What is THE ISSUE right now in 2017?

We can't show his face - but this man harangued and cajoled 7 bidders to $3,273,000 at 42 Guilford Road Surrey Hills. Actually it was a Tostevin - the good looking one!

We can’t show his face – but this man danced, kidded and smooched 7 bidders to $3,273,000 at 42 Guildford Road, Surrey Hills. Actually we will tell you – it was a Tostevin – no, the good looking one!

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It’s 6.00pm Saturday and the James Clearance rate for $M+ Inner Melbourne was 78% on the 23 Auctions we covered this weekend.

Bidderman was back hovering where it has been for several years now – at 2.7 bidders per auction and on big auction numbers – meaning whilst 151 bidders bought, there were still another 313 bidders who didn’t and when you add those unsatisfied bidders/buyers to the 420 wounded underbidders of the last two reported weekends, then there are 733 bidders in Inner Melbourne and Bayside, who have not bought and who, ceteris paribus, will be competing next weekend – give or take a few drop-offs, repeats and any gaps in our stats/assumptions.

If the two key rock solid stats (Bidderman and Clearance) maintain their strength, evidencing the depth of demand; then prices must continue to have an upwards leaning.

However we feel and it is only a feeling, from what we see around the traps, that the Inner Melbourne Top End market is currently flattening a little (ever so slightly), meaning it has altered its angle of trajectory, meaning it has dropped the turbo boosters it had a month ago – this is also fairly normal going into May.

With the Easter Bunny nearly upon us, signalling the completion of the first two of seven 2017 markets (Start, Pre Easter, May, Winter, Early, Middle and Late Spring) – we decided that instead of waxing lyrical about all “shades of strong” in describing both the on and off Inner Melbourne Top End market – that we should attempt to outline what we feel is THE ISSUE besetting many bystanders (non-buyers) still circling the Inner Melbourne Home Market of early 2017?

THE ISSUE

Big Picture

1) Human beings need love, air, water, food, environment and shelter to sustain themselves.

2) History has shown through the centuries, that control over one’s individual by the masses, generally leads to better and more just societies – Europe as opposed to Africa – and better outcomes for those who are actually in control of their , such as landholders as opposed to slaves, serfs or renters.

3) And we also know – no matter how factual and logical the above two statements are – that many will disagree because that is what human beings do – we all perceive differently.

Little Picture

1) Despite the 2017 market starting higher than the late 2016 market, we at James Buyer Advocates have improved our strike rate of homes bought versus homes we pursued for clients. It is now at a high of 83%. That’s right, of all the 2017 homes we have tried to buy, we have bought 83% of them.

2) We raise this point to impress potential clients and justify our existence.

3) We also raise it because it’s a truth (that we can prove) and one that may help you in your homebuying pursuits – if you read on.

As the world is wading through discussions on climate change, bringing peace to the Middle East and debating ad nauseam Melbourne Home Prices, our clients have gone out and bought on and off markets at an 83% strike rate in 2017. There are between 3 and 7 bidders on almost every home we go after – it’s not luck or poor choices.

In fact we have bought homes at a better rate this year than at anytime in 2016 or 2015.

We have done this when prices are 10 to 20% above prices two years ago – so 10% to 20% more unaffordable by some people’s definition!

And in the next decade they may well become 50 to 100% more unaffordable? ……….. It’s interesting how as things become more unaffordable – more buyers actually afford it………Please young homebuyers are exempted from our semantics here and we genuinely sympathise with their predicament. They are in an UNFAIR position and they need help through Deposit assistance like Super…….…but I digress.

Back to how we at James, are finding the 2017 market pre Easter and what we feel THE ISSUE is.

Mark Earle and Romana Altman in full flight at 2 Coral Beaumaris - 3 bidders and under the hammer at $2,492,000. These two are a tough team to crack - ethical, professional and annoyingly good at their job. Hat off to both of them over the years.

Mark Earle and Romana Altman in full flight at 2 Coral, Beaumaris – 3 bidders and under the hammer at $2,492,000. These two are a tough team to crack – ethical, professional and annoyingly good at their job. Hats off to both of them for their work over the years.

There are now scores of people, who at the start of 2017 were concerned by overseas bidders, unaffordability, lack of stock and where to live – who are no longer concerned………..……as they now own that “unaffordable” home.

In fact, some are secretly hoping that immigration controls are slackened, more overseas is forthcoming and negative gearing continues to get the thumbs up in this budget – because those things will continue to push their Melbourne home higher.

What is THE ISSUE in Inner Melbourne 2017?

Buyers and Non-buyers or as we call them Bystanders and wounded underbidders, listen to all sorts of statements in relation to the markets and generally read, see and hear the same things.

What separates the buyers from the wounded underbidders from the bystanders, is how they process that information.

Currently many Bystanders (non-buyers) are being frozen out of the market by the discussion topics and associated rhetoric surrounding the Inner Melbourne Family Home market – or if they are not frozen, they are zigging when they should zag – squibbing when bravery was the order of the day – they are being distracted from their main game.

Here is an example statement of what we think encapsulates the general mood of the rhetoric, we are all currently witnessing on a daily basis;

There is a chance the market could drop by 10% even 15%. It could be next week, next month, next year, next decade. We don’t know when and how much and we didn’t say it will. We have a lot a graphs, a hell of a lot of graphs, that say we are overpriced, overheated and over the top.

If you have three growing children and you are looking for a family home – how do you react to the above statement?

Do you decide to go live in a tent, sell your children, move to India?

Sorry I’m waffling – but I am getting to the point on THE ISSUE pre-Easter in 2017

THE ISSUE in the Inner Melbourne Market right now is;

Stock – No.

Bidders – No.

Underquoting – No.

You – Yes

Yes, You and NOISE.

Noise in the market – we would say, unbalancing noise.

Unbalancing noise because it “makes” those who are not clear on their journey alter course, lose their way, take a different path AND many are doing this when we cannot see the evidence to suggest the market is doing anything other than what it should be doing, based on demand and supply fundamentals.

Noise distracts the many who are not clear on what it is they really, really want – what it is they are really trying to achieve. And in this market, if you are not 100% on your game then, frankly you are not in the market – you are a bystander.

So if you are looking for a long term family home – near private schools, transport, CBD and in a nice area AND you have a good job, a few brains, a supportive spouse and a sizeable chunk of money, then what does it really matter what people are saying about the Inner Melbourne market right now.

Are you worried about the market falling 20% – which it has done twice since 1985?

Why?

Are you planning to buy now and sell in two years? If yes, I would be worried.

If no and it’s still 10 to 15 years before all your clan has completed school, then why are you worried – what is stopping you?

Buy well and then hold through the tough times (like a farmer in a drought).

OK, are you worried about not meeting your mortgage payments or the banks foreclosing or you losing your job?

Why?

How many foreclosures on your friends were there in the GFC, did you get through that, did you lose your job?

If you did, how did you survive to get to the point you are now at, where you are considering buying an Inner Melbourne home next weekend?

Ok Mr Negative Noise listener, Ok, so don’t buy a home or worse still buy a crappy home – you know the one on poor land, with a “shitty” floor plan and no light and on the fringe of where you want to be. Do that because you are nervous about money and it’s $500,000 cheaper and you think that will give you a happier life – because right now………………..

Lots of noise (especially negative stuff) creates a higher level of uncertainty – anxiety and it “forces” many to make bad long term decisions.

Inaction is also an action. Doing nothing is a bad long term decision for some as the migrants are still coming, as are the overseas investors and the tax regime looks firm – we can’t see how there is more land being made and if there is, then maybe it will be for the young people and ………….

Overstating the negatives has now taken over from agent underquoting as THE ISSUE in 2017.

However for our clients at James Buyer Advocates negative noise has been a positive.

We have been able to buy what we have bought in 2017, in part,

* because of our experience and improving buying strategies,

* but also in part because of increased market NOISE, has reduced the strength of our competition.

The current market will fall in the future and yes, some who have made poor decisions will be left behind (young homebuyers have not made poor decisions, they have not been given a fair go) and yes some buyers will get themselves into debt trouble.

BUT

Inner Melbourne’s good (not bad) positional, price and property fundamentals are sound and will continue to remain sound, while population demand and wealth continues to increase and land supply continues to decrease…… AND the fundamentals will remain sound while families need shelter, near schools and rail and want to live in Inner Melbourne.

Affordability, underquoting, overseas imbalances are market issues, however they are not the biggest issue of 2017 – not right now.

THE ISSUE of Easter 2017 is;

YOU and UNBALANCED SHORT TERM NOISE which leads to LONG TERM POOR DECISION making.

Nobody at James is saying pay any price and nobody is saying stretch and stretch and don’t worry about debt or buffers and nobody at James is saying the market will zoom forever.

Nobody at James is saying buy just any ‘ol property. You are an idiot if it’s not the one you really, really want.

What we at James are saying is buy good land at a fair price (with a buffer for interest rate and illness and employment changes), hold on for the ride through the ups and downs and try not to buy and sell that often (eg buy now for the next 10-20 years) and forget the SHORT TERM NOISE.

What we are saying is be long term happy, not a long term renter.

Yes you have some “now” pain (one less holiday) and some “now” stress (mortgage movements) ….. but in the long term, a well bought family home can strengthen a marriage, provide a security blanket for your family and give you a family stability (no forced movement like a refugee, when your unexpected notice to vacate arrives).

Think Greece v Somalia – which society would you prefer and by the way the Greeks have a higher home ownership than we do (we are number 38 according to Wikipedia).

What we are saying is buy with good land content, a home with a good floor plan – near infrastructure and most of all – buy well and buy now or next year or when you have found “the one” – don’t be put off buying a great home, just because the market says it may dip 20% for a few years – so what – it probably will!

At James it’s the POSITIVE and NEGATIVE NOISE we listen to and then process.

If you can understand and commit to this, then you will be a buyer and not a bystander and YOU will be dealing with THE ISSUE of the Inner Melbourne market right now – SHORT TERM NEGATIVE NOISE.

We wish all our 10,000+ readers the best over the coming Easter holidays – our office is open except for Easter week –  and if you have an off market for one of our buying clients ($2m and above) then please ring our office on 9804 3133.

We will be back at James Market News in early May 2017.

For young people we continue with our series below and congratulations to Emma Hanssens our latest $1,000 Young Homebuyer competition winner.

Note to Young People

We again encourage younger people, who have settled down a bit, to do anything you can (legally) to get a deposit, to buy good land content (70%+ of price) near rail with an OK floor plan, as close to the CBD as you can.

Don’t buy too far out (the government may not provide the infrastructure) and buy a home you really, really want for the next two decades; as long term renting for most people is absolute bulltish, especially if you plan to have children.

Please keep trying – get your parents/friends/financial people to help (if you can), avoid that second avo on toast and buy a home, not an apartment (if you can) and do it now – eg as soon as you find the right home AND then hold on for the rough ride – it will get better!

Governments please – you need to provide deposit assistance to young people as negative gearing, overseas migration and overseas investment has made the playing field very unlevel  – through no fault of younger people AND if we don’t have younger people in our societies, then we as older people will also be the losers.

To say we can’t help young people because the market is hot, is baloney. It’s like saying we can’t give overseas aid because it encourages corruption. The hungry are still starving – we need to help young people, even if it’s imperfect.

BidderBuzz banner

Malvern East, 4 Belson Street (John Morrisby) – Under the Hammer $2,895,000, 8 bidders

Surrey Hills, 42 Guildford Road (Hamish Tostevin) – Under the Hammer $3,273,000, 7 bidders

Hawthorn, 110 Riversdale Road (Antony Woodley) – Under the Hammer $4,600,000, 6 bidders

Read all James auction reports click here.

auctions

Inner East green banner

17 Immarna, Camberwell 2

Here is a man in need of publicity – 17 Immarna, Camberwell (Glen Coutinho) – Under the Hammer $2,396,000, 4 bidders.

Hawthorn, 110 Riversdale Road (Antony Woodley) – Under the Hammer $4,600,000, 6 bidders

Camberwell, 10 Derby Street (Richard Earle) – Under the Hammer $4,570,000, 3 bidders

Hawthorn, 74 Wattle Road (Walter Dodich) – Under the Hammer $4,550,000, 4 bidders

Read all James auction reports click here.

Bayside Blue Banner

23 Kinane Street, Brighton (Robin Parker) - Under the Hammer $5,530,000, 3 bidders

23 Kinane Street, Brighton (Robin Parker, the quiet achiever) – Under the Hammer $5,530,000, 3 bidders.

 Brighton, 23 Kinane Street (Robin Parker) – Under the Hammer $5,530,000, 3 bidders

Brighton, 6 Vaucluse Street (John Clarkson) – After Auction $2,300,000, 1 bidder

Port Melbourne, 263 The Boulevard (Michael Paproth) – After Auction undisclosed (bought range $2,103,920-$2,344,810), 2 bidders

Read all James auction reports click here.

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4 Belson Street Malvern east

Geez, only 8 bidders Johnny! Malvern East, 4 Belson Street (John Morrisby) – Under the Hammer $2,895,000, 8 bidders.

Toorak, 7 Lisbuoy Court (Anthony Grimwade) – Sold After Auction for over $6,000,000, 3 bidders

, 56 Tivoli Road – Passed In $3,500,000, 0 bidders

Malvern East, 4 Belson Street (John Morrisby) – Under the Hammer $2,895,000, 8 bidders

Read all James auction reports click here.

Towers

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Emma & Simone

Simone presents our second winner, Emma Hanssens with a $1,000 cheque.

 Emma’s winning essay:

After endless searching, research and reading my husband and I moved into our newly purchased family house in late 2016.  It was not a moment too soon – it was two weeks before our first son was born that we’d fulfilled the dream we had since meeting five years earlier. We made plenty of mistakes getting there, we did a significant amount of research, and we sought help.  This is our story.

My husband and I met interstate, just before he headed overseas to undertake an MBA. At this point in our lives we were your typical drifters – young, carefree and discovering the world and this provided an opportunity to travel together.

Post-MBA we both looked for a change, and opportunities came up in Melbourne – for me as a Senior Project Manager and my husband as an IT Manager.  When we arrived in Melbourne we immediately fell in love with the city and decided this is where we wanted to raise our family.

From the outset we knew we wanted to transition to landholders and buy our family home.  We knew we had to choose where to live, get our finances in order, and then prepare for auction day.  We found the first part took a long time and but was ultimately straight forward.  Getting our finance house in order was emotionally difficult but ultimately doable.  Finding the right house was all about having persistence, the right attitude and approach.

Getting our Financial House in Order – Our starting point

Early on we knew that to buy the house we wanted, we would need to borrow around $1m.  We had some confidence around this, knowing  friends and family with similar mortgages who made the same .

Buying a home usually involves overcoming one of a handful of key constraints including:

Building the deposit
Ensuring we had the earning capacity to cover the mortgage
Our careers, and particularly my husband’s investment in his MBA, meant that our earning capacity was not an issue.  Our greatest constraint was pulling together the deposit.

If I look back, intuitively we knew the type of house we wanted and how much it would cost. As singles, Noel and I had built a portfolio of three , as well as pulling a small nest-egg for our deposit which would benefit us in the process of looking for the family home .

Initially we hoped we could retain all three properties.  In fact, my husband was quite stubborn about this.  We spoke to a financial advisor to get a second opinion and made the hard decision to sell.  The wishful thinking or emotional component was we couldn’t bring ourselves to realise our investment properties were a means to an end, being the purchase of our family home.  The downside was that this delay ended up costing us 12 months.  Again, in retrospect we should have made hard decisions earlier and once we decided to get into the market, focused with laser like precision on doing that.

One of the surprisingly difficult things for us at this point was answering the question of ‘how much of a deposit do you need?’ (or the opposite side of the same coin – “What is my maximum bid limit?”).  When you are aggressively maximizing your bid amount, this is a critical question.  It’s not simply a matter of 20% of the purchase price (or less if you are willing to pay LMI) – you also need to factor in:

– Stamp duty
– Settlement fees
– Application fee
– Registration & Transfer
– Conveyancing/Solicitor

We saw a mortgage broker at this point and took in a couple of different scenarios to work out what our purchase price could be.  This gave us a good idea of what to aim for and gave us confidence in our bid-ceiling during the auction.

Deciding where to buy

Ultimately we sold off our investment properties and began searching in Melbourne.  Like a surprisingly large number of people such as investors or aspirationals such as ourselves, we were new to Melbourne and had to go through the task of working out where to buy.  We rented in South Yarra and knowing we’d only have enough money to buy a scooter-sized parking space if we chose to buy there, we began looking elsewhere .

One resource tip for people new to town, interstate or overseas investors I can happily recommend is the Age’s Liveability index.  This has a handy quiz that you can take that develops a recommendation for which suburb to live in.  We asked ourselves ‘what is important to us in a home?’.  We came up with the following list:

– 3 bedrooms and a good-sized yard
– an average house as we wanted to maximise the land we purchased (my husband has a genetic aversion to depreciating assets)
– close to parks
– close to Melbourne’s best schools
– close to the city and public transport to maximise time with the family

This landed us in a rough diamond with to Albert Park to Armadale to Elsternwick.  We spoke to friends and family around Melbourne to get a feel for each place and occasionally we would hop in the car and do a ‘day-in-the-life-of’ in a new suburb.

We found our sweetspot in 3 bedroom houses well positioned on 250-350sqm of land in bridesmaid (Windsor, Balaclava, East, etc), liveable with a potential to renovate.  A point on the good positioning of a house – we quickly realised small amounts of land were not a deal breaker – a house at the front of a block on 250sqm will often have a larger usable backyard than a house randomly plonked equidistant from each fence side on 400sqm that you cannot do anything with.

My husband believes that in life, with its ups and downs and lefts and rights, there’s only a few decisions you need to get really right.  You can overpay for an average pair of shoes or choose a less than exciting holiday destination because you didn’t do your research, but there are some things you simply can’t get wrong.  For both of us, there are 6 non-negotiables that we need to knock out of the ball park:

– Educate ourselves well
– Develop good careers and earning capacity
– Marry well
– Make a good decision buying our family home
– Educate our children well
– Have a solid retirement plan

We felt good we’d done the first three well, and the last two would come later, but for the immediate future we needed to find our family home.  We invested the time that reflected the importance of this decision. We researched previous sales in our target area on real estate websites, noting designs and features we liked and identifying what we could afford. Noel used his  skills to setup a database and spreadsheet for us to analyse. We reached out to buyers agents like James to find out more about their services.

We found James to be the best website to familiarise ourselves with real estate concepts (his essays around the 3 Ps are invaluable) and what to expect on auction day.  There’s a strong community building in James’ work, which includes generously sharing information (and running competitions such as this) – their website rounded our knowledge and allowed us to focus in more on maximising value.

There was also an emotional component to choosing a family home.  A handful of properties we walked into that had an immediate effect on us, places that felt like home as soon as we stepped through the front door – a house that felt emotionally right was worth twice as much to us as the house that looked good on paper. Our goal was to find a home that met both needs.

Preparing for auction day

After much research we finally found our dream home and began preparing for auction day and choosing our auction strategy. We did our housekeeping, contacting the agent for the S32, contacting the council and had a building inspection completed.

We woke up bright and early that particular Saturday morning, we packed our Labrador in the car (we wanted to make it look like we would move in the second the hammer fell), and my husband mentally stepped through the aggressive auction strategy he had determined would be the best for us (quick counter bids, no requests for smaller increments, bidding aggressively up to our limit- the true go hard or go home approach).

We arrived at the auction, went through the motions and were summarily blown out of the water by a chap who practised his imaginary golf swing while matching bids.  The auction we had chosen as our first was well above our price range, and we went home with our tail between our legs.

This process repeated itself over and over again.

Eventually we did find our family home in the city of Glen Eira.  We ticked all of our boxes and came within our modified budget.

Our situation and a few metrics (my husband works in Business Intelligence and loves his numbers).

33 and 36 years old
What we bought: a perfectly positioned house on 250sqm in one of St Kilda East’s leafy streets that ticked all the boxes.
Time from go to whoa: 14 months
# of auctions attended: 24
# of S32s requested: 15
# of council calls, agent inquiries and followups: countless
# of auctions bid at: 11
Original budget at the start of the process: $800,000
Final bid price: $1,100,000

What were we happy we did:
– Starting to save and build up investments in our 20s
the time into researching the market that reflected its importance to us (ie. Lots)
– Talking to agents
– Being persistent and realising that every knock back or underbid is an opportunity to learn

What would we have done differently:
– Had a laser focus on getting into the market
– Asked for help and spoken to people who knew more about the housing market than we did
– Got in earlier

Emma Hanssens

cash house

We still have 3 x $1,000 cheques to give away! 

How to enter:

  • Write an essay on “A solution to buying a home under $1,000,000”. It must be a solution that a younger individual or family can implement – not a government solution.
    OR write a letter about your experience. It could be what worked, what didn’t work or what you would do differently.
  • It should be between 300 – 1500 words.
  • Like the James Buyer Advocates Facebook and Instagram.
  • Submit your entry via email to mal@james.net.au, with the subject line as “The James Money Bin Competition”.

For more details, terms and conditions click here 


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