Beaumaris, 28 Cromer Road, passed in, $5,600,000, 0 bidders
    The is the biggest auction Beaumaris has seen this year in terms of , price and quite possibly crowd size. James Paynter …(See More in Auction Reports)
  • Albert Park, 19 Canterbury Road, passed in, $3,250,000, 0 bidders
    As the 112 tram turned from Mills street into Canterbury Road the screech of metal on metal could be clearly heard – unfazed with this temporary…(See More in Auction Reports)
  • Brighton, 190 Church Street, passed in, $2,800,000, 1 bidder
    A crowd of around 70 turned up to see Nick Johnstone auction this home. After an opening bid from the crowd of $2,500,000 …(See More in Auction Reports)

Catching a falling star – Price?

Right now, values, pricing and results should be a little inconclusive to all. Any one telling you they know for sure what the market is going to do up until Christmas, are a lot smarter than us, Gunga Din.

The current mid-Winter 2012 market is best characterised as being historically low in terms of exciting new stock. Another key characteristic is that it is a significantly falling market in terms of expectations for B and C graders, and a gently falling market in terms of expectations for A graders. See our graphical representation below:

In some of our pricing recommendations, we are using 2007 to 2009 comparables to support where we feel market sentiment may be for any particular home right now.

In 2008 everything was negative. In 2012, there are buyers out there, but we haven’t been seeing them because they are not interested in the poor quality stock currently being offered in the $1 million to $2.5 million range. This Winter the transacting market above the $2.5 million price point is so small that commentary, in our opinion, is supported by best guesses rather than factual evidence. Bidders in big numbers are generally only acting when a good home appears and then they are aggressive on price in two ways:

  • Up – if there is proven competition and there is a reasonable reserve (although competition is not as strong as it was in 2007 or 2010).
  • Down – if there is no proven competition or if the reserve is courageous.

In Winter 2012 there are 5 key buyer questions:

  1. How long will this lack of quality stock continue? Buyers are wondering whether they should buy now and take second best, because they really don’t want to be looking for another year. Another sub thought is: if stock is going to be so weak for a long time, we might as well buy a B or C grader now rather than wait another year and then still only have B or C graders to choose from.
  2. Falling prices mean – How do I, as a buyer, catch a falling star (price)? How do buyers get an A grader against some competition while minimising the burn marks on their hands if prices continue their re-entry from the once seemingly unstoppable surge into the stratosphere that was early 2010.
  3. How do I risk to me and my family going forward? The first decade of this millennium was all about playing market offence and looking for homes that would grow most strongly in value. Remember the words ? This second decade looks to be all about playing market defence. As in, how do buyers look to best protect their family interests in a flat or falling market?
  4. How do I deal with bank and sworn valuations that are historic pieces of information? In many cases these values are no longer reflective of the sudden and significant change in the market. How do I deal with an official valuation in a future that may well be different from my purchase price now?
  5. How do I buy a home when I am the lone ranger (the only bidder) on the property? How do I hang my hat on a value when all I can see is an agent quote which seems lacking in substance and supporting current data? How do I take comfort and keep my sanity when I can’t get surety and vindication through seeing competitive transparent auctions?

This fifth question is really a compilation of the above four. If you are informed, you can get it right and you can make good decisions and you can sleep OK going forward.

Question: How have stock levels been since the school holidays?

Campbell Cooney, Hodges (Brighton): “The market, post the school holidays, has remained steady. No real of stock, although the numbers of property appraisals have noticeably increased………Buyer commitment is still our biggest issue as there is neither time pressure nor escalating price pressure to aid deals.”

Richard Winneke, (Hawthorn): “Very quiet over July, with most schools now having 3 weeks break in July. August extremely busy with a new wave of buyers out and about looking at the many new listings. Feelings for September are that it will be quieter than normal.”

Justin Long, Marshall White (Armadale): “Stock levels are gradually picking up, especially for properties up to about $3m. But $3m – $10m properties remain in short . After a winter break the market seems very receptive to reasonably priced, good quality properties and we have had many good results although no really big sales.”

P.S. Congratulations to Tim Picken and his wife Sally on the birth of twins during the week. Buyers, now may be a good time to push one of the decent human beings in this industry a little harder as sleep deprivation sets in!!

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