Our bumper pre-winter issue – so much great info!


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Gerald Betts sells 4 Hawksburn Road, South Yarra Under the Hammer $2,920,000, 3 bidders

Gerald Betts sells 4 Hawksburn Road, South Yarra Under the Hammer $2,920,000, 3 bidders.

This week in James Market News: (click on contents)

1. Market Commentary

2. May 3-Week Auction Challenge – Results are in…

3. Bayside and Inner East Auction Action

4. 2017 James Half Year Summary

5. Land Prices – 2010 – 2017

6. Negotiation Corner – Narrowed Focus

7. Inside James – and Off Markets

8. Younger Homebuyers – What to Buy

9. Opinion – The Market is in a Crisis – See our latest Masterclass Article here

Market Commentary Banner

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At 6.00pm Saturday, the $M+ Family Home Clearance Rate was 69%, with a James Bidderman (bidders per auction) @ 2.1 on the 34 auctions we covered. Stock levels were solid.

Overall for the 3 Week 100 Auction Challenge, the Clearance Rate was 79% and Bidderman 2.2. That is only one completed transaction down on our February 100 challenge of last year. WOW, the market is still very much rocking on those numbers.

In terms of Clearance rates, today was not as hot as last week and yes some results surprised (down on our price expectations).

However the market is doing what it does almost every May, seasonally easing a tad and in May 2017 that easing is/was from a very, very strong pre Easter position.

James 2017 Summary

The Inner Melbourne market started like a house on fire and continues to smoulder – talk of its demise has been inaccurate – actually it has been dead wrong.

Going forward we are looking pretty well exactly the same as we did at this point last year. (Yes of course we drop at some point – but we cannot see the signs in the market now.)

Look at the 100 Auction Test – we are only one down at 79 bought and 0.3 down on Bidderman on a record February of last year AND the sample we took was from higher priced properties than last year AND in a bigger stock month AND after a raft of negative headlines – how much proof do you want of market vitality!

Commentators and “experts” who have been stating a crashing and dangerous market – implying you should not buy now – are borderline irresponsible when it comes to the Inner Melbourne Market. Young people and inexperienced buyers do listen to what some of these people say – but this is not like predicting the footy – these “experts and journalists” are making comment on a subject that really affects people’s lives – apologies to fellow Pies supporters, I know footy is more important.

Blanket Statements

How about we end the blanket statements and irresponsible headlines and start by putting out the facts.

How can we say the market is falling when Inner Melbourne house prices are rising.

However, we can’t say the market is rising across the board, when higher priced apartments continue to be one of the poorest investments, one could buy.

How can we say all the market is unaffordable when a home in outer Melbourne is not and when land prices are so different within Inner Melbourne.

The housing market is made up of many markets and the main one we talk about here in James Market News, is the $2m to $8m Inner Melbourne hosing market. That market is:

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May Challenge results

Three weeks ago – we decided to repeat our challenge of February 2016 to find out just how accurate the newspaper headlines were.

AND guess what  – the newspaper headlines were/are very inaccurate.

The Test

Bidders per auction, combined with good stock levels, combined with clearance rates on homes at auction.

We covered 100 randomly chosen auctions, mostly over $2 million in Inner East and Bayside on 13th, 20th and 27th May (today).

We did not cherry-pick good or bad results. We reported every one we covered.

The Disclaimers

A small seasonal drop in clearances and Bidderman was expected, as historically May and October are the year’s most fluid months due to big stock numbers.

With new underquoting laws in play, it was possible that the market operated marginally differently during this May transition month.

The Results – No opinion, no baloney headlines, just the facts.

Below is the cumulative total (100 random auctions in 3 auction weeks) with definitions we set out in James Market Insight three weeks ago.

We were one transacted property down on last year’s record February results – only one (80-79). WOW.

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Auction Action

9 Plantation East Brighton Passed In $2,700,000.

9 Plantation, East Brighton Passed In $2,700,000. The most pass-ins today, that we have seen this year.

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John Morrisby sells 8A Central Park Road, Malvern East Under the Hammer $3,870,000, 3 bidders

John Morrisby sells 8A Central Park Road, Malvern East Under the Hammer $3,870,000, 3 bidders.

Malvern East, 8a Central Park Road (John Morrisby) sold under the hammer $3,870,000, 3 Bidders

South Yarra, 4 Hawksburn Road (Gerald Betts) sold under the hammer $2,920,000, 3 Bidders

Middle Park, 286 Richardson Street (Damian O’Sullivan) sold under the hammer $2,620,000, 3 Bidders

For all 34 James Auction Reports

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289 Richardson St Middle Park 2

Damian O’Sullivan sells 289 Richardson Street, Middle Park Under the Hammer $2,620,000, 3 bidders.

South Melbourne, 47 Howe Crescent (Damian O’Sullivan) sold after auction $4,600,000, 3 Bidders

South Melbourne, 8 Ferrars Place (Greg Hocking) sold under the hammer $4,100,000, 3 Bidders

Hampton, 68 Littlewood Street (Robin Parker) sold under the hammer $2,905,000, 3 Bidders

For all 34 James Auction Reports

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25 Fermanagh Road, Camberwell (James Tostevin) sold After Auction $4,050,000, 1 bidder.

25 Fermanagh Road, Camberwell (James Tostevin) sold After Auction $4,050,000, 1 bidder.

Canterbury, 42 Parlington Street (Sam Wilkinson) sold after auction $4,750,000, 2 Bidders

Hawthorn, 39 Mason Street (Scott Patterson) sold after auction $4,250,000, 1 Bidder

Camberwell, 25 Fermanagh Road (James Tostevin) sold after auction $4,050,000, 1 Bidder

For all 34 James Auction Reports

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Half Year Summary

Off-Markets – Non-Auction Action

Off-Markets are a large part of our business – currently we are negotiating on a three homes in the $8m, $4m and $2m ranges – and we assess more off-markets almost every day.

We have stated previously that 82% of all homes over $4m, are NOT sold under the hammer  – where did we get this stat?

Its simple, we looked up the first 100 homes sold over $4m in 2016, on the government database and cross-checked against internet advertising – it took about two hours to do. It’s a real fact and anybody could have done it.

We bought an $8 million home mid week – outside the auction system and the same agents are now engaged and incentivised to sell the “trade-in” home off-market. This off market campaign might last for several months, before any spring auction campaign is started. We gave that recommendation and we care about our clients – going to auction first up, was not our recommendation.

Why? Results. If you are looking to buy or considering to sell and you are not considering the OFF-MARKET space, then you are potentially leaving a lot of your market behind. Of course the big internet companies and newspapers are not promoting it – there is no money in it for them.

Our work is increasing, not decreasing in the OFF-MARKET or NON-AUCTION arena and hey, we love the internet, look at our ratings programme.

However a significant proportion of the action is away from a Big Ad in the paper and a hammer on Saturday.

Stonnington

Since October of last year, the average price of a family home we have bought in Stonnington, has been $3,800,000 and that does not include the one-off Towers Road, Toorak purchase north of $20,000,000.

On top of having to stump up significant cash, family homes have not been easy to find or buy; especially if you do not have a home to sell in the area. In negotiation corner, we look into the issues that few consider when buying a home – yet these issues (in some cases), can drive the transaction as strongly as the money.

Bayside

In Brighton alone, in the last few weeks, we have bought for clients 4 homes, averaging over $5 million each. Any sign the market is easing by the Bay can only, in our opinion, be traced to C graders and/or overpricing or “bulltish media reports”. And we say this despite the higher number of pass-ins in Bayside today.

Overpricing is still there – one obvious example in central Brighton – great home, but the numbers don’t stack up and it remains unsold, even in this strong market. Notwithstanding some overpricing and with loads of self interest (I live here), Brighton is still cheap, when you look at things comparatively and historically (see our article on land prices below).

Boroondara

In the Inner East, our average purchase price across the board at James so far this year, has coincidentally also been $3,800,000. Half of our total Melbourne homes bought in 2017 have been in this geographical area.

It’s been interesting to note the methods of sale we have been involved in.

Just over a third have been bought under the hammer and just on a third have been auction homes, but bought before or after auction, ie outside the hammer. Just under a third have been off-market purchases (such as Lyall street – $4000 per sqm and The Ridge $5,000 per sqm in last month).

This market continues to be Melbourne’s strongest, due to the heavy Asian influence on many (but not all) homes.

Post winter, it is the market where you will need smarts to buy. Three things to consider;

1. Off markets are there, but where to look and whom to look with? How do you leverage your own existing assets?

2. Power Lifting (asking for a lot, lot more) post auction at the pass-in; could well become an increasing feature going forward. You really need to know how to deal with this phenomenon, in light of the new quoting laws. Yes, you can complain to Consumer Affairs, but how does the old cliche go – the horse has already bolted – meaning you have missed your home to somebody else or paid over the odds.

3. I had a discussion at lunch with an agent recently on why sell outside the auction system? I was polite in my disagreement about why people sell beforehand or off-market. It’s because sometimes they get a lot more than at auction. A few weeks ago, we gave the example (when talking about the new zoning laws), of a home that a client offered $5,400,000 on and was going to $5,500,000 to settle the deal before he rang us. We suggested an intervention strategy, which included allowing it to go to auction. It was the failed auction that facilitated the deal to be done $700,000 lower. Know your values if you’re going hard, early – but don’t always be scared of an auction!

David Hart and Stefan Whiting sell one of Brighton's best homes for a strong price, two weeks prior to the close of Expressions of Interest. The market showed some teeth at the Top End

David Hart and Stefan Whiting sell one of Brighton’s best homes for a strong price, two weeks prior to the close of Expressions of Interest. The market showed some teeth at the Top End.

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Land Prices

During 2017 we have highlighted how land values are changing dramatically depending on the zoning.

It is very easy to overpay or miss a bargain or a problem in the future, by not understanding the new zoning laws; in particular the changes to General Zoning – see James analysis article here

Another interesting change to note concerns geography – land does not go up across the board at the same rate – as evidenced by the massive changes to Toorak land prices from historical prices BUT also Toorak relative to other suburbs – see below.

So when they say Melbourne is overpriced, please ask them which part of Melbourne and then ask them what the Sydney and Mumbai land prices are.

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Negotiation Corner

Narrowed Focus

If we’ve learnt anything from buying over a thousand homes and missing a few hundred as well; it’s about the importance of narrowing your focus at times and widening your focus at other times.

Below are three concepts relating to narrowing and widening one’s focus.

Learning Fees
An article we wrote in 2010 and still ringing true today in 2017.  Go to article. Many people focus on a fee or a cost and lose sight of the big picture.

Learning Fees

Pincer v Pinpoint v Contain

My all time favourite movie is Zulu and one of the Zulu’s battle tactics was the pincer movement. It’s one we at James remember when in battle – trouble is we often have two or more “enemies”.  One must always have a focus on the enemy – but the enemy changes type and the enemy can be multiple parties. If you are too far down one drain pipe, then you become surrounded and cease to be able to observe from which flank your final and true enemy is coming from.

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Interests v Positions v Dynamic

When we are in the briefing room discussing next steps with our buying clients, the most “shocking” or “foreign” concept is – a negotiation is not just about positions (eg seller price and other buyer offer). A negotiation is also about interests and the dynamic. Information flow is vital and if the offers were the same, but the person in charge of the information flow – buyer or selling agent or financial planner or lawyer was getting a 4 to 1 payout at that same offer, but with different parties – who do you think consciously or subconsciously would be getting the best information flow. You or the “other” party.

If you were into a deal late and with little preparation, with parties you lacked trust in and a method that you felt you could overpay in – would that be a good dynamic to fight an enemy – would that be a dynamic for you to give it your best.

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Inside James

Karyn and Bruce celebrating with Mal at Cerberus Beach House - Melbourne's best kept secret - like the old Stokehouse used to be - on the water at Half Moon Bay, Black Rock. I know life is serious for many - but some days you just have to cheer - it  was a world record 9 hour lunch. Thanks Jamie for the great food and wine.

Karyn and Bruce celebrating with Mal at Cerberus Beach House – Melbourne’s best kept secret – like the old Stokehouse used to be – on the water at Half Moon Bay, Black Rock. I know life is serious for many – but some days you just have to cheer – it was a world record 9-hour lunch. Thanks Jamie for the great food and wine.

What is it with lunches this week - a 3 hour one on Friday with Iain Carmichael and his new friend Brie and Macca from Jellis Craig at the very impressive and apparently place to be Kisume in Flinders Lane - sensational Japanese food and wine. Oh and Mrs Carmichael, Iain's new friend Brie is the waiter and she was great fun! Chin Up - the world is still beautiful.

What is it with lunches this week – a 3-hour one on Friday with our waitress Brie and Iain Carmichael and Macca (Andrew MacMillan), directors from Jellis Craig at the very impressive and apparently place to be, Kisume in Flinders Lane – sensational Japanese food and wine. Thanks for lunch gentlemen.

A satisfied client sent us this note in the last week – we very recently bought for them Off-market – it is unedited for this news story.

Dear Mal and Gina,

I wanted to reach out to you earlier, but it’s been a busy week with travel to Malaysia and India. Even with an active schedule, I take huge comfort every day in knowing that our quest to start building a home in Melbourne has moved through a significant milestone last week.

On behalf of myself, K.. and our little family, I wanted to personally thank the both of you for everything you have done for us during the search to find our ideal property. You have been spot on with your guidance, your timely advice and your knowledge of the market. While these searches are never straightforward, you have made it as low stress and efficient as it could possibly be. As someone who does M&A and negotiations for a living, I have thoroughly enjoyed seeing the way you work as a deal practitioner. We know we were in great hands, had the best team, and got the best deal possible.

Thanks for everything. Hopefully we get a chance to have a celebratory drink with both of you when we are next in Melbourne.

Warm regards, M

Back After July School Holidays

It’s been a really clear and decisive start to the year 2017 and the market has spoken.

There is little else of substance we can say until James Market News returns early August, after the July winter break, so we will break till then.

Any important and breaking news will be to subscriber/clients only – so sign up and subscribe if you haven’t already.

At James Buyer Advocates we are still knee deep in dealings on June auctions, private sales and off markets AND our office will be open for the remainder of May and June and all through the July break.

Our office contact is 9804 3133 or our advocates mobiles.

Until next we chat it’s Mal, Gina, Simone, Rhi, Randall, Kathy and the rest of the James team saying thank you, be safe, buy well and “au revoir” for now.

RTTJ

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Young people – What to Buy NOW!! - Good PPP’s

* Good Land content (Property)

* Workable floor plan – in good condition, with wet areas in right place and some room to grow;  but can/should be cosmetically unappealing and really recommend good light (Property)

* Market price close to median for Market Type (Price)

* Near a train, Inner over Outer (Position)

* And you buy only what you really, really want AND can afford AND with a financial buffer for / job/circumstance changes. For youngies, yep one less trip OS (actually na, do the trip, life is short) or avo on toast or new car is worth it, for long term family stability and happiness.

RTTJ


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