Stock Levels

The general feeling amongst those Port Phillip agents staying in town is that stock levels are about the same or lower compared to this time last year. Geoff Cayzer (Cayzer Real Estate) always has his fingers on the statistical pulse of the Port Phillip property market and he has confirmed that current stock levels are below last year. When you consider that 2012 was already coming off a low base, that means there really not a lot to choose from out there. This is somewhat disappointing as there were expectations for a mini spike in winter sales on the back of property prices moving up by around 10% on last year.

As with most agents, I believe the strengthening in the market is a balanced one. The lowering in interest rates has been a bonus, however the world economic climate is still uncertain and we may not be out of the woods just yet. As a result people’s confidence in the property market is measured as they wait for more economic certainty and sustained clearance rates. Therefore a brave sale in the middle of winter may be better placed in spring when the home looks better and the overall feel in the property market is more energetic.

Stock Levels Will Improve

Kaine Lanyon (Marshall White), David Wood (Hocking Stuart) and John Holdsworth (Greg Hocking Holdsworth) have all confirmed that property appraisals are strong, with many campaigns being booked in for August and September already.

Remain Focused

For buyers desperately looking for their dream home – be patient. Don’t just buy anything because your frustration levels have blown off the Richter Scale with the lack of a suitable property. Your dream home may be only a couple of months away.

Bring on spring otherwise I will have to start talking about football and given my beloved Pies don’t have a back line there is not much to talk about on the football front.

Vino Guy

Mas de Libian Vin de Pétanque 2012, is a lovely moreish red wine that is free from chemicals (organic and biodynamic). I sourced a bottle of this very drinkable, un-oaked blend of Grenache and Syrah, from Europa Cellars on Wellington Parade in East Melbourne for $22. Interestingly, the wine comes from the Rhone area but it is not marketed as such on the label. It must sit outside of the appellation, the area actually designated as the Rhone. Position is also important when it comes to precincts in winemaking, not just home buying.

What made this sale so exciting was that it represented a very rare land sale, as the existing dwelling will probably be demolished (STCA). The result helps me significantly when pricing properties in the area. So what does the $2,210,000 sale, or nearly $6,600 per square metre, tell me? Well, the last genuine land sale was in August last year, when 17 Hambleton Street sold after auction for $2,070,000 or approximately $5,300 per square metre, and that was in a much better location.

Who said the market isn’t moving?

Should I Buy an Apartment rather than a Property in the Burbs?

During the week I met with a couple who bought a semi-penthouse apartment in Docklands in 2003 for $1.25m. It has three bedrooms, three bathrooms, two car parks, a generous balcony and a view to die for.

After ten years and a change in circumstances (the children have up and gone) they have now put the property on the market. The property is being sold as a private sale with an experienced agent. The campaign has been going for three weeks and to date the only offer has been $1m, despite the selling agents appraisal of the property at circa $1.3m.

What does this tell us about the difference between apartments and houses in Melbourne?

First, remember a family home needs to achieve two very clear objectives. The first should be your emotional needs and the second is your financial needs. It is possible to achieve both if you approach the selection process with a foot in both camps.

The Docklands apartment obviously fulfilled the emotional needs of its owners for some time. How did it go with the financial needs?

To try to estimate this, I wanted to compare the change of price in a home in a more traditional location that was bought around the same time for around the same price as the Docklands apartment and which had been resold recently. It was difficult to find a property with exactly the same circumstances, but I did find a house that sold in August 2005 for $1.65m in Kooyongkoot Road Hawthorn – and have used some poetic licence to make the point. This property resold in March this year under an Expressions of Interest campaign for an undisclosed amount for around the mid $4 million mark. That’s an increase of 172% in eight years.

Meanwhile the owners of the Docklands apartment are finding it difficult to sell for around the same price as they bought for 10 years ago. You could say that by not buying a home like the one in Kooyongkoot Road Hawthorn, and instead buying a Docklands apartment, they have potentially missed out on a $3 million (approx) tax-free increase in their property value. Certainly not every property in Hawthorn is going to produce an increase in value of 172% in eight years. And not every Docklands apartment is going to show a negative return. But I certainly know what I would rather buy.

Vino of the Week

I needed to buy a celebratory bottle of wine. My first thought is usually to get something sparkling but I felt like a nice glass of something red. What would it be – something red or something with bubbles? Then I spotted a bottle of Domaine Chandon, not sparkling, but pinot noir. This was the perfect compromise – a silky smooth pinot noir from the Yarra Valley’s premier sparkling winemaker. The 2011 vintage is full of cherries and berries and at 13% alc. content, it’s a nice medium-bodied red. At around the $30 mark it’s also nice way to say congratulations.

Due Diligence Before Buying A Property

Last week I looked at two properties for sale, one an off-market and the other a forthcoming auction. Interestingly, both these properties had lodged planning applications with the City of Port Phillip Council for extensions that had been consequently rejected. This highlights the need for buyers to understand the special characteristics of City of Port Phillip’s individual neighbourhoods and how any works need to reflect and reinforce these characteristics.

It wouldn’t be an exaggeration to suggest that the City of Port Phillip takes a very conservative approach to Planning/Building Applications. Applications must fall clearly within the Planning and Environment Act of 1987.  It’s not altogether a bad thing. These stringent guidelines have helped to preserve the area’s many classic period homes and in turn contributed to the area’s sustained capital growth over many years.

In Port Phillip the process is further complicated by both local and State Government Heritage Overlays. This, combined with the small land content of most properties in the area, makes the process of carrying out any works or extensions on a property very difficult.

The process is not getting any easier, and a little due diligence may avoid having to put your dream home back on the market because your planning application was rejected by the council and ultimately VCAT.

Before spending big bucks on your new dream double- or single-fronted Victorian property, it might be prudent not only to make an appointment with your bank manager but also to take your architect along to a Pre-Application meeting with the Planning Department at the Port Phillip Council to get their thoughts on your plans and the likelihood of getting them approved.

Spending a little extra money on the due diligence before you purchase may well be cheaper than having to go through two years of frustration when an application is rejected, leaving you with no option but to resell your property.

Vino of the week

A friend from a winery gifted me a bottle in a brown paper bag. Not very salubrious packaging I know, but the bag had the number 259 scrawled on it. It had come from the Australian Shiraz Challenge, an industry event going for around 18 years to date that judges recent shiraz vintages. The bag was for blind tasting purposes so that the origin of the bottle remained unknown. What would this one be? Apart from a shiraz, of course. With hundreds of bottles entered annually this was a lucky dip. It turned out to be a Tolley Elite Bendigo Barossa Valley Shiraz 2009. I’ve seen it retail for about $38 so it was a good pick up, if you like a big full-bodied red that is. At 14.5% alcohol, of a deep colour, oaky and spicy, it’s not for the faint hearted, but a good drop to plan a big winter meal around.

With the buzz surrounding the sale of 93 Richardson Street two weeks ago, now being replaced with the question of how long Mark Neeld will remain as coach of Melbourne, there was only a small flicker of interest in this weekend’s auction of 115 Richardson Street,  Albert Park (Geoff Cayzer, Geoff Cayzer Real Estate), an Edwardian in original condition on a solid 271 sqm (approx). What we learnt (or had reconfirmed) was that a slightly narrower frontage and the less emotionally appealing Edwardian facade don’t do it for a lot of buyers. The auction, in front of a good-sized crowd, commenced with Geoff placing a vendor bid of $1,750,000, before two bidders saw the property passed in at $1,835,000. It sold after for around $1,850,000.

During the week I inspected 63 Nimmo Street, Middle Park (Nicholas Hoo of Marshall White). This double-fronted Edwardian sits on a very healthy 456 sqm (approx) of land and is only a short distance to Armstrong Street Village and the beach. Nicholas says there is interest above $3m and we’re expecting the property to generate strong competition when it is auctioned on Saturday June 1. The home is liveable as is, having undergone some earlier renovations. But I would expect most buyers to see this as a total rebuild in order to achieve a modern floor plan. Rear off-street parking is excellent and privacy isn’t too bad. Orientation to the south east is the only thing holding this property back from being close to perfect. But then again, the three properties that recently sold in St Vincent Place all had the same orientation to the rear. And that didn’t seem to hold back the demand one bit.

Apart from that, the pickings for Port Phillip aren’t that great at the moment, Many of the key agents I spoke to during the week in Port Phillip had very glum faces, as stock levels over winter are looking very low.

Off-Markets

Off-markets are still steadily coming onto the higher end of the market – with a ripper in Harold Street, Middle Park, one in Park Road, Middle Park and a unique terrace in Esplanade East, Port Melbourne. All three of these properties are very different in style and will appeal to a range of buyers. Two of the three will stay as off-markets until they are sold, while the other will come onto the market later in the year if it is not sold within the week.

I am always surprised that genuine vendors (as opposed to those vendors who are just fishing for a dream price) don’t just put their properties on the market for all to see.

Increased competition from SMSF property investors

It used to be that the person bidding next to me at auction was either an owner occupier or investor looking for good yields and a negative gearing opportunity. But increasingly we are seeing competition from people who have set up a self managed super fund (SMSF) with the idea of using it to buy an investment property. These people use the cash in their SMSF as a deposit to buy a property and borrow the rest (subject to satisfying the lenders servicing requirements). The catch is that they have to wait until retirement to get the rewards of smart property buy.

Assuming there are no changes to current legislation, and with compulsory super contributions rising to 12% by the 1st of July 2019, we’re likely to see this happening more often, with competition becoming even stronger for good investment type properties.

Vino Guy

A week or so ago, when were having an Indian summer, I was at some inspections around East Melbourne. Close by, on the corner of Hotham and Powlett Streets, was East Melbourne Cellars. It’s a convenient location for locals and I was first introduced to this fine establishment when visiting a girlfriend who lived at Powlett Mansions many years ago. I thought it rude not to pick up a light Riesling to go with the fair weather. They had a few different labels on display – Poachers Ridge 2010, from Mt Barker in WA, for example. At $20 it seemed very reasonably priced. Zesty, limey and with a bit of spritzig to finish off. It was a nice way to toast our bonus dose of sunshine.

The other interesting sale was 124 Esplanade West, Port Melbourne, (also Michael Paproth, Marshall White – Michael’s on a good run at the moment), which was an apartment in one of Becton’s developments. It sold under the hammer for $1.33m. What was interesting was that all five bidders came from a different demographic, which may suggest that with the market warming and low stock levels, buyers are becoming keener to have a go at whatever is available.

Record price paid for 93 Richardson Street, Albert Park

After all the excitement at last weekend’s auction of 93 Richardson Street Albert Park, which sold for $2.7m (Greg Hocking – Greg Hocking Holdsworth), as well as the three sales in St Vincent Place, the main topic of conversation in Port Phillip this week has been what impact these sales will have on property sales in the future.

The consensus seems to be that three factors contributed to the record price paid for Richardson Street.

1. Its Physical Attributes

• Classic Victorian facade with touches of “Boom-Style”
• Double-fronted
• Good land content at approximately 317 sqm
• Free-standing
• Rear lane access
• Road to the North West that gives surety of unhindered natural light
• Matching period neighbours
• Quality street
• Proximity to the beach and to Armstrong Street shops and Cafes
• A rare offering in a precinct where unrenovated properties are becoming more and more scare
• A blank canvas to create a dream home

2. Pent-Up Demand

I hate to keep going back to the St Vincent Place properties, but those sales give us an insight into what can happen when a potential buyer misses out on a property. There were 15 bidders altogether on those three properties – all of them prepared to pay in the high $3m range. Taking away the three successful buyers, that leaves twelve active buyers out there in the market, each with over $3m in their pocket, all disappointed that their dream home has gone to someone else. Three weeks later, up pops Richardson Street, (which was a bit of genius, timing-wise, for Greg Hocking and John Holdsworth). And while it’s no St Vincent Place, it’s still a great property in a very tightly-held precinct. It wouldn’t be unreasonable to expect that some of the under-bidders from St Vincent Place were at the auction of Richardson Street (and I think I recognised at least two of them). Those frustrated under-bidders, with their deep pockets and desire not to come second again, no doubt influenced the outcome of the auction.

3. An improving Market

Since October last year the market has been moving along nicely, and we didn’t see it falling away after Easter, as has happened in previous years. Of the $1 million plus auctions we attended last weekend, only 22% had no bidders. There is a definite vibe out there amongst buyers that if they don’t buy now they will certainly be paying more in the future.

Vino of the week

Rathdowne Street Cellars

Although known for their collection of fine wines from around the world, Rathdowne Street Cellars at 348 Rathdowne Street, North Carlton do a handy line of quaffers under their own RC label. Offering good value at around $12 for a Pinot Grigio/Fruilano blend and $15 for a Pinot Noir, they are quite affordable. The RC label has a couple of Pinot Noir to choose from and are simply labelled as Yarra Valley ’08 and Geelong ’10. The Yarra Valley version is a leafy, minty sort of red, it tastes like a younger wine than an ’08 vintage. The Geelong version is more to my liking, with the earthy flavours characterised by the variety. At $14.95, it’s not bad for a grape tricky to grow and which usually requires a few more dollars in outlay.

The last of the three terraces in St Vincent Place sold last weekend for $4,008,000. If you add to that result the selling prices of the other two properties, a cool $12 million has changed hands. Previously all the discussions had been around what these properties were worth. Now that their value has been confirmed, the selling agent Michael Szulc from Cayzer Real Estate, as well as Kaine Lanyon from Marshall White Real Estate (not involved in the sale) believe the prices achieve at St Vincent Place are a reflection of the improved market we are now seeing in 2013.

Kaine confirmed that he is seeing an improved selling environment in Port Phillip from the low base we saw in 2011 and most of 2012. During this period vendors were reluctant to put their properties up for sale. However, since October 2012 brave vendors have been nicely rewarded with an up to 10% increase in the selling price of their homes.

Graeme Wilson from Wilson Real Estate and Elliot Gill from Jellis Craig – Bennison McKinnon Real Estate also agreed that prices have risen approximately 10% since the lows of 2011/2012.

Off-Markets

I have spoken in previous market wraps about the significant increase in the number of off-market properties up for sale in Port Phillip. But results for properties that were initially “off-market” and were then later out to auction would indicate that vendors might be better off going to auction straight away.

Two properties, 64 Armstrong Street Middle Park and 40 Howe Crescent South Melbourne, were both available as off-markets for long periods and didn’t sell. When it finally went to auction late last year, 64 Armstrong Street Middle Park (Cayzer Real Estate) had a strong result under the hammer. Howe Crescent (Rob Vickers – Wills Abercrombys Real Estate) went to auction last weekend and sold just after auction, price undisclosed.

If vendors of off-market properties are serious about completing a sale perhaps now is the time to commit to an auction campaign. You never know, you might get five bidders and a fantastic result as they did with the three properties at St Vincent’s Place.

Vino of the week

Last week I toasted our troops with a Mallee Bull Ale from Mildura. This week I kept the theme going with a glass of Running with the Bulls Tempranillo. The Spanish grape is early to ripen and often blended with other grape varieties, but it makes for a change from the usual reds when bottled all on its own – the fruit is delicious. This one is called the Wrattonbully 2012, and comes from the Barossa area. The label suggests it is drinking okay until 2020, but why wait until then? Priced under $20.

With over 600 people attending the auctions of 73 and 75 St Vincent Place Albert Park last weekend and the weekend before, it was no surprise to see another large crowd of over 250 attending this weekend’s auction of 77 St Vincent Place (Michael Szulc and Geoff Cayzer of Cayzer Real Estate).

Considered the lesser of the three properties because of its orientation and the amount of work required, No.77 surprised many experts when it sold for $4,008,000. All three properties had five bidders which shows that when good properties in great locations come onto the market, buyers find the money. Good job by the team at Cayzer, as getting these properties to auction has taken a lot of work and patience.

On Saturday I inspected 49 York Street St Kilda West – a large Edwardian family home in need of renovation, to be auctioned on May 11 with a price estimate of $2.75m plus (Michael Paproth of Marshall White). With land of 780sqm, buyers will see this as an opportunity to enter this popular precinct with a slight discount to prices paid in Albert Park or Middle Park.

Another property presenting a good opportunity is 46 Richardson Street Albert Park, a single-fronted Victorian on 191sqm of land (Lisa Jarrett and Oliver Bruce of Marshall White). With a price estimate of $1m plus, it passed in at auction this weekend for $1.175m. This property is renovated and, whilst it offers comfortable living, buyers may see the need for a more substantial renovation. At just under $1.2m, it seems good buying to me, particularly with the excellent rear car access.

School Zoning becoming an Issue in Port Phillip

Port Phillip’s access to the CBD, the beach, MSAC and a number of village shopping precincts means that families buying in this area are showing a willingness to compromise on the size of their homes to be close to all of these amenities.

The only thing left for family buyers to consider is which schools they want their children to attend. Without getting into politics, the closure of a number of State Schools by the Kennett Government back in the 90s is starting to have an impact on existing schools. In some cases the demand for places at some state schools is forcing the shrinking of school boundaries just to cope with the overwhelming demand.

Back in 2012 Albert Park College had to ask the Education Dept to do just that, due to overwhelming demand because of the school’s growing prestige and the fact that a very high percentage of students from local primary schools were wanting to attend Albert Park College.

In the municipality of Glen Eira it is not uncommon for local real estate agents to lead their advertising blurb by alerting buyers that a property is “In the Zone” of the prestigious McKinnon Secondary College, which, like Albert Park College, has an excellent reputation for its music and accelerated learning programmes. In Glen Eira, a property in the school zone can sell for more than $100,000 higher than a comparable property that is out of the school zone.

Last year I knew of a number of vendors in Port Phillip who sold up to move just a kilometre away into the zone so that their children could qualify for Albert Park College.

As with Glen Eira, we may see selling agents in Albert Park and Middle Park in particular become more proactive in the future in talking about whether a property is “In The Zone”, and a price premium may well apply.

Vino of the week.

Diggers don’t drink wine. So it was fitting this week to toast our servicemen with a good bottle of ale. Mildura chef Stefano de Piera also has a brewery to his name where he produces a fine range of pilsners and lagers in the sunny north. I went for the Mallee Bull Strong Ale. It was malty, biscuity and Britishy, and with a generous 5.6% alcohol content to boot. Price? Can’t remember, just toast your mates a round. Cheers.

This weekend we saw an 86% clearance rates across 10 $1 million plus auctions In Port Phillip. Next weekend auction numbers will be 15, and there will be 14 on May 4. The quality of stock has also started to lift.

Three sensational two-storey Victorian terraces have been offered in St Vincent Place (Michael Szulc, Cayzer Real Estate).  After the excitement last week that surrounded the sale of No. 75, the auction of No. 73 this weekend could have been an anticlimax. But that was not the case – with a strong crowd at over 300 and with five bidders the Buzz was definitely there. The only difference this week was the price at $3.97m.   It will be interesting to watch the sale next week of number 77 St Vincent Place and to see what price this last iconic Victorian brings.

Up for sale in the St Kilda area is 49 York Street, St Kilda West (Michael Paproth, Marshall White), as well as a fully renovated 1920s townhouse at 327 Beaconsfield Parade St Kilda West (Graeme Wilson, Wilson Port Phillip).

The number of off-market properties for sale is also continuing to grow, with a ripper in Richardson Street, Albert Park for sale for more than $4m, adding to the others in Armstrong Street, Nimmon Street and Page Street.

All agents are consistently reporting strong numbers through open for inspections, internet and telephone enquiries. Key agents in the area are further reporting stock clearance rates of 100%.

To Sell Before Buying or Buy Before Selling

In years gone by, buying before selling was considered an acceptable option, particularly if you found a new home relatively quickly and the two settlements could be arranged on the same date.

The big plus to this scenario was that you could avoid the risk of having to rent. And if by chance things didn’t work to plan, there was always bridging finance.

But we’ve noticed in an increasing number of client meetings a new mindset or willingness to now sell before buying, and if necessary rent until such time as a new property is found.

The key factors influencing this are:

• Uncertainty around the selling price
• The question of whether the property will actually sell
• The stress associated with having a failed campaign
• High cost of Bridging Finance if the property doesn’t sell and you have purchased a new property
• Significant lack of quality stock to choose from
• The desire to make a good decision without being under pressure.

Confirming this trend was Karl Gillon, Managing Director of Buxton Real Estate who said that stock levels in Port Phillip were still “historically low and, as such, vendors were factoring in the dreaded double move”. Whilst this can be an expensive process, it was the preferred option as the consequences of being caught with two mortgages and/or bridging finance weren’t acceptable.

Two Italian Boys (Cabernet Sauvignon)

The snap of cold weather last week sent the message it was time to rug up. It’s not quite winter, but I toasted the turn in weather with a couple of glasses of Two Italian Boys Cabernet Sauvignon. Good value, and good balance, and at around $18 it’s an easy choice. The label first appeared in independent cellars, but it’s getting about town more now. It hails from Hanwood NSW, though the origins of the winemakers ensure it goes down well with a meal. Try it with your favourite hearty Italian dish.

So far in 2013

In 2012 the real estate market was more about treading water, with the market moving like a rudderless boat on Port Phillip Bay for much of the year. The first sign of a spark in the market was on the Super Saturday on October 27, 2012, when we saw a James Clearance rate of 71% on the 42 auctions we attended. That weekend gave the market the first indication that things might be on the improve, particularly at the higher end.

This snippet of market positivity led a brave vendor to auction their property at 64 Armstrong Street, Middle Park on December 2 with listing agent Michael Szulc (Cayzer Real Estate), achieving a very solid $4,300,000 result. Before Christmas, 63 Mary Street, St Kilda West (Karl Gillon, Buxton) had a solid result, selling under the hammer for $3,300,000. Then, earlier this year, 47 York Street, St Kilda West, listed with Michael Paproth (Marshall White), sold for $3,130,000. These are clearly signs of a market starting to show some warmth on price.

But we’ve seen improvements in the market between Christmas and Easter before, in 2008, 2010, 2011 and 2012. Each time the trend was short lived, and the market quickly headed south after the Easter bunny returned home. So even though there is warmth to the market at the moment, with improved numbers bidding at auction, we will need to see if this trend continues into April and May before we can be certain an upward trend is really with us in 2013.

The $3 Million Market

We’re witnessing a significant increase this year in the number of $3 million properties on the market. For example:

• Three off-market renovated period homes on good land in Middle Park at $4 million plus
• Four Victorian terraces needing work in St Vincent Place, Albert Park, with Michael Szulc and Andrew Turner (Cayzer Real Estate) talking $3 million plus each.
• 286 Beaconsfield Parade, Middle Park, a renovated single-fronted terrace, now over three levels, with spectacular views across the bay, is listed with Karl Gillon (Buxton Real Estate) and looking for a buyer at $4.5 million, after being passed in at auction earlier in the year on a vendor bid of $3 million.
• 8A St Leonards Avenue, St Kilda, a spectacular Federation home on an impressive 1,386 sqm of land, is with agent Matthew Young (Buxton Real Estate) and being sold under an Expressions of Interest campaign which closed on March 21.
• 49 York Street, St Kilda West, a large Edwardian property on 736 sqm of land, is due to be auctioned in April by Michael Paproth (Marshall White Real Estate) and expectations are in excess of $3 million.

Vino of the Week

At 58 Commercial Road in Prahran, Winebins bottle shop recently held a wine tasting of Petaluma Wines from the Adelaide Hills. Included in the tasting were the Sauvignon Blanc, Chardonnay and Cabernet. This forty-year-old vineyard is still producing some cracking wines. There are discounts on all three tasting wines at Winebins – a good buying opportunity.

With the Grand Prix on this weekend, normally sleepy Port Phillip is currently clogged up with bollards and crowd controllers directing traffic. Key agents Michael Coen (Hocking Stuart) and Kaine Lanyon (Marshall White) agree that this means there will be little, or no real auction action over the next two weekends with only five auctions this weekend over $1m. However, they also said that property appraisals are solid. This means we could see a supply of new listings coming on at the end of April and early May. Agents are reporting strong enquiries and good numbers through open for inspections, and there does seem to be some warmth in the market.

Eyes on York Street

The sale of 47 York Street, St Kilda West (Michael Paproth, Marshall White) on March 2 is a result worth noting – the property sold for $3,130,000 with 6 bidders. The home was previously offered to the market by another agent on November 18, 2011 – at which time it passed in for $3,800,000. The neighbour at number 49 York Street, St Kilda West has now listed their property for auction. The campaign will be run by Michael Paproth from Marshall White, and he confirmed to us that the property goes to auction on April 27, with interest in the vicinity of $3,000,000. Property details will appear on the internet shortly, and I look forward to watching how this campaign develops.

Vino of the week

During the recent heatwave, water was probably the drink of choice for many. However, one warm night I enjoyed a couple of chilled glasses of Turkey Flat Rosé. Usually rated as a bit lightweight, Rosé comes into its own on a balmy evening. The Turkey Flat version is a blend of Grenache, Shiraz, Cab Sav and Dolcetto and is light, but also flavoursome. Put a bottle in the fridge for a few hours and try it before the weather cools down for the year. I picked up the 2012 vintage for about $20.

Auction of the weekend was at 78 Ruskin Street, Elwood, with Kaine Lanyon of Marshall White. This was a ripper of a small period home with nothing to spend that rated well at 719. The big upside to this property was its  flexibility, with couples, young families and downsizers all seeing merit in this property, resulting in four bidders on the day. The eventual knock down price of $1.67m was pretty strong for the area and is reflective of the warmth we are starting to see in this price range.

Passed in on the weekend was 82A Mitford Street, Elwood, by John Bongiorno of Marshall White, for $1.775m on a genuine bid. It was one of a pair, and the matching property next door was also auctioned yesterday, selling after the auction for just over $2m.

Rising Up

Proposed multi-storey developments in Coventry and Dorcas Street are yet to be approved by council, however the proposals are polarising the local community. The upside to these types of high-density residences is that they bring more customers to the local businesses and the South Melbourne Market. On the other hand, some locals fear these proposed 10-storey developments may significantly impact the precinct’s village feel.

Vino of the Week

With the Labor Day weekend around the corner I am planning a meal of osso bucco. Matching wine with food can be a bit of fun and I’m thinking of opening a bottle of Brothers In Arms No. 6 Shiraz, an underrated wine from Langhorne Creek, South Australia. It’s a vineyard that has stood the test of time. Operating for over 122 years, it has some iconic wines, but remains unknown to many. The current vintage is 2006, and you can pick up a bottle for around $20.

With 64 Armstrong Street Middle Park selling for over $4 million at auction last year, (Michael Szulc of Geoff Cayzer), and an off-market with Michael Coen (Hocking Stuart Albert Park) going for over $6 million, some bigger properties that have been in hibernation for the last two years are finally starting to surface. In the past two weeks, I have been offered four private off-market properties in Port Phillip, the prices ranging between $3.5 – $6 million.

Auction process put to test

I attend more than 140 auctions each year, and in most cases vendors and buyers understand the rules of the auction process. But just occasionally you get someone who thinks they are smarter than they really are.

Aggressive bidders do turn up at auctions – the experienced agent usually enjoys the banter and opportunity to flex their verbal muscles. But last weekend, we saw a unique situation at the auction of 10 Beaconsfield Parade, Port Melbourne. Auctioneers David Wood and Kendall Bares (Hocking Stuart Albert Park) were faced with an aggressive bidder flanked by his friends. This bidder trod a fine line in terms of acceptable tactics, putting forward several challenges to the auctioneer and touching on a couple points of auction law.

Here’s where this bidder got it wrong:

1. When the auctioneer announced a vendor bid above this bidder’s, the outbid bidder called out: ‘You have no right to vendor bid above me’.
   Wrong. The auctioneer has every right to vendor bid above an amount.
2. The bidder then shouted, ‘You must accept my lower bid!’
   Wrong. A vendor bid is legitimate and replaces the previous bid as the highest.
3. The bidder offered a $1000 rise, then pressured the auctioneer to accept it, saying ‘You must accept my bid!’
   Wrong again. The auctioneer can reject any bid. At this time, they did not wish to accept the small amount.
4. A moment later the same bidder urged, ‘You cannot pass the property in when you have accepted my bid’.
   Wrong. The auctioneer can pass the property in at any price point, whether the last bid was a crowd or vendor bid.

Thankfully, there were three other bidders who continued to bid, and after a 40-minute auction one of them bought the home under the hammer.

To their credit, the Hocking Stuart agents never forgot their responsibility to the vendor, remaining in control, and performing well. If anything, the aggressive bidder came close to intentionally disrupting an auction – and that is illegal. Well done, guys! This one will be hard to beat for excitement. (See the report in last week’s auctions).

Smart money

The smart money is chasing properties renovated 10 to 20 years ago, where the hard work has been done, and all the rooms are usually in the right place. Costs are significantly reduced if all the renovating work is above ground. And, depending on the extent of alterations it may not be necessary for plans to be council approved, which will save time and money on what can be a lengthy and costly process.

Vino of the week

During the hot and humid weather last week I enjoyed a couple of glasses of Victoria’s own Tahbilk Marsanne, it’s an oldie but a goodie. A refreshing summer drink, light on the palate, and with delightful honey overtones. Be careful not to over-chill or you will mask the complexity. The current vintage is the 2012, and at around $12-14 per bottle it won’t break the bank.

Heritage home

The standout property for me this week was 35 St Vincent Place South Albert Park, a two-storey Victorian terrace. Despite the property having a southerly orientation, it is still bright and airy and very liveable now, although it could do with some upgrading. Questions will be around the lack of car parking, and how difficult it will be to re-instate. Heritage Victoria will need to approve any works to the property before another application under Development Permits goes back to Port Phillip Council for further approval. As a price guide, the property last sold for $3,005,000 on April 13, 2008.

Trending Topics

Numbers up: Across all the areas I cover, which include the cities of Melbourne, Yarra, and Port Phillip, selling agents are consistently reporting stronger telephone enquiries. They also note an increase in numbers at open for inspections compared with the same time last year. While they consider it too early to call what this means for property prices, it is an encouraging sign.

The Big Four: I am still seeing the ‘Big Four’ driving vendors and buyers: Divorce, Financial, Death, and Property Limitations (such as the size of the property, too few rooms, or too many rooms). When discussing vendor motivations for properties currently on the market, the feedback I get is that it’s rarely for reasons to do with upgrading. Motivation to sell usually relates to one of the ‘Big Four’ reasons.

Bad habits: Last year, buyers got into the habit of waiting for properties to be passed in before declaring interest. They used this tactic in the hope of buying the property for the lowest possible price. Wrong! Agents make it clear in their preamble that those wanting to buy the property need to bid. We strongly concur, but we expect to see more of the same this year.

March listings: If you are looking to buy a property in Port Phillip, and haven’t bought before March, don’t expect to see new stock come on the market during March. Why? Agents and vendors prefer an uninterrupted four-week advertising campaign leading to the auction day. This is not going to happen in March 2013 given that the school holidays, Easter and the Grand Prix are all occurring in that month.

Vino of the Week
A favourite producer of mine is Cape Mentelle (WA), who say they draw inspiration from the Northern Rhone Valley in France. The 2004 Shiraz is the perfect Australian expression of Northern Rhone style, and drinking exceptionally well now, nearly ten years on. The current 2010 vintage can be picked up for around $30. Cellar now, and reap the rewards of your investment in a decade.

Welcome back – don’t read too much into the stats below as this is a very small sample.

The highlight of the year for me was Super Saturday on October 27^, where the clearance rate was 71% on the 42 million dollar plus auctions we covered. For the first time in nearly eighteen months, auction numbers exceeded 1250 for the weekend. With large numbers of properties up for sale there was a definite improvement in stock quality and we saw strong competitive bidding at a number of auctions.

Sales over $3 million under the hammer have been rare in Port Phillip over the last 12 months. Two significant results on the Super Saturday weekend in this price segment were the sale of the very stylish two-storey Edwardian property at 21 Mary Street, St Kilda West (Karl Gillon of Buxton Real Estate) for $3.3m, as well as the sale of the double-fronted Victorian at 77 St Vincent Street, Albert Park, which had a very special master bedroom and north facing balcony, (Michael Szulc of Geoff Cayzer Real Estate) for $3.325m.

The agent response from Super Saturday was really positive. Clearance rates were good and in many cases sale prices exceeded reserves. After Super Saturday there was an expectation by agents that stock levels might now improve as we lead up to the last selling period before Christmas. However this hasn’t really eventuated, and stock levels haven’t changed significantly from earlier on in the year.

The Melbourne Cup came and went, and for a change the prize money stayed in town, helping Mr Williams feed all those thoroughbreds. Then about mid-November we saw a little warmth come into the market and agents started to talk about long term lookers possibly missing the low point in the market. Properties such as 328 Danks Street, Albert Park, finally sold, for around $4m (Alex Schiavo of Kay and Burton), and bidders were starting to put their hands up at auction for small single-fronted terraces like the renovated terrace at 285 Richardson Street, Middle Park, which sold for between $1.5m and $1.6m (David Wood of Hocking Stuart). The auction of 64 Armstrong Street, Middle Park, an extensively renovated period family home by Michael Szulc and Geoff Geoff Cayzer of Geoff Cayzer Real Estate on Sunday December 2 sold under the hammer for $4.4m with two bidders in front of a large crowd of over 200. This represents just under $10,000 per sqm and will be seen by most as a strong result.

Port Phillip agents have been signing up vendors for February 2013 and we are expecting another Super Saturday on February 23rd. After that, stock will dry up over March as the Grand Prix, Easter and school holidays all occur during this time.

I would like to take the opportunity to thank all the agents in Port Phillip that I have had the pleasure to work with during the year. I am sure there are times when my name appears on their phone and they must think “what does he want now?” I would particularly like to thank Kaine Lanyon of Marshall White, David Wood of Hocking Stuart, and John Holdsworth for their patience and assistance during the year.

Particular thanks again to Marshall White’s Kaine Lanyon, Buxton’s Karl Gillon and Chisholm and Gamon,s Sam Gamon for taking the trouble to pass on their thoughts for the past year and into next year:

Kaine Lanyon – Marshall White

All in all 2012 has been a really solid year throughout the Port Phillip market. Slowly but surely the results and the confidence and number of bidders have got stronger as the year has matured.

Whilst the volume of property offered has been moderate at best, we believe the market has finished off really well and particularly towards the top end. The last 4-8 weeks has seen a flurry of really strong off-market sales in excess of $2m, the likes of which we haven’t seen for well over 12 months.

Needless to say the recent decrease in interest rates can only inject a little more confidence across the board. However it appears that after a long absence of the better homes and properties actually hitting the market, the somewhat starved buyers have jumped in without hesitation to snap up the really good offerings.

Having said all that, what is also relevant is that the B and C grade properties are only selling when the sellers have finally decided to actually “meet” the market and accept fair value after going through a process – as opposed to hoping that the buyers will pay whatever price the vendor Is hoping for. As always good advice prevails.

In regards to what the new year will hold, we are confident that the buyer sentiment across the board is now back on track as many believe the market has bottomed out and is slowing coming back to life. The “best of their type” will continue to be bought confidently and the rest will follow suit as long as expectations are fair and reasonable.

Karl Gillon – Buxton

2012 proved to be an up and down year in real estate with a mixture of good and not-so-good results for Vendors but some great buys for Buyers. There was no sense of urgency from Buyers to get into the market unless they felt they were getting a good deal and they would not be pressured into committing to a purchase as they felt prices were not going to rise anytime soon. There were some stand out auctions for us in 2012. One in particular was the auction that we held in June for the winners of the hit TV show The Block, Brad & Lara, at 405 Dorcas St, South Melbourne. This sold for $1,620,000, which was $500,000 over the reserve. Another huge auction was at 21 Mary St, St Kilda West, which I sold in October for $3,300,000 – a whopping $800,000 over the reserve – which just proves there is still plenty of money around for quality property.

In summary 2012 was my greatest year in my 20 years in real estate and personally. With my involvement and National TV coverage in winning the hit TV  Show The Block for Brad and Lara netting them a cool $600K in prize money along with the birth of my first child, my beautiful baby girl Montana Marion Gillon, 2012 was a year to be remembered and I am optimistic about 2013.

I feel that 2013 will see steady growth and a return of confidence from Buyers to re-enter the market as toward the end of 2012 we have seen higher Auction clearance rates and a sense of anticipation from Buyers that prices are about to rise again.”

Sam Gamon - Chisholm & Gamon

2012 was a year where the market rewarded quality well-priced homes first. Buyers were discerning and made considered choices. We found buyers in the market were decisive and saw a real emphasis placed on making the right choices rather than quick emotional ones. The market has seen improvement in the last quarter as vendors began to upsize and investors saw interest rates reductions were more compelling. We’ve seen a greater influx of competitive auctions and in this environment we feel 2013 will show more activity and more stimulus from buyers. The year ahead is likely to remain steady with quality listings continuing to be highly sought after. Buyers place more stock in orientation, position, floor plan and overall condition than they have in years gone by and there may still be opportunities for astute buyers who are keen to consider a value-add proposition.

The auction had a large crowd in attendance, with two strong bidders and, after being declared on the market at $1.02 million, it sold for $1.145 million or $4,810 per sqm (approx).

When it comes to land sales in Port Phillip, they are few and far between. The City of Port Phillip has a Heritage Overlay across its municipality that makes it extremely difficult to get the necessary planning permit to demolish a property.

Hence when a property comes up that is Land Only (very rare) or that can be demolished, it is met with some excitement by the market place.

Local agents Alex Schiavo from Kay and Burton, David Wood from Hocking Stuart and David Lack from Biggin and Scott all agree that the scarcity of vacant land means that buyers are willing to pay a premium in Port Phillip.

Recent land sales, and they are very few, have returned a healthy $5000 plus per square metre:

A vacant block of land at 17 Hambleton Street, Albert Park, sold under the hammer in August by Kaine Lanyon of Marshall White for $2,070,000 or $5,300 per sqm.

48 Kerferd Road Albert Park, an existing home that could be demolished (STCA), also sold under the hammer in early September by John Holdsworth of Greg Hocking Holdsworth for $1,205,000, or $5,360 per sqm

Before that the last sale of a vacant block of land in Port Phillip was back in 2010 at 77 Hambleton Street Albert Park, which was sold by Greg Hocking of Greg Hocking Holdsworth for $1,220,000 or $5,980 per sqm.

Suburbs such as Middle Park and Albert Park have more heritage listed properties than suburbs further south, making land sales extremely scarce. Some properties are also covered by Heritage Victoria with a number of these found in St Vincent Place, Albert Park. All properties are classified under the one of the following three categories.

·         Significant

·         Contributory

·         Non Contributory or Nil Graded Buildings

A period home (particularly the basic ones) can at times be a hindrance to creating a new dream home as you must adhere to any Heritage Overlays that may exist on the property.

But buyers can’t assume that a 50s, 60s or 70s facade gives them free passage to demolish. You may find your application to demolish refused by Port Phillip Council as they may require you to restore the original facade.

The City of Port Phillip is currently looking to cover additional streets under its Heritage Overlay, which may mean that vacant blocks of land will remain as rare as hen’s teeth and will continue to sell at a premium to properties with a house on.

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The second was 11 Acland Street St Kilda – a grand “Boom-style” two-storey Victorian terrace on 549 sqm on land, managed by Jutta Rubinstein of Wilson Port Phillip, quoting $1.8M plus. The property had been in the current owner’s hands for 50 years and is in original condition, needing a full renovation. It is located only a short distance to Fitzroy Street, St Kilda.

The auction of these two properties could not have been more different – John Bongiorno of Marshall White opened the auction of 12 Crimea Street with a vendor bid of $2.3m in front of a sleepy crowd, passing the property in shortly after on the vendor bid of $2.3m.

The crowd at the auction of 11 Acland Street was huge – in excess of 130 people – and there was a definite buzz in the air. Auctioneer Adam Guest of Wilson Port Phillip received an opening bid of $1.8m and asked for rises of $100,000 as five bidders went hammer and tongs before the property was declared on the market at $2.55m and eventually sold for $2.74m.

Reflecting on the two auctions, the vendor of Crimea Street might well be asking, why did the Acland Street property fly and why did my auction fizz, given my property was liveable and on 49 sqm more land and the other property was unliveable?

One reason may have been that Acland St was quoted low, while Crimea St had a fairly high asking quote. It will be interesting  to see how Crimea St now fares as a private sale proposition. Another factor may have been the rather dated style of the Crimea St renovation.  Buyers these days tend to prefer either a shell they can transform themselves, or a bright contemporary renovation.

The biggest sale in Port Phillip over the weekend was 36 Moubray Street, Albert Park – a two storey Victorian terrace in good order.  Despite the kitchen/family room needing some work to improve its size and connection to outside, buyers clearly liked the property’s good width of around 6.5m, the ensuite to the master bedroom and the excellent rear car access. The sale was managed by John Holdsworth of Greg Hocking Holdsworth and it was sold under the hammer for $2,270,000 after having been declared on the market at $2,100,000 with two bidders.

This property has had some interesting recent sale history. It sold in October 2011 for a touch over $2 million through R.T. Edgar. Earlier this year it was up for a private, off-market sale, before being sold under the hammer on Saturday.

The sale, at around 10% above its 2011 sale price, is a good result for the agent and the vendor, and suggests that the transparency of the auction system worked better than the off-market process earlier on in the year.

Next week we have 10 properties up for sale in Port Phillip over one million dollars. I’ll be watching two of those properties with particular interest. One is a grand two-storey Victorian terrace with good land content at 12 Crimea Street St Kilda, managed by Simon Gowling of Marshall White. The other is an original two-storey terrace incorporating the Boom Style at 11 Acland Street, St Kilda, managed by Jutta Rubinstein of Wilson Port Phillip.

Things are finally starting to move along in Port Phillip with the biggest auction sale taking place at 8 First Point Port Melbourne David Wood for $4,100,000. David and I were chatting together late in the day, at an after auction sign for a nice little investment property we purchased for a client at 86 Harold St. David was telling us that the First Point auction had no bidders during the auction and that it wasn’t till afterwards that two parties showed some interest and the deal was done pretty quickly. Price-wise the result may be a little on the light side compared to previous sales in boom times but that is the nature of the market at the Top End right now and in this market to get a result over $4m in Port Phillip is a rare accomplishment.

We were at the auction of the warehouse conversion of 201 Liardet St Port Melbourne (Oliver Bruce) which sold under the hammer for $1.35 million. The interest and buzz beforehand was as great as any Port Phillip property this year and the agents wisely removed the initial $1m+ quote as the interest declared itself. It was an absolute ripper warehouse conversion and we gave it a James Home Rating of 647/1000.

The standout rooms for me were the living room, kitchen, master bedroom and ensuite. They were bright and airy and worked in harmony with the original rustic elements of the old bakery. However, the property wasn’t perfect, and buyers needed to consider the size of the garage, the low ceiling to the master bedroom, the limited access to the ground floor court yard and the property’s position.

A large crowd of more than 120 people turned up to the auction to see what this unique property was going to sell for. A strong opening bid of $1.3m knocked the wind out of many bidders and the drama we were all expecting didn’t eventuate, as the property was quickly declared on the market at $1.31m and it sold four bids later for $1.35m – a little lower than I expected.

Another property I was very interested in was 21 Mary Street in St Kilda West – a very stylised period property in a highly regarded street that had WOW written all over it. The bidding was very emotional at times, as buyers locked horns during the auction. Karl Gillon from Buxton Real Estate and the vendor must be very pleased with the $3.3 million result as they were quoting the property at $2 million plus at the start of the campaign.

The market will take a breather next weekend with the Melbourne Cup coming up and we will be left with the short selling period up to Christmas.

The second was 71 and 71 A Grey Street in St Kilda a property managed by Iain Carmichael of Bennison Mackinnon and John Holdsworth of Greg Hocking Holdsworth. The size of this property and its grandeur are rare offerings and given its location in the heart of St Kilda and estimated price of $5m ish it could end up as the area’s largest sale for the year.  The property is for sale by tender and it will be interesting to see what the buyer plans to do with the property. The property may in fact be too large for a family home and we could see (STCA) a similar situation to Eildon mansion next door. Eildon was bought in August 2006 for just over $4m and turned into the Melbourne head quarters of Alliance Francaise.

Most of the chat amongst agents during the week was the sale of 289 Richardson Street Albert Park last weekend. The property sold for just over the high quote range of $1.2m, and the consensus amongst local agents was that this represented very good buying. I thought the price was actually spot on, when you compare it against the recent sales of these properties in similar condition and land content: 32 Barrett Street, Albert Park (Justine Holod of Hocking Stuart) at $1.386m, and 48 Kerferd Road Albert Park  (John Holdsworth of Greg Hocking Holdsworth) for $1.205m.

The sales trend of period homes under $1.5m with good land content in Port Phillip continued this weekend with the sale of 21 Hambleton Street Albert Park by David Wood of Hocking Stuart for $1.33m. This liveable period home had good rear access and northerly light and, while it didn’t exactly fly, it sold under the hammer. It was a different story for 20 Docker Street Elwood, (Stuart Lopez of Kay and Burton) which passed in today for $2.010m. Having recently sold on the 7th of February 2011 for $2.4m the sale of this contemporary town house represents a challenge for the agent if the vendors are looking to achieving a sale price close to what was previously paid.

History would suggest that those that passed in will sell within the month as long as the vendors are prepared to meet the market by reducing the asking price to match buyers.

One example of this was the auction of 238 Dank Street Albert Park on the 15th of September. The sale was managed by Brett Hallam of Greg Hocking Holdsworth Real Estate and, while all indications were that its value was above $1.3m, it was sold for just under $1.3m after being passed in at auction on a vendor bid of $1.2m.

There are 11 auctions next weekend and 23 auctions scheduled for Super Saturday on October 27th, which represents the largest volume of properties offered for sale in Port Phillip this year. If you have found a property to bid for on Super Saturday it’s likely you’ll be up against a fair bit of competition as many buyers will see this as their last opportunity to buy before Christmas. There is not likely to be much around afterwards, with only two auctions listed for sale the weekend after Super Saturday (Melbourne Cup weekend), so if you haven’t bought by the 27th you may need to mentally prepare yourself to accept that your new home purchase may not happen until next year.