Is the Inner Melbourne Market moving?

The market was split today - which is the first symptom of a possible change. Two similar offerings, both land. Above 27 Sir Garnet Surrey Hills (Tim Heavyside) sold under the hammer with 3 bidders for $1,766,000 in front of a good sized crowd of 75.  Whilst below, also land only at 6 Harwood Brighton had no interest and passed in on a vendor bid of $3,100,000 in front of a crowd half that size.

The market was split today – which is the first symptom of a possible change. Two similar offerings, both land, are a good example of this. Above 27 Sir Garnet, Surrey Hills (Tim Heavyside) sold under the hammer with 3 bidders for $1,766,000 in front of a good sized crowd of 75. Whilst below, also land only at 6 Harwood, Brighton had no interest and passed in on a vendor bid of $3,100,000 in front of a crowd half that size.

41031-6HarwoodStreetBRIGHTON-6

Bidderman19.08.17

Wordonthestreet

At 6.00pm Saturday, the overall $2M+ market results:

Family Home Clearance Rate of 77% on the 30 Inner Melbourne $M+ auctions we covered

Combined with James Bidderman (bidders per auction) @ 2.2 on lowish auction stock numbers.

Overall not a stellar start to spring; of course far from a shocker either on the above stats – the stock wasn’t that exciting – and there wasn’t that much of it.

Bayside was almost a bidder free zone and looking at what’s on offer, we can see why.

A split or dual market (A-graders v C-graders) was in vogue today:

* One in three auctions were “duds” as they were ducks or lone rangers

* Whilst on the other side of the ledger, one in three were “winners” with volcanic bidding (4+ bidders)

gamechanger

Marketscrutiny

Is the market on a turn? For the first time in a long while, we think it may be – not ‘it is’ – just it ‘may be’.

It’s a little too early to confirm (either way) due to the current congruence of unusual market characteristics:

1) Lower stock (supply) keeping the market higher

2) Lower quality stock doesn’t bring the bidding out, therefore lowering the market

AND in recent times,

3) There has been a noticeable drop off of International Asian buyers (demand) winning at auction, bringing the market down

4) But strong local demand has until now (?) been taking the market up

Overseas Demand

The key market force for Inner Melbourne has been rapidly increasing population (not interest rates, not jobs, not tax stuff – its population, then combined with jobs, interest rates, tax etc) – and population still appears to be rising.

This key market force has had at it’s helm one key driver since 2009 – Wealthy Immigration in the form of Overseas Asian Bidding (mainly China).

We may be now beginning to see a longer term dampening of demand from that group, still only anecdotal in our evidence eg; fewer interpreters at auctions and seemingly fewer Overseas Chinese buyers winning.

We state only anecdotal, because the governments stat (6 months lag) are still not showing any significant longer term drop off from buyers with Chinese or Chinese sounding names (granted not the most professional/accurate measurement criteria).

Samples we took:

Balwyn $2m, last 100 sales – 2015 (90%) and 2017 (79%);

Toorak $3m, last 100 sales constant at a third or 33% 2015 – 2017 and

Kew $3m, last 100 sales constant at 40% 2015 -2017

Let’s look at some what-ifs?

If any perceived demand drop is not taken up by local buyers or overseas buyers of other nationalities, then that means less demand overall in our market…. And…… this type of demand (wealthy immigration) has been the greatest directional driver (upwards) of the Inner Melbourne property market in my lifetime.

So, this is what our 100 Auction test is designed to indicate to us – with 30 random $2m+ auctions today and hopefully another 70 over the next two weekends.

If there is a sustained lessening of OS demand, which is not taken up by the locals, then we would begin to see an effect on top-end pricing and that would eventually ripple through to lower markets; however this may not be immediately noticeable, due to two key characteristics of the Inner Melbourne Top End market:

1) The ability of owners (supply) to hold without fire sales, due to this latest sustained wealth building period (2012-2017).

2) The 2015/2016 depth of unsatisfied local demand was very, very deep and therefore lessening demand may well take some time to “appear” at Saturday auctions. There are still a number of unsatisfied local bidders.

What do we know?

The Early Spring $2m Auction market has started like Usain (only Usain at the last World championships, not Usain at the Olympics).

In other words not the greatest (but still pretty strong), when compared to pre-winter 2017 and this time last year – 2016.

If this continues (eg the market pulls a hammy, like the great man) how may this affect you, the buyer?

Short term

1) You will see a real dichotomy in bidding, as the goodies (A-graders) are still volcanic in the bidding and the not so goodies (B/C-graders) are lone rangers or ducks. The potential to overpay increases dramatically; if you misread what is happening on your target property (we could be talking hundreds of thousands). Today was a good example of this.

2) If the market does weaken, you will see more pass-ins and that will require different negotiation strategies, if you wish to maximise your position (we could be talking hundreds of thousands), whilst still securing the property. Today and last week were good examples of this.

3) It’s not all chocolates for buyers in terms of choice, as you will likely see less quality stock coming into the market, as quality, discretionary sellers choose to adopt a “wait and see” strategy. Maybe that is exactly what we are seeing now in the stock levels.

In the longer term

The only strategy that consistently works is buy good PPP (Position, Property and of course Price) characteristics for a longer term hold; with the rider be emotional and love what you buy, so as you happily ride out the inevitable bumps along the way.

Final word for today

A pretty unexciting start for the market, but there are excuses on stock quality – however on the stats it was still very solid, even if it did feel mixed in its undercurrent.

Early days, but we agree the change symptoms may be there for the first time in a long time. The Top End market feels like it could be leading to some form of pause in Early Spring 2017 – but to be frank all that may be, is us looking for a different, less repetitive headline.

Let’s see how the 3 week 100 Auction Test washes up in terms of bidders and clearance rates, before we pass judgment and start making any bigger calls of a change.

So is the market changing? We honestly don’t know yet.

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Bayside Blue Banner

Been a big week for Marty Fox selling Lleyton Hewitt's home and getting away a monster on the beach. Meantime 39 Emerald South Melbourne failed to attract a bid and was passed in for $1,900,000

Been a big week for Marty Fox selling Lleyton Hewitt’s home and getting away a monster on the beach. Meantime 39 Emerald, South Melbourne failed to attract a bid and was passed in for $1,900,000.

Middle Park, 70 Herbert Street (Damian O’Sullivan) Under Hammer $3,500,000, 2 Bidders

St Kilda East, 31 Lansdowne Road (John Manton) Under Hammer $2,700,000, 3 Bidders

Albert Park, 123 Richardson Street (Oliver Bruce) Under Hammer $2,550,000, 3 Bidders

For all 30 James Auction Reports

Stonnington Purple banner

Toorak, 200 Walsh Street (Gowan Stubbings) Under Hammer $4,770,000, 3 Bidders

Malvern East, 3 Rothesay Avenue (John Bongiorno) Under Hammer $2,990,000, 3 Bidders

Malvern East, 46 Karma Avenue (Daniel Wheeler) Under Hammer $2,030,000, 3 Bidders

For all 30 James Auction Reports

Inner East green banner

Not everybody took their hands out of their pocket at 53 Cecil Street Kew (Maurice DiMarzio) - however 4 bidders did and this volcano sold under the hammer for $2,536,000

Not everybody took their hands out of their pocket at 53 Cecil Street, Kew (Musketeer Maurice Di Marzio) – however 4 bidders did and this volcano sold under the hammer for $2,536,000.

Kew, 37 Wellington Street (Antony Woodley) Under Hammer $4,000,000, 4 Bidders

Hawthorn East, 43 Rathmines Road (James Tostevin) After Auction $3,021,000, 2 Bidders

Camberwell, 12 Mayfield Avenue (Anthony Grimwade) Under Hammer $2,680,000, 4 Bidders

For all 30 James Auction Reports

EOI

Click on picture below for a Initial James Home Rating typical for a current EOI – 23 Hill Street, Toorak (Mike Gibson)

Hiil

Off Market james colour banner

A lot of TOP END buyers are still unaware of just how much goes on behind the scenes – off markets, before and after auction, private sales and so on.

Below are two detailed Property Ratings of the twelve (12) off-market homes we assessed this last week.

We cover Boroondara, Stonnington, Bayside and Port Phillip and mainly $3m-plus family homes and investments.

The Hawthorn Off Market is big land in a good position – circa $7m – click below

Opening Comment: It’s the location and land size that got me there – AAA plus AAA. Access to all schools, along the spine and in an area where heritage controls are less than in other parts of Hawthorn.

The Brighton Off Market is also big land and a big home in a good position – asking $15m – click below

Opening Comment: A home in Brighton that historically is a once in a lifetime offering due to its location and size, but is also futuristically a conundrum due to its location and size.

Click on here to go to James Off Market Home Rating

Click on here to go to James Off Market Home Rating – Hawthorn

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Click on here to go to James Off Market Home Rating -  Brighton

Click on here to go to James Off Market Home Rating – Brighton

EarlySpring100Auction

Starting this week – we at James Buyer Advocates are covering and reporting back the results on 100 randomly chosen auctions, over $2 million in Inner East and Bayside on August 19th, 26th and September 2nd – to find out where the Top End Inner Melbourne market is really at, in Early Spring 2017.

The Market Measurements

Rising Market: Over 70% Clearance Rate (auctions bought versus auctions conducted) with over 2 Bidderman (bidders per auction), on auction numbers over 100 per weekend in Inner Melbourne.

Steady Market: Between 60 and 70% Clearance Rate, bidders below 2 per auction on auction numbers over 100 per weekend in Inner Melbourne – which we are happy to accept is an easing market, off solid highs of the last few years.

Falling Market: Below 60% Clearance Rate, bidders below 1.5 per auction, on auction numbers over 100 per weekend in Inner Melbourne.

Target of Interest

May 2017 was a bumper time for the market and Early Spring 2016 was even hotter, if that was possible – so a drop on the stats would not surprise and would not necessarily show a falling market – just show a market not rising as fast.

Stay tuned over the next three weeks for the results of the 100 Auction Inner Melbourne Market Test.

Mordialloc 1 George   Good solid auction with nice pathos from auctioneer, Byron Kerr in front of a crowd of 80 - which saw 3 bidders duke it out from 1.65m to 1.87m for this stylish period home.  As far as auctions go this was a good one - agents were with all bidders urging them on without being intrusive.  The auctioneer gave a professional opening spiel, called for bids well (including good bidding suggestions) and cajoled, delayed and kept pace when appropriate - with good quoting and a solid finish.

Mordialloc, 1 George. Excellent Lower Bayside auction with nice pathos from auctioneer, Byron Kerr, in front of a crowd of 80. 3 bidders duked it out from $1.65m to $1.87m for this stylish period home. Agents were with all bidders urging them on, without being intrusive. A professional and timely opening spiel, saw bids called for well (good suggestions and voice projection) and the auctioneer cajoled, delayed and kept an overall appropriate pace, with a solid finish.


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