Deeper Examination Into Our Markets

9 Rubens Grove Canterbury sold after auction undisclosed

James Tostevin sells 9 Rubens Grove, Canterbury after auction for $3,460,000 or $4,000 per sqm. This home now represents what many land buyers are facing AFTER they purchase. It has no Heritage at time of sale, but if you want to hold it for a few years and then rebuild, you may find the council has placed a Heritage Order on it – AFTER the sale.

9 Rubens

BiddermanStats

overall

SepStats

Wrong Call Right Call

Spring Summary: To say the market is as strong as six months ago, or this time last year, would be a wrong call.

As an across the board statement, it would be the wrong call, to state or assume the overall Inner Melbourne Family Home market is definitely on the way down, as there is still no statistical or anecdotal evidence of this – but it may be.

It would be the right call to say the market is fragmenting. The overall market is levelling, meaning it is not continuing to rise significantly across the board, and yes, some parts are falling – there is less bidder depth on lower auction stock numbers. There has been a significant increase in the number of Bought before Auction sales, which also supports a levelling market; as this is less likely to occur on homes with significant bidder depth.

SpringClearance

Diagrammatically this is how we have seen A and C graders go from last year, to last season, to now. A graders have continued to power on, while C graders have noticeably weakened in results and price.

Graders

MSES

If you are looking to buy now over $3 million, it is the wrong call to assume you will more than likely buy your home, by putting your hand up at auction.

More homes are sold outside the auction hammer system than under the hammer. The hammer rate over the last fortnight has been 1 in 3 – this means 2 out of 3 auction homes ARE NOT transacted on the street, under the hammer, with the full protection of the law.

If you were bidding in early spring on anything other than an A-grader, you had a four in ten chance you were all by yourself – our Ducks and Lones bidder graph, last week showed 40%. It would be the right call to have a back-up strategy for that. That is auction homes we are talking about – it is the right call to say off market, private sales and EOI’s equate to more transactions than auctions, at the high end.

It would be the wrong call to assume a selling agent’s guide will be of assistance to you at a volcano auction (4 plus bidders). Refer to our Insight report  – The Market Is Clearly Talking to You; 2nd September 2017 – which reviewed quoting vs results. It would be the wrong call to assume it will be a no-brainer to work out what you have to pay – with the new quoting laws.

It is the right call to realise that it’s far more likely you will need one on one negotiation skills, patience and expert, independent pricing when buying a home.

It would be the wrong call to assume a property which has passed-in, will not be sold by the end of the day – the Under the Hammer Rate last week was 37% vs the Clearance rate (including bought befores) was still 81% at 6.00pm Saturday.

However, it would also be the wrong call to think that if a home which has passed-in remains unsold by Monday, that it will still sell quickly. Currently more properties (nearly 60%) are still for sale 3 weeks after a 24 hour pass-in, than have sold. The 3 week STALE rate is 60%.

Stales

Wrong Call Right Call

Whilst the overall clearance rate is still very strong, it would be the wrong call to say all property types are receiving the same interest – see Ducks & Lones 40% vs Volcanoes 20% graph above and the property types schematic below.

While the market is fragmenting, it is the right call to say the market remains relatively consistent.

Below is our simplified (?) way of showing where we think various market segments are at.
For example, Heritage land cold vs Non-Heritage land hot – however, completed Heritage homes are just as hot as completed New homes.

Big Picture

It would be a right call to say property with unencumbered land or a property with a completed home (new or period) is getting volcanic interest, unless it is questionable on price or position or has major negative property specific issues (PPP’s).

It would be the right call to say, property without land (Apartments) or property with land that is encumbered (eg Heritage, Body Corp) is struggling.

It would be the right call to say, that if you had to buy an apartment for growth, it better be a cheapie such as a 1960’s, rather than an off-the-plan and/or expensive one.

However, it would be the wrong call, absolute wrong call, to say low-end apartments have just as good growth prospects as low-end houses in the same Inner Melbourne area.

betterdecisions

Growth Outcome

It would be the right call (after due diligence) to spend $2 million on one house rather than spending $1 million x 2 apartments, if growth was your most important outcome. If you are going on recent and long term history, the no brainer is the $2 million home (assuming its PPP’s are OK). Please note: history is not a guarantee to the future, but to date it has proved a valuable guide.

It is the right call to say it’s lower risk to spend more and buy land, rather than spending less and buy an apartment/townhouse; if growth was your key outcome – all things being equal and after property specific due diligence.

It would be the wrong call to value the same land in the same street as the same; if one had Heritage and the other didn’t.

Cashflow and Risk Outcome

It’s the wrong call to buy for the short term because you don’t want to pay rent. Rent money to a landlord is not dead money – if you pay more ‘rent money’ to the bank (interest) and have no capital growth AND don’t forget stamps and buy/sell costs as opposed to a month’s bond (even if you lose it).

Negotiation – Emotional Outcome

It’s the wrong call to plan to buy a home between now and Christmas and not consider:

  • off markets,
  • how you manage an agent one on one (chances are you won’t avoid wheeling and dealing by buying under the hammer),
  • strategies about buying a WOW home that you really, really want (because you have nine competitors and three of them could be a lot better better placed than you, even if they have less money (house to sell, advocate representing them, you’re “owned” by another agent within the same company).

Footnotes: Yes we got the right call/wrong call idea off Caroline Wilson and Footy Classified – hope you like it for this week – a bit different – Good Call or Bad Call?

Some statistical anomalies as we only put one bidder against bought befores and there were a large number of bought befores and there are a larger number of sold afters with no bidders, compared to last year. Stonnington stats below are very strong on only 25 auctions – we covered well over 30 in Boroondara and to get to 100 Auctions over the last three weeks. So overall Bidderman at 1.9 is correct – but you could make a case for Bidderman at 2 and therefore only down 10% on May – but still well down on this time last year.

GameChanger

Land has now three pricings:

  • Land with no chance of Heritage
  • Land with the possibility of a council mind change
  • Land with Heritage

We bought on Camberwell Hill last year – nice period home, in need of a reno. The client was in two minds as to the future, but got a sniff there may be a Heritage Policy coming, so immediately bulldozed the home, just in case – period home bulldozed on fear, rather than merit? Is this how Heritage Policy distorts when run on a piece-meal basis?

Three Questions:

1. Who owns /controls the bricks and mortar or timber on your land? The council are saying they do! Should they?

2. Why does Heritage only involve dead or nearly dead architects – why does Heritage only mean Olde English, are we not multicultural? I live opposite a beautiful new development in , was involved in buying some exquisite new homes last year, last week visited 41 Were Street (less than a decade old). Why are these not being considered to be placed on Heritage. These are attractive and evocative – especially when lined up against the home in the “Stonnington Destroys Auction” article.

3. Most of us understand if we are buying into Gascoigne, into Tara, into Grace Park, into Normanby Street Brighton; that we are not going to be able to easily bulldoze homes and nor should we be allowed to (in my opinion). However, how can only one home, in a street of period homes be designated as Heritage? How does this happen? One person’s opinion is how this happens. Is that right – that one person has so much unsolicited and inconsistent power over a family?

And if you don’t agree with our singular opinion on Heritage, then you further support the thrust of our argument.

Is there a solution? Yes.

1. Government appointed experts that include younger people, women, general community members, indigenous and yes, landscape heritage architects and townplanners.

2. Clear and concise community Heritage policies, as to what the community wants their neighbourhood to look like. These include new, as well as old buildings and not just buildings – spaces and ……  now maybe that will encourage all new buildings to be bland – maybe – maybe the council could advise that to build in a certain area or to bulldoze a home of borderline merit, you need to put up a home that reaches a certain “community” merit.

3. Trained council officers match these policies to any home in question on a points system (like ID or your passport). Certain points mean no bulldoze without permit. If all buyers knew what, say, the five point system was, then they could make an assessment of risk prior to purchase.

  • Street: 0-20 points
  • Age: 0-20 points
  • Neighbours: 0-20 points
  • Facade: 0-20 points
  • ????: 0-20 points

What Mal James thinks is worth a bonus 50 points (that’s a joke). Anyway if you get 30 or 40 or 75 points, whatever the number, then bulldozing becomes problematic – but all buyers knew the risk.

4. Finally all buyers and sellers know that from Jan 2018 to Jan 2020 we are in a transition period as Heritage policies are developed, where there may be hiccups at buy and sell time – so best go to the council and get an OK to sell. Council has to respond within 5(?) days of an application to sell. If they do not respond or say No Heritage issues, then the sale can proceed and cannot be stopped without compensation. Please, another sale a month ago, pulled at the last minute AFTER Council said NO HERITAGE at start of sale, only to say a few days before auction, YES THERE MAYBE HERITAGE.

Human Beings:  The property that Stonnington Council destroyed at auction remains unsold and we want to continue to remind you of this trampling of an innocent family’s rights. Refer to our Market Insight article – Game Changer – Stonnington Council Destroys Auction; 26th August 2017.

BehinD

auctionvoff

Currently we are directly involved in 4 homes between $6 and $9 million that are off market. We have looked at another 3 this week in that price range.

More than half our current clients are in what are simply called BUY and SELL situations. They want to maximise their outcomes on both sides. In all bar one of those cases we have, or will be, recommending a period or off market buying and selling. We are leveraging in all cases.

Please note we are not anti auctions – we have bought 5 from 5 in the last 3 weeks (we love ‘em) – another sign of a levelling market. It’s just that at the Top End, the market has been moving to more off market than on.

Wrong Call Right Call

It would be a wrong call to ignore the off market arena in buying or selling.

It would be a right call to leverage your selling and buying in this market – especially if you are a local, competing against overseas buyers.

It would be a wrong call to not fully understand how the off-market arena works and how the agents within this operate, are rewarded and how there are positives and negatives to committing to one agent.

It would be a wrong call to have a selling agent represent you on the buying side –  do you really think the other agent in the other company, will be helping them/you with anything other than a record price, when they see no chance to sell a home – even if they are “free”?

It would be a wrong call to get your off-market home sold by your buyer agent – they/we simply do not have the buyer reach, the good selling agents have.

It would be the right call to say, we may see an increase in off-markets as the new Public Quoting laws bite at auctions.

It would be the right call to say sellers are considering Off-market campaigns to minimise the Public Neighbour Heritage Gauntlet. It would be the right call for buyers not to trust Section 32 Council paperwork and to have a system of making discreet enquiries to assess the real risk.

Round

InnerEast

Solid Stats for Boroondara

Boroondara

Andrew Gibbons 14 Elgin Street Hawthorn 2 Bidders $4,005,000

Andrew Gibbons 14 Elgin Street, Hawthorn 2 Bidders $4,005,000. Not bad for a home with no car-park. Was for sale at $3,500,000 off market a little while ago.

Hawthorn, 14 Elgin Street (Andrew Gibbons) Under Hammer $4,005,000 2 Bidders

Canterbury, 17 McGregor Street (Steven Abbott) After Auction $3,130,000 1 Bidder

Canterbury, 9 Rubens Grove (James Tostevin) After Auction, $3,460,000 2 Bidders

Stonnington

These two Stonnington stats below are surprising for this time of the year. Stonnington leads the way! Unusual.

Stonnington

27 Closeburn Avenue Gowan Stubbings $3,520,000 3 Bidders

27 Closeburn Avenue, Prahran Gowan Stubbings $3,520,000 3 Bidders.

Prahran, 27 Closeburn Avenue (Gowan Stubbings) Under Hammer $3,520,000 3 Bidders

Malvern East, 22 Kerferd Street (John Morrisby) Before Auction

South Yarra, 57 Tivoli Road Passed In $3,305,000 2 Bidders

Bayside

Bayside is lagging a little, stats wise, has been for a decade. Nonetheless still solid.

Bayside

John Clarkson 18 Lynch Street Brighton Sold After undisclosed

John Clarkson 18 Lynch Street. Brighton. Sold After $2,750,000 and some – no bidders during auction.

Brighton, 18 Lynch Street (John Clarkson) After Auction, price undisclosed 0 Bidders

Hampton, 22 Avelin Street Passed In $3,100,000  0 Bidders

Middle Park, 136 Page Street Passed in $6,250,000 3 Bidders BOUGHT AFTER $6,400,000

136

BaysideAgents

Agent Question: Where is the Family Home Market going in Bayside?

Hi Mal – the Brighton market for family homes is particularly strong. As I said at a recent auction, family homes in Brighton under 3 million, will very soon be a thing of the past. We are seeing strong bidding from young for well located 4/5 bedroom homes – everyone wants to be near amenities, train, shops restaurants. Selling to people recently moving from the eastern who are wanting to get away from traffic.

Absolutely starved of correctly priced, good quality family homes between $3m and $4.5 million, which really is our typical family buyer range. David Hart

The at present is extremely limited, far more so than is expected at this time of the year. I don’t see this market softening anytime soon. Kaine Lanyon 

The family home market is trading offline at the moment with 2 sales off market this week alone. The total lack of availability at any time and most certainly at the moment; after such a quiet winter selling season has meant that owners of family homes merely have to contemplate a sale and they have buyers. Michael Paproth

The demand for good family homes is still very strong due to schools etc is solid! In the last few weeks we have felt an urgency amongst buyers and sellers that spring has come (not the weather) and soon will be going. Andrew Campbell

Left Field

nelson

Homeless

Elisa’s story

Background

Elisa (62) and her daughter, Nicole (22), have lived in their private rental property for over five years.

Elisa successfully managed her tenancy until she fell ill with pneumonia and lost her casual employment. Elisa was unwell for a number of months, during which time she was unable to seek other employment. Elisa applied for a Centrelink income, but this was considerably less than her previous wage and her rent became unaffordable.

Elisa presented at Launch Housing in May 2017, by which time she had accrued rent arrears amounting to two months. Elisa was about to receive a Notice to Vacate.

Support provided

Elisa was referred to the Homelessness Prevention Private Rental Support Program as a way to help her maintain her rental payments.

The Launch Housing Initial Assessment and Planning (IAP) Worker also contacted Elisa’s landlord and supported Elisa to negotiate a rent arrears repayment agreement.

Outcome

A total of $1,300 has been committed through the Homelessness Prevention Private Rental Support Program to assist Elisa to maintain her rental payments. We are pleased to report that this incredible support, in combination with support and advocacy on the part of Launch Housing, has enabled Elisa and Nicole to sustain their tenancy.

Elisa has engaged well with the program, is actively looking for employment and reports that she feels positive about the future. This vital preventative program has provided the family with a great sense of security knowing that they can remain in their home during this challenging time in their lives.

Homelessness Prevention Private Rental Support Program

In June 2007, there were 14 local government areas across Melbourne where 30% or more rental properties were affordable for low income households. By June 2016, just three local government areas – Cardinia, Wyndham and Melton – were at or above the 30% mark.

The situation is even worse for single people. Quarterly rental data shows that in March 2016, there were a mere 29 one-bedroom properties across the entire Melbourne metropolitan area that were affordable for a single person receiving Newstart Allowance.

You can help, you can make a real difference and its really easy. Just do it. Ring Andy.

Contact Details

Andy Grant

Fundraising Manager t 03 9288 9810

Andy.Grant@launchhousing.org.au

launch

GFSee

James Market Insight will return early October with another 3 Week 100 Auction Test to assess Middle Spring.

Until then we are open for the business of Buyer Advocacy in Boroondara, Stonnington and The Bay – over $2 million – on and off market – six days a week – 9804 3133.

Thank you for the incredible feedback over the last month; makes what we do even more enjoyable than just the best job in the world, which it already is.

Homes we've bought


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