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Balwyn Calling – International Asian Demand showing the real signs of easing!

Peter Batrouney Sells After with one bidder - 20 Illawarra Road Balwyn North over $2,710,000

Peter Batrouney Sells After with one bidder – 20 Illawarra Road, North over $2,710,000

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Special Edition – James International Demand Report for Inner Melbourne $M+ housing

Today we have ditched our across Melbourne auction coverage and focused on assessing the change (if any) to International Demand within the Melbourne Property Market.

James Bidderman, Bayside, and clearance rates have been sidelined, so as we could focus almost all our resources on assessing International Demand – to do this we went to where International – Asian – Chinese Demand is on show for all to see – Balwyn.

We focused our auction reporting on 20 of our reported 30 auctions in Balwyn and Balwyn North, meaning today’s figures are not representative of the overall market in Melbourne. So forget our Bidderman and Clearance rates as an accurate Melbourne guide today – look at them for what they are – a Balwyn or Asian Market focus.

Summary of James Asian Market Opinion at the end of this Report.

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For many years now James Buyer Advocates has stated that the $M+ Melbourne Market is driven by International Demand and in particular Chinese money through Chinese Australians and Chinese nationals. We are no longer a property backwater – we are an International Property Market.

Yes, interest rates and Australian monetary policy and banks affect our markets, but they don’t drive the market like the migration of money – and in particular since 2008, the migration of Asian (Chinese) money.

The most important concentration of migrating Chinese money in $M+ Melbourne is Balwyn.

In a James Market News article earlier this year we stated that we felt what happened to Balwyn land prices, had more influence on Melbourne’s property market than Brighton, , or even Toorak. Click here for that James article.

We still stand by that.

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What happens in Balwyn now, is a sign of what might be coming for the rest of Melbourne later (eg next year).

Balwyn and parts of Kew and Glen Waverley have been Melbourne’s Talisman since 2008.

What happens here first, has been in the past, later repeated in other key Melbourne Eastern and Bayside suburbs.

Over the last few weeks we have seen a subtle, but very noticeable change in what is happening in Balwyn and Balwyn North – so today we investigated and analysed an Asian epicentre of Melbourne’s International Property Market.

However, please keep some balance on what you interpret from the information we provide below.

1. The Balwyn market is a microcosm of Asian demand – in a September 2015 James Market News article, we detailed that a check of Valuer General records by us, showed that 90 of the last 100 home transactions over $2 million involved Chinese, or buyers with Chinese surnames. Click here for that James article.

2. The current Balwyn market is awash with spring property and to be fair a lot of it is not that exciting. So supply is very high – that means demand will be more widely spread and that also contributes to bidding intensity drops. It is normal for spring to show some easing and we have come off the strongest rises I/we have ever seen in Balwyn property prices (eg Feb to June 2015).

3. The changes that you see below, have only been evident to us since September – still early days – things may respike again if the reported FIRB and Chinese government changes cease or cease to have an effect on Chinese money flow.

4. However, no sugar coatings – you will see there has been a shift in International Asian Demand over and above any seasonal changes.

All our JAMES Auction reports are at – click here

Balwyn Calling

BALWYN – today 

66 Gordon Street, Balwyn – Sold before auction, $4,880,000 (Chinese Australian or Chinese National Bidders – unknown)

(Last sold for $3,300,000, November 2009). 

107 Winmalee Road, Balwyn – Passed in $2,025,000, 1 bidder (Chinese Australian or Chinese National Bidders – 0)

(Sold $751,000, September 2002).

There’s a small crowd on a very wide street at the auction today of 107 Winmalee Road, in Balwyn.

4 Clapham Street, Balwyn – Under hammer, $1,473,000, 3 bidders. (Chinese Australian or Chinese National Bidders – 1)

(Last sold for $901,000, August 2007).

Happily, the showers have moved on and a reasonable-sized crowd of around 60 onlookers are standing in the sunshine at 4 Clapham Street in Balwyn.

9 Kaleno View, Balwyn – After auction, $1,588,000, 3 bidders. (Chinese Australian or Chinese National Bidders – 2)

(Last sold for $1,250,000, September 2010).

In the quiet cul-de-sac of Kaleno View, Balwyn, a crowd of 45 gathered under the trees opposite number 9.

All our JAMES Auction reports are at – click here

Richard James sells under the hammer 12 Angle Road Deepdene for $3,410,000 - 2 bidders

Richard James sells under the hammer 12 Angle Road, Deepdene for $3,410,000 – 2 bidders

31 Knutsford Street – Passed in, $2,700,000, 2 bidders. (Chinese Australian or Chinese National Bidders – 0)

(Last sold for $1,800,000, April 2013).

We hope that Campbell Ward from Jellis Craig is a better auctioneer than he is a meteorologist as he assures us that he’ll get through the auction quick smart before it rains.

19 Freeman Street – Passed in, $2,400,000, 1 bidder. (Chinese Australian or Chinese National Bidders – 1)

(Last sold above $2,400,000 for an undisclosed price, June 2015).

Prime Balwyn land attracted predominately Chinese buyers today.

62 Rochester Road – Under hammer, $1,881,000, 3 bidders. (Chinese Australian or Chinese National Bidders – 2)

A 1920s knock down just off Mont Albert Road and near a stack of schools.

DEEPDENE 

12 Angle Road – Under hammer, $3,410,000, 2 bidders. (Chinese Australian or Chinese National Bidders – 0)

(Last sold for $2,100,000, January 2012).

A contemporary home on 590 squares just near both Camberwell Grammar schools is on offer. 

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BALWYN NORTH

11 Illawarra Road – Passed in, $1,900,000, 2 bidders. (Chinese Australian or Chinese National Bidders – 1)

Dark clouds were gathering overhead as auctioneer, David Smith greeted the gallery. 

20 Illawarra Road – After auction (undisc. high-$2 million), 1 bidder. (Chinese Australian or Chinese National Bidders – 1)

Auctioneer, Peter Batrouney greeted the gallery before him as the rain began falling in Balwyn North. 

76 Mountain View Road – Under hammer, $1,510,000, 3 bidders. (Chinese Australian or Chinese National Bidders – 2)

We are on the high side of Mountain View, a road running North/South off Doncaster Road. 

22 Inverness Way – After Auction, $1,750,000, 1 bidder. (Chinese Australian or Chinese National Bidders – 0)

There’s a good crowd at this auction in part of the Riverside estate – the “ants pants” of the area with its heritage overlay preventing that dreaded word – “over-”.

3 Lynton Court – Passed in, $1,450,000, 0 bidders. (Chinese Australian or Chinese National Bidders – 0)

(Last sold for $850,000, August 2012).

This auction has a very small crowd of about 20 people in attendance.

18 Pavo Street – Passed in, $2,760,000, 3 bidders. (Chinese Australian or Chinese National Bidders – 1)

(Last sold as land for $955,000, March 2014)

The rain has backed off which draws out a reasonable crowd for a look at the interior and unfolding auction.

All our JAMES Auction reports are at – click here

2 Osburn Avenue Balwyn North passed in $2,510,000 - 2 bidders

2 Osburn Avenue, Balwyn North passed in $2,510,000 – 2 bidders

4 Thea AvenueAfter auction, undisclosed above $1.4 million, 1 bidder. (Chinese Australian or Chinese National Bidders – 0)

(Last sold for $732,000, November 2007).

A grey, dreary sky matched the row of grey cars out the front of this newly renovated ‘almost grey’ exterior. 

7 Almond Street – Passed in, $2,135,000, 2 bidders. (Chinese Australian or Chinese National Bidders – 1)

(Last sold undisclosed above $1.3 million, June 2010).

Elevated 1930s home with a 20-plus metre frontage not too far from the Greythorn shops.

2 Osburn Avenue – Passed in, $2,510,000, 2 bidders. (Chinese Australian or Chinese National Bidders – 2)

(Last sold for $2,120,000, August 2014).

One of the larger-sized crowds seen today, this parcel of land in Balwyn North was ready for development. 

2/5 Tower Road – Under hammer, $1,330,000, 4 bidders. (Chinese Australian or Chinese National Bidders – 2)

(Last sold undisclosed above $700,000, October 2008).

An enthusiastic crowd of about 70 holding the four bidders gathered at the double-storey Tudor-style townhouse within the highly sought after Balwyn High Zone.

12 Agnes Avenue – Passed in, $2,100,000, 1 bidder. (Chinese Australian or Chinese National Bidders – 0)

(Last sold for $2,050,000, December 2014).

Sun dappling through the trees, the crowd of about 70 milling around the coffee truck taking punts on what price this original ’60s cream brick veneer atop 1012 m2 would fetch. 

3-5 Loma Linda Grove – Passed in, $1,600,000, 0 bidders. (Chinese Australian or Chinese National Bidders – 0)

A small crowd gathered around the coffee van for one of the last auctions of the day.

All our JAMES Auction reports are at – click here

James Statistical and Assumption Errors: Please note we can only estimate Chinese money – we accept and understand criticism that there are some inaccuracies with our assessment of nationality – and those same inaccuracies were there on our previous assessments. Yes we get the joke, we are consistently inaccurate. Hang in there and look at the big picture, hey! The Chinese money affect on our market has been huge, continues to be, although we are now seeing the first signs of some abating.

As well, just for the record, we accept and support the right of Chinese people to legally buy homes under Australian law, and in fact, we work for a number of Chinese Nationals and Australians of Chinese heritage and we do so happily – we don’t keep records, but we estimate around 15% of our buying business comes from this demographic. These articles are not about Chinese people as individuals, but Chinese money as a whole and its affect on our other clients and older and younger local homebuyers. It’s still the biggest phenomenon in Inner Melbourne $M+ property and has been so since 2008.

Mark Fletcher sells 62 Rochester Road Balwyn under the hammer for $1,881,000 - 3 bidders

Mark Fletcher sells 62 Rochester Road, Balwyn under the hammer for $1,881,000 – 3 bidders

Questions

As well as our auction reporting, we spoke to 4 key selling agents in the Balwyn area and a further 6 out of the immediate Balwyn area to give you real opinions from experts on the ground.

All expert agents were asked the same five questions.

Question One: Do you think your market has moved since May?

Question Two: If yes, which way and why?

Question Three: Do you think the International Chinese demand for homes and land in your market has changed since May?

Question Four: Why, if you feel there has been a change?

Question Five: Any correlation in your mind?

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Agents_Local Experts-21-11-15

Tim Heavyside – Fletchers, Balwyn

We are experiencing dramatic changes to the market and sale prices in Balwyn and Balwyn North at the moment.  Many properties are being passed-in (irrespective of the agent/size and or quality of home being offered).

Clearance rates are down and the market has corrected 8% lower than highs of May 2015.

Balwyn/North Balwyn has experienced growth, (like most suburbs) in 2013/21014, but at the start of 2015 we experienced growth in these 2 suburbs, the likes I have not seen before.  This crazy growth outperformed neighbouring suburbs – such as Kew, Camberwell and Surrey Hills.

This high growth is one of the many factors why the market has now corrected/changed/slowed in Balwyn and Balwyn North – in other words, the rise in prices went up too quickly. Also, there has been a number of changes with foreign buyers and regulations – these changes have directly affected the demand for the Chinese market in Balwyn and Balwyn North. The Balwyn High School zone is a popular choice for Chinese buyers – it’s a great school. But we not experiencing the sting around this zone anymore – which was evident only months earlier.

I was talking to a colleague yesterday about Balwyn North and he said ‘it’s like the taps have been turned off – where have the buyers gone”?

Tim Picken – , Balwyn

1. Yes

2. It has softened in my view 5-10% due to much more supply and not as much urgency in the buyers.

3. Certainly the last 4-6 weeks has seen a drop in Chinese demand.

4. Supply, Government rule changes and over heated market.

5. With the international buyer demand coming off a touch, it means the local market becomes a more stable normal healthy market, which is probably better for everyone long term. There has been unprecedented growth this year, so it’s not unexpected to get a correction to some degree.

James Tostevin – Marshall White, Balwyn

1. The market and property values increased between May and September – since then the market has levelled to a degree.

2. The momentum in the market was unprecedented for the majority of 2015, the market hasn’t been as strong recently because of the amount of choice prospective buyers have – and also as a result of vendor expectations increasing to unrealistic levels in some instances.

3. The Asian influence has mirrored what’s happened in the market. They are being more selective.

4. It’s harder to get money out of China and the Australian Government is achieving what they wanted, to slow down the amount of Asian in Australia.

5. So definitely a correlation without a doubt!!

James Scoones – Jellis Craig, Balwyn

Our market in Balwyn has remained stable since May, but Balwyn North has dropped between 5 and 10%; due to less Asian/Chinese buyers participating at auctions. Speaking with the Asian buyers over the past few weeks they have been concerned about the market and have decided to sit out of the market until it has stabilised. The Chinese buyers say they like to buy on a stable or rising market. The next three weeks might see them come back into the Balwyn North market. We will wait and see.

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Agents Experts x 6- 21-11-15

 Michael Hingston – Jellis Craig, Camberwell

1. Yes, the market has been trending up rapidly since May until more recent times where it seems to have stabilised.

2. Demand has been very strong with a lot of good buyers having been priced out of more expensive neighbouring suburbs that have been pushing across or out – while the supply has been relatively low in comparison to that demand.

3/4.  Demand is still strong but there are now complications with getting the funds out of China. As a result while that profile of buyer is still there and very keen to purchase here, their hands are tied to some extent.

– Marshall White, Toorak

1. We have noticed the market has changed somewhat since May, still strong but it has eased.

2. Generally speaking, we have returned to a more balanced market with buyers being a little cautious and calculated about their buying decisions.

3. In Toorak and surrounds the demand from International buyers has not changed and still remains constant but they are far more educated about local values than perhaps some sellers believe.

4. The exceptionally strong market we were experiencing in the first half of the year was just temporary and unsustainable on a long term perspective; the market has now returned to normal.

David Hart – Buxton, Brighton

1. I believe our market continued strong growth until probably September, probably peaking prior to the normal spring volume.

2. Values grew in the period before September and at best have stabilised, but probably eased during the spring selling season. Increased volume always has a knock on price effect.

3. We are still seeing very strong demand from the Chinese market, although they are probably becoming more selective.

4. Interestingly, we are seeing evidence of a few properties bought by Chinese coming back on the market quickly. I’m not sure whether perhaps the bank’s lending policies are impacting, or possible changes to government regulations are creating more caution.

5. Any correlation? The next 12 months will tell!

Justin Long – Marshall White, Toorak

1. Market has been steadier although there is still some growth in many sectors.

2. Prices still strong (and maybe strengthening still) but vendors have lifted their reserve prices in response to the massive price growth in the first six months of the year, so there are less 10-20% over reserve results now.

3. Not a lot of change – Chinese interest still very strong, although in Stonnington their interest remains predominantly focused on Toorak.

4/5. Market is still very strong and in many areas very Chinese driven. I don’t think much will change over the next 12 months; even with Chinese government tightening their internal regulations on foreign exchange transactions the desire to in Melbourne is so strong, buyers will find a way.

Steve Tickell – Hocking Stuart, Sandringham

1. Yes, significantly.

2. At least 10 to 15% since May, and possibly 20 to 25% in the last 12 months. Even more in certain sectors. Underlying demand has outstripped supply.

3. The demand from the Chinese sector has remained steady, if anything slightly stronger in the area of development/investment.

4. There is a clear demand from Asian investors to shift money from offshore into Australia.

5. The direct correlation is evident in the sale of development sites where Asian interest remains strong.

Mike Gibson – Kay and Burton, Toorak

Slight slowdown in off shore buyers and the market is balanced and neutral as opposed to being just a seller’s market!

Low rates, low dollar and the most liveable city in the world still keep the market moving.

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James Buyer Advocates Key Summary

  • Melbourne’s “Forward Scout” – Balwyn is not operating at the level it was several months ago. This could well be a pointer to the future of the property market next year, as Balwyn in our opinion, best influences or reflects International Demand for Melbourne $M+ property. Balwyn and surrounds Clearance Rate today 50%.
  • Balwyn volcanoes (4 bidder auctions) are now rarer, replaced by a mixture of normal auctions and pass-ins. The auctions are just not at the same intensity as they were in May – this is more than seasonal – this is a change in International Demand. Chinese Australian or Chinese national bidding is still strong, but not at the dominating intensity of a few months ago. Only one Balwyn Volcano today.
  • The Balwyn market has dipped in price in this key Chinese community area. Balwyn Bidderman 1.8 and see expert agent comments.
  • More so than currency and banking changes, FIRB publicity and Chinese Government monetary tightening seem to be reducing the intensity of Chinese interest and consequently prices are easing. See expert agent comments.
  • Things may change back, as quickly as they have changed this time in. But things have changed!
  • We at James consider the International Demand change that has occurred, the most important change in the Inner Melbourne Market, since this market began rising in October 2012. If it continues, this change in International Demand will have a greater impact on the Inner Melbourne $M+ market than interest rates or Australian monetary/banking policies have had (in the last 3 years).
  • Our final salutary note for buyers – the Asian market is not as strong as it was – but it was uncontrollably strong Feb to June 2015 – now it is manageably strong for buyers. The theme in the last sentence – the Asian market is still strong and you still need strategies to deal with Chinese money when buying. Much of our Tuesday and Thursday James Buyer Advocates Negotiation Councils are still taken up with how to deal with Chinese investors and Chinese homebuyers for both locals and Chinese buyers whom we represent. We list below 6 Key Strategies, which are often a lot more important than an extra $25,000 bid, when we at James Buyer Advocates are buying for local or overseas clients.

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