oc | Monday 20th May
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The Market is splitting as it normally does with the Spring Influx.

Biggest Sale of the Day: Jeremy Fox (RT Edgar) at 14 Mercer Road, Armadale, under hammer, $6,100,000, 4 bidders

At 6.00 pm on  Saturday, the James Clearance Rate for Melbourne’s $M+ was 65% on the 37 auctions we covered. The , our bidders per auction measurement continued its impressive run at 2.4. Today we did cover a lot of $3M+ homes that needed some work  – and a lower clearance rate is in line with that.

Overall Summary of Melbourne’s Million Dollar Plus Auctions:

  • Ducks ($M+ auctions with no bidders) 15%
  • Lone Rangers ($M+ auctions with one bidder) 18%
  • Norms ($M+ auctions with 2 or 3 bidders) 32%
  • Volcanoes ($M+ auctions with 4 or more bidders at auction) 35%

That’s a win to the Volcanoes!

Market Summary

The Market is splitting. This is a normal adjustment to the Spring Influx of properties – those the market wants and those the market rejects.

And so this week the market has sent sellers (and buyers) two very clear messages:

  • If you’ve got a well priced, ready to move in home with some WOW in the $1m to $5m  range, then you have a home that is attracting a lot of interest. And as a buyer for these homes, you will have to prepare to compete. Look at the near volcanic Bidderman of the last two months and again today – despite the stock surge (Super Saturday – eg 150 $M+ Inner East and Bayside).
  • If you have a home that is overpriced AND above $3m AND less than perfect (eg. it needs a renovation) then you’re not travelling as well as the rest of the market right now, nor are you travelling as well as this market segment was  just a little while ago. And as a buyer you will have to be prudent in your negotiations for these homes. Check out the pass-ins below.

If we look at Bidderman we have another win to the Volcanoes today. Right now, it is a case of  – when you’re hot, you’re on fire!

But if we look at the James $M+ Clearance Rate we have an overall rate in the 60%’s. So right now it’s also a case  of – when you’re not hot, you will be experiencing a real kick in the guts; if you have priced your home “courageously.”  And as the buyer of these homes, you are probably Robinson Crusoe at above market levels.

However make no mistake  – we see the market as still very hot.

But now that Spring is here, buyers should recognise the difference between a good home and a bad home – a market priced home and a “courageously” priced home.

Footy? What footy? Despite finals fever hitting Melbourne, the city's other obsession, auctions, were well attended on Saturday. Here around 130 people lined Edro Avenue, Brighton East, to see what would transpire at number 13. Bought under hammer, undisclosed above $3,250,000, 4 bidders (Peter Kennett, Hocking Stuart)

$3M+ Auctions: The $3m market was one we were knee-deep in today, as many advocates were.

Here are three that absolutely flew and warrant comment and then there’s the rest:

13 Edro Avenue Brighton East (Peter Kennett and Tam Whelan) under hammer, undisclosed above $3,250,000, 4 bidders James Home Rating 720/1000 click here to see rating. The third East Brighton home to go past $3.5m in the last few months. A sale at this price is no longer a fluke, an outlier, an anomaly like many said of Binnie and Shasta.

222 Esplanade West Port Melbourne (Maddy Kennedy and Oliver Bruce) under the hammer, 5 bidders. James Home Rating 719/1000  click here to see rating. This was by any measure a single fronted home and it achieved just a tick under $3m. WOW. Don’t get me wrong, it was worth it if your goal was to buy one the best homes of this type going round. A massive crowd of nearly 200 people lined Esplanade West to see what would transpire at auction…(See More in Auction Reports)

14 Mercer Road Armadale (Jeremy Fox and Warwick Anderson) under hammer, $6,100,000, 4 bidders. Congrats to buyer advocate Guy Angwin. James Home Rating  675/1000 click here to see rating.  This was a blank canvas in the true sense of the word and one of the classiest blank canvasses on offer this year. Over 120 people gathered around the perimeter of the big front yard of this big home on big …(See More in Auction Reports)

Some More $3M+ Results

  • Armadale, 46 Stuart Street (Gowan Stubbings, Kay & Burton), after auction, undisclosed above $3,500,000, 1 bidder
    As I approached this scene I noticed the big crowd (120 people) and wondered if they had all walked here…(See More in Auction Reports)
  • Brighton, 142 & 142A The Esplanade, passed in, $4,700,000, 2 bidders
    To the 40 people crowded into the bare sitting room…(See More in Auction Reports)
  • Toorak, 44 Mathoura Road, (Justin Long, Marshall White), after auction, undisclosed above $4,050,000, 1 bidder
    A grand Victorian brick home is on offer and auctioneer…(See More in Auction Reports)
  • Kew, 44 Studley Avenue, passed in, $4,000,000, no bidders
    Despite the picturesque city views and lush setting auctioneer…(See More in Auction Reports)
  • Malvern, 4 Mayfield Avenue, passed in, $3,800,000, 1 bidder
    Warwick Anderson was our auctioneer on this bright and sunny morning…(See More in Auction Reports)
  • Brighton, 23 Tennyson Street, passed in, $3,650,000, 3 bidders
    What a glorious day for an auction and what a glorious setting.  More than 40 people had gathered…(See More in Auction Reports)
  • Malvern, 40 Thanet Street, passed in, $3,400,000, 2 bidders
    The smell of cut grass was in the air and the sunshine was drying off clothes on washing lines with ease…(See More in Auction Reports)
  • Middle Park, 86 Nimmo Street, passed in, $3,000,000, no bidders
    Geoff Cayzer says this one has got the lot – accommodation, orientation and a big block of land…(See More in Auction Reports)

Bidderbuzz:

  • Hampton, 28 Grenville Street (Campbell Cooney, Hodges), under hammer, $1,895,000, 6 bidders
    Sometimes you can just feel when an auction is going to be a cracker and this was one of them…(See More in Auction Reports)
  • Port Melbourne, 222 Esplanade West (John Bongiorno, Marshall White), under hammer, $2,920,000, 5 bidders
    A massive crowd of nearly 200 people lined Esplanade West to see what would transpire at auction on Saturday…(See More in Auction Reports)
  • Bentleigh, 17 Seaview Avenue (Gary Peer, Gary Peer), under hammer, $1,439,500, 5 bidders
    Surrounded by new builds and homes under construction in a desirable school catchment zone…(See More in Auction Reports)

Next weekend will be another Super Saturday and then the auction scene quietens down until the footy’s over and school holidays have finished. Our Market News team will be taking a break from reporting but our Buyer Advocates team will still be doing plenty behind the scenes with off-markets, pass-ins, stales and pre-markets.

Justin Long in amongst a more subdued crowd along at 44 Mathoura Road Toorak, Bought After over $4 million, 1 bidder.

In Support of Our Young People

In line with our James Buyer Advocates, The Age and The Young homebuyer series here is a comment for our leaders.

My bias in this article is I have teenage children; my knowledge is that I buy 2 to 3 homes a week, every week in this market and have done for many years.

A small interest rate hike will do little in this current market, except make it even more difficult for young people to buy homes.

The Inner Melbourne market is not what it what thirty years ago when I was looking for my first home, in fact the market is not what is was 10 years ago when James Buyer Advocates first began to really take off.

Today our children have to compete against

  1. Increasing debtless local family wealth
  2. Favoured investors such as “Superfunds
  3. Wealthy Chinese Nationals

As we said last week, we feel interest rates will have to be very punitive before any effect is felt in the current Inner Melbourne young homebuyers market (either side of a $1m). By the time that happens it will have made young homebuyer dreams even more difficult than it is now.

Issues

The federal government (inadvertently or not) is fuelling the current Inner Melbourne Market “frenzy” through

  1. Immigration policies, especially the FIRB changes of 2007 which are pushing prices higher and higher. Around 1 in 2 homes in the Inner East has Chinese National bidding. Yes that’s right 1 in 2 and no its not an exaggeration – we act for and against Chinese Nationals every Saturday. Chinese Nationals saved the Inner Melbourne market from the GFC in 2008 and they continue to dominate the same market as the most influential buying group in 2014.
  2. Favoured tax concessions for Super funds and negative gearing. Negative gearing was favoured as it created rentals in the 1980’s and now its wiping out Inner Melbourne homes for the young. Super Funds are the latest phenomenon taking out more and more stock. Look at the AMP Ad campaign and read the expert comments below. Both Negative Gearing and Super Funds are pushing prices up, especially in that just below $1m market. We act for and against Super Funds and Investors every Saturday.

Solutions

  1. Families should act now. Our fastest growing market segment at James Buyer Advocates is buying $1m homes as investments for parents, which are also intended to be for their children. Read our Young Homebuyer Series click here
  2. Perhaps the government should consider moving away from the blunt instrument talk of interest rates if it wants to improve the housing situation for the young. Perhaps it could look at what is really causing the Inner Melbourne market “frenzy” – tax concessions and wealthy immigration. It’s a demand and supply issue; governments are fuelling demand (maybe unintentionally) and reducing supply in a way that is very, very unhelpful and unfair to young homebuyers.
  3. Perhaps young homebuyers could be listened to or perhaps they need to speak out more.


Welcome to Article 3 in our series for Young Homebuyers in conjunction with The Weekly Review and The Age Domain. (click on publications for full articles)

Last week we talked about how you could save around 10 per cent of the of your , simply by setting out a three-point plan about what you wanted in a . This week we will discuss how you can save/make a or more by future-proofing your plan.

Why Future-proof your plan? Here’s why.

  • Apartment: In 2000 a young buyer bought an apartment in Docklands at 15 Caravel Lane for $507,500 and resold it for $576,000 in 2014.
  • Inner Melbourne Home: Around 2000 a young buyer spent similar money on a family home in Celia Street $493,000 and sold again in 2014 for $1,500,000.
  • Future-proofing the plan put a million dollars into that young buyer’s pocket?

A good homebuying plan should be in two parts. Get this right and it’s worth a fair chunk of that $1million dollars I promised you.

Read The Masterclass article by clicking here.


Agent Survey: “What are the issues younger homebuyers are facing?”
David Hart (Buxton, Brighton): “In our area, being Brighton and Brighton East, the issue for younger buyers is really affordability. With prices pushing back up in 2014, the Brighton market is out of reach for many, unless perhaps they have previously owned a property somewhere like Elwood, where comparatively speaking, Brighton is good value in terms of property size and proximity to facilities.”

Bill Stavrakis (Biggin & Scott, Elsternwick): “The “Big Issue” that young  home buyers face is the increased competition for entry level properties by SMSF’s and international buyers. Most investment buyers are very specific about position and proximity to lifestyle attractions. Given that most first home buyers are just as motivated by lifestyle attractions and often wanting to be close to family and areas they have spent their youth, we often see the two opposite ends of the market battle it out. As to whom prevails depends on the day… particularly if the young buyers parents decide to get involved at the pointy end of the deal!”

Mark Wridgway (RT Edgar, Toorak): “The issues as I see it are affordability. Investors are competing directly with then for properties that are in the lower price ranges in the inner suburbs.I personally don’t have a great deal to do with first home buyers, but I do list a lot of large apartment projects and my staff sell to a lot of first home buyers and investors. It appears that that the investors have the buying power to hold off a first home buyer.”

Damian O’Sullivan (Marshall White, Albert Park): “Younger homebuyers forever face the challenge of saving for a deposit in the first instance. The ongoing sacrifice required nowadays looms large for many young homeowners before the reality of home ownership exists. Add to this the daunting task of finding and ultimately securing ‘the great Australian dream’ and the assignment can become all too much for some. But the rewards are often plentiful allowing buyers to reap the rewards of capital growth, security and lifestyle pleasures. Providing buyers do their due diligence and buy within their means, the long term gain is certainly something to strive for.”

Torsten Kasper (Chisholm & Gamon, Elwood): “Younger buyers are facing increased competition from empty nesters looking to embrace the village lifestyle in smaller lock up and travel apartments. The growing number of self-managed superfunds also buying property adds to the increased competition. Ultimately the gap between wage and assets of the y and x generation compared to the baby boomers is large. The good news is that more stock is coming online; interest rates are incredibly low and with the right research and strategy a home or apartment is only a few offers or auctions away.”

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