John "The Boss" Morrisby (Marshall White) can sense a sale in the air. 11 Evandale Rd, Malvern, bought after for an undisclosed amount over $1,550,000. Two bidders.

Key Points:

• Only two from the nine we attended were bought under the hammer, however five from the nine were bought after auction
• Big improvement on Clearance Rates on reasonable number of monitored auctions (21 $M+)

$3m+ sales this week:

• 1 Myamyn Street, Armadale – Andrew Macmillan of Bennison Mackinnon ($3,215,000)
• 6 Bonview Road, Malvern - Peter Bennison of Marshall White (0ver $3,600,000)
• 1 Hopetoun Road, Toorak – Justin Long of Marshall White (over $5,500,000)
• 15a Sorrett Avenue, Malvern (Passed In from several weeks ago) – Andrew Hayne of Marshall White (over $3,200,000)
• 19 Acland Street, South Yarra – Warwick Anderson and Greg Herman of RT Edgar ($3,600,000)
• 1a Como Ave, South Yarra – Michael Ebeling and Jeremy Fox of RT Edgar (over 6,o00,000)

A funny thing happened at an auction:
1 Hopetoun Rd, Toorak, John Bongiorno, Marshall White, Bought after, undisclosed amount:
Those that were there for the Hopetoun Road auction and left quickly would say “Hey Jack – nice suit, reasonable spiel – dud auction”. Those that hung around would say, when they heard it was bought and at a price believed to be well in excess of the vendor bid, would go “Hey Jack – nice suit, impressive post-auction manner, great result”. John Bongiorno and Justin Long, Marshall White.” (Mal James)

Agent Question: How are you finding the market?

Peter Kudelka, Kay & Burton: “People are sitting on their hands. If I hear one more time `I’ll wait and see’, then I think I’ll go mad! What are people waiting for? (Editor note: this was said with Peter’s typical dry sense of humour but it was an honest reflection – we like those that don’t spin) Buyers are out there and will make an offer, but not with the sense of desperation as per earlier in the year, and they feel if they don’t get it, then there will be another because the market is not really advancing. It has plateaued. Upper end apartments are still slow, except under a million. Investment stock is selling well. Apartment buying goes in waves and it is always interesting to see when the next wave is. The election has given people an excuse not to make decisions.”

Bidderbuzz Auction of the Day:
19 Acland St, South Yarra, Warwick Anderson, RT Edgar, 4 bidders: “After a day of pass ins and relatively low attendances, it was nice to attend an auction with multiple bidders all looking to secure a fine property in a much sort after area. Four keen bidders kept auctioneer Warwick Anderson’s attention as they showed their interest early, bidding strongly and quickly looking for that knock-out blow. It came fifteen minutes later for a price of $3,600,000.” (Guy Angwin)

Clearance Rates & Monitor Table:

We Only Buy Homes

John "Jack" Bongiorno (Marshall White) braves the wind and the rain at 6 Bonview Rd, Malvern. 3 bidders, bought after for an undisclosed amount in excess of $3,600,000.

"Yeah this is going to turn out OK." And it did - just a casual $800,000 over reserve for David Oster of Jellis Craig of Ivanhoe. Bought for $4,300,000. 2 bidders from the opening bid of $3,300,000.

August has seen a bit more noise in the $3m+ market and deals are seemingly back on the agenda at this price level.

Jon Friedrich-designed apartment 9 Glyndon Brighton with an 812/1000 James Home Rating sold for mid $3millions this week after a long time on the market wanting a bit more. Stewart Lopez of Kay and Burton

In Ivanhoe two bidders fought it out for over a million dollars to get to the $4,300,000 result, as the above picture states  - a full $800,000 over a fair and reasonable reserve. I went through the home prior to auction and I have to say it was a unique offering with an incredible “Gone with the Wind” feel and sweeping views of much of Melbourne.

Moving southwards we get to:

896 Glenferrie Road, Hawthorn which has been on the market for an eternity, but has finally been sold this month for just under $5m through Phillip French of RT Edgar. Still with Phillip French, he reported a private sale of an apartment at 1/42 Grange Road, Toorak for in excess of $5,000,000.

Earlier this month we reported the auctions on two properties  in Moorakyne Ave, Malvern – Number 11 (Michael Gibson of Kay and Burton) and Number 4 (Justin Long of Marshall White), which sold for $4,000,000 and $3,000,000 respectively. Both had multiple bidding.

While we’re in Stonnington let’s look at a couple of sales through Marshall White’s Peter Bennison, Andrew Hayne and Justin Long.

• 6 Cross Street Malvern which was on the market longer than it takes an Independent to extract a deal for  just under $4,000,000.
• Huntingtower Road Armadale over $8,000,000
• An off market in Malvern East Gasgoine around $4,000,000

3 Wellington St Brighton with Kay and Burton - Passed in June 5th see our Auction Report - James Home Rating 702/1000. Sold this week for a bit under $4m.

Nathan Waterston of Bennison Mackinnon sold a lovely terrace home in 12 Jolimont, East Melbourne for just north of $3,000,000. His compatriot Andrew McCann got 31 Finch Malvern East away at auction for $3,360,000. As reported last week it needed a $million reno – so it was a solid price. There were multiple bidders at the auction.

We reported on 23 Chaucer, Canterbury a fortnight ago with James Tostevin of Marshall White – 3 bidders and sold just under $4,000,000. On the same day Steve Burke of Jellis Craig moved at auction 5 Callintina for $3,330,000.

But the news has been in Brighton in the last week or so.

1) John Knox House – 71 North Road. It had been on the market for a long time but it still wasn’t exactly given away – Sturt Hinton of Kay and Burton.

2&3) The Golden Mile was hot this week with two apartments at 3/9 Glyndon selling for over $3m, and 23 St Ninians, which had an initial asking price of near $5m, selling. Both were with Kay and Burton.

23 St Ninians apartment sold by Stewart Lopez of Kay and Burton for an undisclosed amount. They were asking around $5 million at the time I went through. I thought it lacked some floor plan imagination - but it had a view. James Home Rating 649/1000.

4) Also on the Golden Mile and also with Kay and Burton – Ian Jackson sold 6 Seacombe north of $4.5 million.

5&6) 3 Wellington now joins 19 Wellington as having sold recently. Both have been on the market all through the winter doldrums. It was sold by Stewart Lopez and Sturt Hinton of Kay and Burton for close to $4 million.

7&8) Gordon St, Hampton, used the unpopular Expressions of Interest method of sale to achieve a result of around $3.4million through Nick Johnstone of JP Dixon mid week. David Hart of Buxton got another away in the street (23) on Saturday, post auction, after it had been passed in at $2,725,000.

Throw in the reported $7.5million for 3 Avalon, Armadale – Ross Savas of Kay and Burton, Wattletree Road Glen Iris over $3.4million with Marshall White’s Heather Elder and Rae Tomlinson aka “Bonny and Clyde” and a few others – and it’s clear the Top End is not completely dead and buried.

But we do need to keep some perspective – we are a long way off Autumn’s deluge where back in May we saw 50 homes reported as having sold for over $3,000,000.

6 Seacombe Grove Brighton - sold for over $4.5m - Ian Jackson of Kay and Burton. Top 10 Melbourne Street and a James Home Rating of 733/1000.

Why is this happening?

Because buyers are there.

Why now?

The best guess is that buyers never left, but we needed some vendor price adjustments and they are now being made. If this is the case it may simply be a statistical coincidence as opposed to a market change – but it also may bring on some more quality stock, which may or may not give the market a more sustained lift. September is going to be quiet due to Election interference , so October will be the telling month to see if this market is trending back or remaining flat.

We only buy homes

It was game, set and match at 23 Chaucer Crescent today. Holding proceedings from the tennis court in front of a crowd of 100 people, James Tostevin accepted an opening bid of $3,500,000 and the game was on. Three bidders took the price steadily to $3,800,000 before Mr Tostevin referred to his vendor. Not yet on the market, the bidding continued until it reached $3,850,000. The property was passed in, but bought after for an undisclosed amount. Great atmosphere with three bidders over $3,800,000 - a strong result.

Canterbury 23 Chaucer: James Tostevin of Marshall White: Great atmosphere with three bidders over $3,800,000 - a strong result. Bought after; undisclosed price.

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 50% for the 38 auctions we attended. Of note is the fact that only 1 in 4 sold under the hammer.

On Sunday the post-auction clearance rate rose to 66% on all 61 monitored properties. That tells us that the market is right on the brink, but still limping over the line. We’ve been seeing these kinds of significant differences between “under the hammer” and “post auction” clearance rates for a few weeks now (see last week as well), a very different situation from earlier this year. As buyer agents, and for you as buyers, that tells us a number of things about post auction and private sale negotiations.

Bidderman, our Demand Indicator, has dropped significantly to only 1.2 bidders per auction. Almost 1 in 3 auctions had no bidders at all. This was our most significant stat of the weekend and a key indicator  going forward – let’s see if it bounces back in two weeks.

Market: The REIV clearance rates might not show it – but the market was soft this weekend. Many agents and reporters described a real hesitancy amongst buyers and the $M+ Clearance Rate and Bidderman confirms that. Now is possibly the start of another downward price trend, especially with stock numbers on the rise. Possibly it’s an election slowdown or maybe buyers are seeing more choice coming into Spring and are acting accordingly with reservation and only when it makes sense. Wow! September has more excitement on offer than just Collingwood.

But conditions are varying widely across the different council areas. If you are in Bayside, for instance you may be thinking that very few buyers bid at auction any more. You would also be seeing plenty of stock around, some which has been there for a long time (especially over $2m). So with plenty of new homes coming on, you are probably thinking prices are likely to be weak in Spring in Bayside.

If you are in Boroondara you are probably seeing some heat building up in the market, with good stock attracting good competition and most things selling on the day or soon after. You can see more stock coming on but you know you are probably in for a fight. But you can also remember May and you know if too much comes on it could well be a buyers market in Boroondara this Spring.

If you are a buyer in Port Phillip you may be thinking that the market is still a bit sleepy and hasn’t started any sort of Spring run – either in auction numbers or new stock.

Finally, those of you in Stonnington are probably a bit confused – some things are selling that shouldn’t and some aren’t that should. You are likely aware that the market is very price sensitive but you haven’t as yet seen the Spring stock surge start and like all of us you are not sure if and when it will.

Agent Opinions: This week we followed up on the $3m+ market asking agents: “Where is it?” Their full answers are in the Market wraps, but here is a sample of what agents are saying:

Richard Winneke, Jellis Craig: “Three auctions this weekend all over $3m – that will be a true indicator  – if only one or two sell then sellers will be cautious putting property on the market. Buyers out there at that level, but they are also cautious. Market at lower level is very different. Not seeing a great amount coming on in the higher level – 8 properties over $2m in September for Jellis Craig which is not huge, at least a third down in terms of numbers compared to last year.”

Activity and Stock Levels – The graph below shows New Stock ($million+) in Boroondara, Stonnington, Bayside and Port Phillip. To note:

• Consistent big stock levels until end of May
• Big drop in mid June stock levels
• Steady build from mid July

Highlights and Lowlights

• No bidders in Sandringham today at the three auctions we attended. At one of them Steve Tickell, of Hocking Stuart, curiously said he was testing the market by not offering an opening bid, or any vendor bids…and passed the property in without announcing any amount at all… Stephen, what did we all learn here?
• The biggest result was at 23 Chaucer Canterbury with Marshall White’s James Tostevin firing up 3 bidders to reach over $3,800,000.
• Check out the video auction of John Bongiorno at 10 Walerna Glen Iris in the Auction Reviews Section.
• Credit where credit is due: Auctioneer Kaine Lanyon of Bennison Mackinnon deserves mention today for achieving a great result for his clients while keeping the crowd well entertained at 76 Spring Street, Port Melbourne. He did so with a combination of wit, charm and humor that only a skilled auctioneer can execute. In my opinion he did affect the outcome and I am sure many people left the auction convinced he single-handedly pushed at least one of the parties over and above what they intended to spend – Author David McMillan.

BidderBuzz Auction of the Day

64 Maud St Balwyn North – Julian Tonkin, Jellis Craig – 4 bidders, sold under the hammer – $2,015,000 Maybe it was auctioneer Richard Earle’s comprehensive preamble, or maybe it was the comfort of an indoor auction. Whatever it was, this auction got off to a flying start with a genuine opening bid of $1,800,000 from the 60 people present. Two more bidders joined in, resulting in an intense three horse race. When it seemed to all that the property was going to be bought at $2,000,000, a fourth bidder jumped in out of nowhere to be the successful buyer at $2,015,000. A strong result.

The wind was up, their tails were up and so was the price. David Lack gets a solid result post auction - over $2,250,000. 2 bidders. Port Melbourne, 2 Swallow.

Are Special Conditions costing sellers BIG MONEY?

Sellers may be costing themselves big dollars all in the name of legal “protections” they would never agree to if the buying shoe was on the other foot.

One prominent conveyancing company claims to be protecting their selling clients with a list of clauses in their selling contracts – but in fact their efforts and attitudes are causing buyers to walk away from deals. In this market that is not a good step for sellers.

If you watched the two latest episodes of Channel 7’s “ Under the Hammer”, particularly the one about the Yarraville auction which featured one of our buyers, you’d be interested to know that the real drama wasn’t what you saw on TV but what happened behind the scenes with the 20 or more phone calls and emails between auctioneer Adrian Butera and our company just to get our buyer to the starting line. It was all about this conveyancer’s Special Conditions.

In Victoria when we buy or sell a home the paperwork we are required to agree to is made up of a number of sections. These include the particulars of sale price, settlement arrangements and chattels; normal contractual conditions governed by the REIV and the Law Institute; and Special Contractual Conditions.

With regards to the Special Conditions sections the conveyancing firm we are referring to is putting in clauses or conditions that are interpreted by our clients’ buying solicitors as meaning that:

• If the home burnt down, the buyer would still have the pay the seller the purchase price in full.
• If the seller couldn’t provide title (we thought that is what you were buying) – they would still have to pay all the money to the seller. (We’re sure the banks would love that idea – NOT!)
• Some of these special conditions may affect the buyer’s ability to insure the home they buy.
• If the buyer had a dispute with the seller, they would still have to pay the seller in full and only after could they dispute.

Back to the Yarraville auction: it took three days and all those phone calls and emails, but the sellers finally agreed to strike out the special conditions.

Even though things have been quiet, we still managed to get 5 $M+ homes over the line this last week in Malvern East(post auction), Balwyn North (off market), Malvern East (under the hammer), Port Melbourne (pre campaign) and Canterbury at auction. One of them (Port Melbourne) could have been very, very different as our client had to walk away from an acceptable deal; owing to this conveyancer’s special conditions. It was only when the seller ignored the conveyancer and crossed out these additional onerous special conditions that the deal was revisited and consummated.

We think sellers need to know about this practice because buyers’ lawyers are increasingly refusing to accept these special conditions, which means that $M+ investors are simply having to walk away from a deal – even on good properties. It’s a practice that could be costing them tens of thousands of dollars.

To illustrate, see our chart below where in Identical Auction One Bidder 3 was able to have the Special Conditions removed but in Identical Auction Two Bidder 3 was not. He did not bid, which reduced the purchase price significantly.

We are hoping to name the conveyancing company, pending legal approval.

Sellers who read this need to be made aware of these issues so they can decide whether they have hired the right conveyancer.

And buyers be aware of what you are signing up for if you come across these kinds of contracts. Make sure you get good professional advice, or you could be up for something more (or less) than you bargained for.

James Buyer Opinion: This week our James Buyer Opinion is on “Carrot and The Stick and Other Negotiation Styles.” Next week in Buyer Opinion we have a special Buyer Agent Conversation – Getting Info to Make an Offer.

Also next week, Election Saturday, we will have a reduced coverage; but there will be a Market Insight – just no wraps - owing to significantly reduced auction numbers.

We Only Buy Homes

Mal

Took this photo at an open at 59 Studley Road Ivanhoe - Liz Walker Jellis Craig - all laid out on the kitchen table. Just want buyers want - fair dinkum information. Sellers - Liz Walker and Jellis Craig Ivanhoe provide what buyers want - reasonably accurate information.

Nothing wrong with asking the "are we on the market" and other questions at the appropriate times. It is only a difficult and an unwanted question to a "Claytons Reserve" auctioneer.

It’s heartening to see more buyers sticking up for their rights at auctions by asking questions – especially about reserves and whether the property is ‘on the market’.

Because not all sellers and agents are respecting the auction system. Some agents are passing  in properties and then reporting an inflated reserve – which we call a ‘Claytons Reserve’. This kind of practice is, or should be, illegal and it’s not the Aussie way.

Quoting is not an exact science, but continued deliberate misleading quoting and Claytons (or false) reserves are hurting buyers, as well as sellers (through buyer mistrust) and the auction system itself. To try and negotiate around unhelpful quoting you need to ask the right questions at the right times.

A seller has a right to ask whatever they want for their home – but they don’t have a right to mislead you.

If you are told something by an agent why shouldn’t you expect it to have a modicum of truth? If Myer or Harvey Norman said a fridge was for sale at $1100 and it wasn’t, there would be hell to pay. But a seller can say a home is for sale at $2,000,000, and then say: “Whoops, I actually meant $2,500,000” -  and somehow that is fine – no problem – no consequences.

If sellers want the big price they should say so from the start – before you spend money on inspections and time and effort. 

That means that as buyers, wherever you can, you need to ask questions of those auctioneers who are not playing fair.

Asking the question is not just about fairness –  it is also about sensible negotiations.

If you want to be a good negotiator you have to stick up for yourself. You need to question and keep questioning unfair and/or illegal tactics.

And don’t feel you are imposing on the agent or the seller by asking questions. Only unreasonable sellers and dishonest agents would consider your questions an impost.

Questions to Ask

Towards the end of the campaign (before you spend money on pest and building and legal and valuation checks)

1. Do you have a reserve or can you give me an indicative thought on it?
2. Does the quote you are giving me relate to the reserve or (as agents loosely put it) to ‘buyer interest’ (which means very little if the reserve is miles away)?
3. If you are thinking of spending time and money on due diligence, tell the selling agent you are asking the questions because you want to avoid unnecessary expense.

On auction day

1. If the auctioneer doesn’t specifically say in their spiel that they have a reserve – put your hand up and ask them: “Is there a reserve?”
2. If the answer is “yes” then follow up with: “Is it near your quote?” If “yes” then great, go ahead and bid.
3. If “no” – well … it’s up to you. But a good follow up question is: “Do you have any idea what it may be… ?” Another good follow up question might also be: “Well, what are you doing here Mr Auctioneer if you have no idea?” But I digress… You can choose, as many buyers do with Claytons (not real) auctioneers, to not bid and walk away instead.

During the auction

Once bidding has reached the quote level, all bidders should start asking the question: “Is it on the market? Is it on the market?”

Some other statements worth making during the auction:

1. “I’ll bid an extra $20,000 if it’s on the market” – please only say this if you will, otherwise you are being unethical and actually you are not negotiating well.
2. “I have more money if you put it on the market” – please only say this if you do, otherwise you are being unethical and actually you are not negotiating well.
3. Why not think about ‘backward bidding’ (making a lower bid) if bidding has gone well over the quote and the property is not on the market? Why not stick up for other buyers, even if they are your competitors, in these situations? We do.

These measures can work well if a number of buyers band together to say these sorts of things in unison. It’s sort of like the blue team vs  red team in Masterchef. Work together to get it on the market then fight it out fairly.

It may not work, but at least you have tried. There are risks associated with any action – professional buyer representation is another option. And of course you can, as many buyers do, walk away from a “Claytons” auction and a “Claytons” auctioneer if you don’t like the answers to your questions.

Please also note

1. Keep yourself decent – no rudeness
2. Don’t involve yourself if you are not a real bidder – that’s illegal

If you are told a ridiculous or Claytons reserve compared to the quote when a property is passed in to you, you have a right to note it down and tell the agent and the seller and report both of them to the:

• ACCC
• Consumer Affairs
• REIV

Also, if you have spent money on pest and building and legal checks and the reserve is well above the quote – why not send the bill to the agent and to the seller and ask the question, can I get reimbursement? If you don’t get anywhere, then why not take it further – and ask the same question at VCAT? (Although at present it seems you don’t have a case unless the reserve is more than 15% over the quote.)

If you want to negotiate well, then you or your representative need to keep asking appropriate questions when faced with these situations.

We Only Buy Homes

Please note: We support Bennison Mackinnon’s ethical approach. It’s not a question of 100% accuracy (that is not possible) – it’s not a question of best representing sellers (that is expected) - it’s a question of sticking up for your rights.  Good negotiators keep asking the right questions.

Iain Carmichael aka "Captain Grumpy" - we have a nickname for every auctioneer. There is a reason Iain has been a top "James Market News" street auctioneer for many years and it's not because he is easy on buyers. He isn't. He is a top auctioneer because he extracts as much as he can from buyers at auction. The fact he and Benmac quote the reserve ethically to buyers is not the reason he is highly thought of; however it proves that you don't need to mislead buyers to be a great auctioneer. Buyers - keep asking questions.

What a funny lot we are at auction! Check out the Expressions! Malvern 4 Grace: Marcus Chiminello and Justin Long: 4 bidders, Bought After Auction

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 59% for the 31 auctions we attended.

Bidderman was at 1.5 – a more representative number than last week’s 2.2 we think. 

Main Points:

• A significant, but largely expected, drop in activity and dollar value
• 3 Longstaff Kew East – sold by Glen Coutinho of Hocking Stuart, had a crowd of 80 with 5 bidders and was bought for $1,413,000. This one was all about the renovation and not the position, home rather than location. See our report and click onto our ratings below.
• Albert Park – I got an interesting answer when I asked Michael Szulc of Cayzers why we had such huge stock levels early in the year. His response was the most original I have heard: With the GFC a number of investors took out 12 month leases. All those leases lapsed about the same time, just as we had come into a significantly better market, and were all put up for sale around the same time.

Guilty – Last Week we were harsh on The Early Million Market

The market has corrected both in terms of price and activity. However, as we put on our winter coats, we should also put our hands up and make our apologies: there is one segment of the $M+ market that seems to be exempt from our blanket market price-drop statement.

We think the market for $1 to $1.5 million-ish quality homes hasn’t really dropped as we first hoped it might have over the holidays.

Yes, there has been a major drop in demand across the Melbourne Top End. And yes, prices are off by as much as 10% since April. And yes, the gains for 2010 have dissipated in most market segments – especially for the unsolds that need to become solds. But the mounting evidence over the last week indicates that such a blanket statement is too strong when talking about quality homes in the early $1 million dollar range.

This segment still has a strong wave of demand – with new buyers taking up when other buyers drop off, albeit at lower numbers than May, but still at three and four deep. In this quieter July market, the evidence is strong (in fact it’s being pushed into our faces) that, even with the reduced stock levels, we may see prices increase faster than we thought possible even a fortnight ago in this early $1 million segment.

So, after a polite battering from some avid selling agent readers, as well as some of our own unsuccessful auctions and some relooking at sales and private sale basket lists, we’ve reworked our blanket statements to:

Reduced activity and price that started from late April, up to now and possibly continuing into Spring for:

1.  Poorer quality million dollar homes (weak 3Ps – price, property and position characteristics)

2.  Many homes over $2 million-ish

But this does not apply to the early $1 millions price segment for good homes. That market has survived the significant market adjustment better than we implied last week.

With the benefit of six more auctions under our belt this week, we’re already thinking that nirvana may be shorter lived than we initially hoped. But it is winter, and we are dealing in a lot smaller numbers stock wise. Even so, the mood at this level is positive and seems to be rebuilding quite quickly.

Our overall last week auction strike rate was 3 from 6 in this $1 to $1.5 million dollar quality homes range. Bidders have been 1-6-2-3-3-3 respectively.

The above $2 million market

The market above $2 million is, as we stated last week and in previous reports, solid on a few good properties and limited on the rest. There are large numbers of stales and unsolds in this range, and it seems that most of the limited demand is for new and quality auction stock, which is itself limited.

The last two weeks has shown little improvement in this area, particularly as you go further up the food chain dollar-wise – unless of course it’s for a first rate home.

Sales at $2m and above (not all are reported) were running at three (3) a day in May 2010. In July they are reported at being down to one (1) a day.

Compare this to the $1m – $2m range in Boroondara, Bayside, Port Phillip and Stonnington. These were at eleven (11) a day in May and while they are down, they are still up at five (5) a day in July.

Of the more than 140 sales over $1 million in those four markets this month, 5 out of 6 are mopping up the early $1 million overhang and new auctions, while just 1 in 6 are mopping up the over $2 million overhang.

Activity is down across all sectors or segments of the market (to be expected, given it is winter) but things are holding up far better in the quality $1million range than in the $2 million+ range – due to significantly stronger bidder depth. This is leading to less overhang than we may have implied through last week’s blanket statements.

Glad to have cleared that up.

166 Bank St South Melbourne. Crowd of 60 saw Gerald Betts Pass In at $1,330,000

We love auctions

Enjoyable auction No 1

Antony Woodley and Peter Mitchell of Marshall White – well done. The three bidders – well done. For me this is how you run an auction: a bit of argy-bargy and a bit of old fashioned fair play.

The quote during the campaign had been conservative, and when the first bidder opened with $1,700,000, at the quote, he asked: is it on the market? “No”, was the agent’s answer, “and I’ll take $25,000s”. A second bidder bumped it up another $100,000. Wow! The first bidder repeated the question to the auctioneer and Antony’s reply was ditto, requesting $25,000 bids. Again, bang, from a third bidder this time – another $100,000 rise. Now with the price up at $1,900,000, all three bidders asked the question: was the property on the market? The second bidder said he had more, but refused to bid unless it was on the market. In the spirit of auction it was put on the market. Another $10,000 and then the third bidder said $2,000,000. Wow – who says “on the market” doesn’t work? It was a great bid, which could not be matched – and the home was knocked down at $2,000,000.

That’s how an auction should be run: three bidders, five bold bids. It was a pleasure to report on. More power to buyers who work together to get a property on the market so they can battle it out fairly. And more power to auctioneers who respect those buyers playing the game.

Enjoyable Auction No 2

This was a boardroom auction with a James Market News’ favourite, Lachie Fraser Smith, and took place on Tuesday night at Bennison Mackinnon’s boardroom. Over the previous 48 hours Lachie had informed a number of buyers that a home going for around $1 million in Glen Iris had received an acceptable offer and that all interested parties were invited to attend an auction where the reserve was set at $1,050,000 and that the property was on the market. Sitting around drinking water, six (6) bidders fought it out pleasantly, with the property selling for about $100,000 more. Gee, it’s amazing what buyers will do when they are told the truth: a stated reserve and the property on the market with the first bid –  and six bidders still turn up.  Bennison Mackinnon continues to sets the ethical standards for inner Melbourne auctioneering.

We only buy homes

Mal

Brighton East 8 Carrington: Auctioneer Danielle Martin. Passed In on a Vendor Bid at $1,000,000

Malvern East 11 Deakin St: John Bongiorno is all smiles as the 3 bidders put their hands up. Passed in at $1,135,000

In Stonnington this weekend we monitored 14 properties, of which 8 were reported as bought before, at or after auction.

Bidderman was a surprising 2.3 – surprisingly good given the stock quality

This gives a clearance rate of 57%. For the corresponding week in May of this year we monitored 18 properties at auction at which 12 sold, giving a clearance rate of 66%. So while numbers were similar for the week, overall sales numbers are down considerably for the month when compared to May, as many top end agents are now just getting back from holidays.

The other noticeable difference is the dollar value of transactions. Today the only significant transaction at auction was 4 Grace Street, Malvern which sold after auction for just over $3,600,000 – Marcus Chiminello of Marshall White. See auction report and James Home Rating below.

Agent Comments – Michael Gibson of Kay and Burton

• Seasonally slow
• Election affecting the upper end – slowing marginally
• New apartments still steady
• May’s performance relates to stock market – it really was affected by consecutive downward weeks
• Bit lucky for market that we came into winter – tighter stock supply should stabilise the market
• Looking healthier than a month ago pricewise

Elliot Gill of Bennison Mackinnon

• Stock levels starting to rise
• A lot of failed auctions have sold afterwards
• My take on price: coming back up a bit to a plateau
• Correction may be over but we don’t know for sure
• Struggle street is main roads and poor aspects but even the odd one of these is still selling at a strong price – no rhyme or reason
• Seen no drop off due to election
• Supply is the still the key to price
• Yes, demand dropped off
• Overhang is all at the higher levels – not much overhang at lower levels

The properties we monitored

We only buy homes

Susan McGlashan (right) of Bennison Mackinnon leads some very happy buyers inside for the sign up of 2/9 Shipley South Yarra. Bought under the hammer $2,195,000. 2 bidders. Strong.

At 6pm Saturday the James Clearance Rate on the 42 Million-Dollar-Plus Auctions we covered was 50%.

Our Demand Indicator, Bidderman, is down to 1.1  -  which is pretty amazing considering that a few months ago it was riding high at around 3.0.

Our Highlights

• Of the 42 auctions we attended this weekend, 26 had no bidders at all. Only 38% of homes attracted one bidder or more.
• In that most troubled of price ranges – the $2million to $4million market – only four properties were bought, and as we went to press 11 had not yet been reported as sold.
• The strongest sale of the day we witnessed was 51 Murray St, Prahran, which reached $3,740,000 for a great home on 600 sqm of land in Prahran (John Bongiorno, Justin Long and Adam Jack of Marshall White). Four bidders.

• Bayside – 32 monitored – 14 bought – 44% clearance rate (previous weeks 40%/46%)
• Boroondara – 45 monitored – 26 bought – 58% clearance rate (52%/70% )
• Port Phillip – 19 monitored – 13 bought – 68% clearance rate (54%/32%)
• Stonnington – 45 monitored – 26 bought – 58% clearance rate (65%/69%)

Most agents are reporting all results. On average Kay and Burton has the most unreporteds – but it still reports. The large majority of unreporteds had been passed in.

Glen Iris results were 9 sales out of 10 auctions, or a 90% Clearance Rate.

Port Phillip (Albert Park and surrounds) had a strong day compared to the previous fortnight

Boroondara and Stonnington had unseasonally (for winter) large stock numbers up for auction (45 homes each) and their clearance rate was less than stellar; but they still got away 52 $million+ homes between them.

Across Melbourne there have been an incredible 170 $million+ sales in the last fortnight, including the Queens Birthday weekend. That is 12 sales a day, which means that every second hour somebody is paying over $1million for a home in Melbourne. Clearly the market is not down and out; it is just wilting under stock pressures.

Prices or Vendor Expectations (to keep all agents happy) are clearly dropping as shown by the clearance rates; however, based on the number of buys, this market still has a underlying demand strength.

When supply reduces, as vendor human nature says it must, we would not be ruling out a quick price stabilisation and possible price increases – unless the demand parameters have changed.

Have Those Demand Parameters Changed?

We don’t really know for sure!

Our demand indicator Bidderman (which measures bidders per auction) was this weekend at a lowly 1.1 – but there were 141 homes up for auction in the key Albert Park, Hawthorn, Toorak, Brighton and surrounding markets. Which means you could say that this auction market has 155 bidders. If the number of homes on offer drops to say 70 and Bidderman rose to two – which is quite possible –  as a buyer, you would have less choice and a  rising market, even if  the overall market remained at around 155 bidders. When Bidderman is consistently at 2 and above we know we have a rising market.

Of course, earlier this year we had these sorts of auction numbers and Bidderman was at 3. That was mind blowing. The point is that just because Bidderman is at 1.1 that does not necessarily mean a big demand drop if we have an unseasonal quality or quantity of supply. When you see the actual number of homes bought it is unseasonal. We will know we have had a major market change when we see significant and seasonally adjusted drops in stock (supply), AND corresponding drops in demand (Bidderman). At that point you would have a a chance of prices freefalling, as occurred in late 2008. We think we have had a market supply change but our money is on this being a shorter term price correction, because solid demand is still there for now.

Price Drop – How Big?

A number of agents now publicly agree with our assessment that in the past five weeks the market has dropped between 5% and 10%, or at least lost the previous gains of 2010. This is a blanket statement which has its limitations – however we feel it is an accurate reading of market performance.

Jeremy Fox of RT Edgar feels the market has come off 10% since April.

Robert Vickers-Willis of Abercrombys feels it has dropped between 5% and 10%, and that it is simply because buyers have choice, no longer feel panicked and therefore will walk away rather than push on as they would have only a month ago.

James Connell of Marshall White and Gerald Delany of Kay and Burton feel the market has stabilised and do not believe there has been significant falls.

I think the mood is far more towards Jeremy and Robert’s view than with those agents who are saying the market is levelling. But it’s true that people like James and Gerald are very experienced selling agents.

For sellers of quality homes, there is still some strength in the market – providing you meet the new June 2010 price terms. The evidence is the fact that there were more than four bidders at a number of auctions: 77 Page St Albert Park (Andrew Stuart of Hocking Stuart); 41 Terry St Balwyn (Michael Nolan of Noel Jones ); 6 Mayrose Crescent Brighton ( Leigh Hallamore Buxton); 16 Van Ness Avenue Glen Iris (James Redfern Marshall White) and 51 Murray St Prahran (John Bongiorno Marshall White)

Price Drop – Why?

The evidence is all pointing towards this being a supply-based correction. What that means is that if the market gets back into some sort of equilibrium, it is possible for prices to rise again within a short period of time.  Supply is at record levels – this weekend saw a record number of auctions for any winter weekend and we have another one  next weekend. All this is following on from  a huge May, where many agents had record sales numbers and many buying agents  had record buys. However,  winter generally brings a cyclical decline in seasonal demand and, combined with the fact that we still have an overhang of unsold properties, a rebounding price surge does not seem imminent – even if supply does level out.

Opportunity

What does this mean for the buyer – opportunity! Opportunity to purchase at prices considerably below what you might have paid in April – and in some cases even below what you might have paid before the surge which started ramping up from November 2009.

The market is not a perfect beast – as the diagram below shows. The trendline  is in yellow. Of course all home sales are different and if you buy well in June you could have paid less than if you bought poorly in November 2009, despite the price surges (the red squiggle below represents indicative individual sale variances or market segments). On the other hand, if you are bidding against strong competition you could still be paying the same on some houses as you were a month ago. That is still a fair bit more than August 2009 and a lot more than the pits of the GFC in 2008 and more even than the peak of 2007.

GFC

Before we, as buyers, start getting into the champagne (that only our selling comrades can afford), it may be useful (or not) to remember that the impact of the GFC on the home market  lasted around a year in Bayside and Port Phillip (May 2008 to May 2009) and only six months in Boroondara (Sept 2008 to Feb 2009). If we ignore the stats for a moment, our “guts” are not telling us that is the same sort of market we saw two years ago. The drop in prices seem to be almost entirely due to excess supply, which means it may soon right itself.  That’s even though, as buyers, we might be hoping for a longer respite. But of course demand is a very fickle beast. Bad news may come tomorrow and, yes, our demand indicator Bidderman is down. But you do need to contrast that with the fact that we are seeing record sales, record auctions, record everything.

Stock Quality May Diminish

Going forward ( July to October)  the jungle drums will start beating hard and many sellers will hear: “Don’t go to market –  it’s not as good”. Those sellers who have organised lives, and these  tend to own the good homes we want to buy, will simply hold off and not put their homes on the market. This happened in Toorak and Hawthorn in late 2008. That means that the only good homes that will come on to the market will be forced sales and, unless we have a major economic change, forced sales tend to be few and far between . What does this mean? Less Supply!!  Who knows what will happen to prices then?  Especially if demand remains constant.

Longer Term Thoughts

Underlying demand still comes from population pressures such as migration and wealth pressures such as investing or buying for your children. To get a sense of that demand, don’t just look at  the stats. Hop in a car on a Friday night and go to Bay St, Brighton or to the Rivoli Camberwell or Chapel St or the City: it’s a gridlock and it’s getting worse. In the 1990s when we had demand reductions it took five and a bit years to recover –  but not now. Between 1990 to 1996 we were like a bowl of rising dough that rose from one third to two thirds of the bowl.  We had plenty of supply – plenty of inner city land, for instance, to redevelop. Improving demand put some pressure on supply without pushing the price lid off. But Melbourne in June 2010 is now a lot more developed. It’s like a full bowl of rising dough that’s had a nick taken out and the price lid squeezed back on. It won’t take long for that nick of dough to be taken up and price pressures to reignite and push the lid off.

Alternative Opinions

We have been very lucky to get agreement from Gerald Delany to give buyers a once or twice monthly opinion on what is happening at the Top End from a selling agent’s point of view. Its called G-E-R-A-L-D and you can view the first video in the right hand column on our marketnews home page. Please bear with me. In future I will be asking tougher questions and Gerald has assured me he will answer them going forward but I was feeling my way on this first one. There will be another one within a fortnight.

If we as buyers don’t or can’t listen to quality selling agents and take their comments for what they are – information and mostly good information – then we will reduce the chances of buying well.

We are also lucky to have talking to us two top Bayside agents (Jenny Dwyer and Barb Gregory), who happen to be female and happen to both work for Hocking Stuart. They, along with our own Kristen Hatt, will report once or twice a month on females dealing with men in real estate and what is happening in Bayside. Again it’s our first effort so be patient with us please. However any constructive feedback to kristen@james.net.au is welcome

We have a younger person’s video and two sparring auctioneers in the pipeline. This will be on this screen some time very soon.

The Rules Have Changed
This is the title of our new Advertising piece on the top right corner of the Market News Homepage. Although it’s a hard sell on why you might think about using us, it does make some salient points about Expressions of Interest and “Learning Fees” in real estate. If you need some extra reading to get to sleep then this may help; click in the top right hand corner title of the marketnews homepage – The Rules Have Changed.

A little bit of a different market insight this week – have had a few heavy ones on the Clayton Reserve so thought we all needed a breather.

We only buy homes

Mal

Prahran 51 Murray Street: The market gloom was no match for this home which got the highest rating for the year (926/1000). $2.9m+ quote - 4 bidders - on the market at $3,600,000 and bought under the hammer at $3,740,000. A very strong but not completely unexpected result for John Bongiorno and Justin Long of Marshall White.

Albert Park 77 Page: Mr Stuart sure knows how to pull a crowd. A couple of jokes, four bidders and bang: she's bought - $1,290,000. He's still got it!

Of the 10 auctions we attended, three were bought before auction, three were bought under the hammer and four were passed in (with one bought after).  Our demand indicator Bidderman was at 1.5 bidders per auction. So out of 10, seven were bought. That seems a big improvement on the last few weeks. We have seen 20 homes over $1m purchased in a fortnight in Port Phillip.

This clearance rate boost was not completely unexpected; unlike Boroondara and Stonnington there is not much new stock on the horizon in Port Phillip. And, while there is an overhang of unsold properties, there is an argument that this mostly relates to inferior or overpriced stock.

We think Port Phillip may be a microcosm of what might happen in Melbourne generally – as soon as stock begins to dry up, the clearance rate will subsequently improve. And if that continues, a return to stronger prices will follow. While we are not fortune tellers, it feels as if this market – along with the other main Million-Dollar-Plus markets across Melbourne – may just be taking an enforced breather (caused by supply exceeding demand), and could reignite again once stock levels are significantly pared back. Let’s wait and see.

The big unanswered question is demand strength: Bidderman is still somewhat weak in Port Phillip, evidenced at 0.9 this weekend despite the post auction clearance rate.

20 Gellibrand Road, Port Melbourne went under the hammer with Frank Callaghan of Frank Gordon, advertised at $1,300,000+. After a very confident opening bid of $1,400,000, two bidders pushed the price to just over $1,600,000. Enter bidder number three, who was only interested in bidding in $1,000 rises, and the property was finally bought for $1,681,000 – which I thought was a solid result for the vendors.

Similarly, the auction at 13 -15 Evelyn Street, St Kilda East saw confident bidding and multiple bidders willing to pay considerably more than the reserve. The growing crowd saw Kaine Lanyon of Bennison Mackinnon put on a good performance and produce a solid result for his vendors. Speaking with Mr Lanyon after the auction, he indicated that, whilst the market is generally patchy, quality real estate is still attracting strong interest and multiple bidders and achieving good results.

Last but not least, 77 Page Street, Albert Park with Andrew Stuart of Hocking Stuart (a James Market News favourite), saw four bidders put their hand up for a slice of one of Albert Park’s premier streets. An opening vendor bid of $1,100,000 was followed by frenzied bidding. The property was announced on the market at $1,160,000, with a final result of $1,290,000. It was a strong result, given the current market, for a property with no car parking. However, that is what happens when four people are determined to get into a great pocket of Albert Park.

The properties that were sold before included: 7 Burns Street, Elwood;  76 Armstrong Street, Middle Park; 161 Dow Street, Port Melbourne.

The properties that were passed in included: 5 Kerferd Place, Albert Park; 96 Iffla Street, South Melbourne; 118 Hambleton Street, Middle Park (Sold post auction for $1,760,000)

What was interesting about all the passed-in properties was that  in all instances the vendor was the only bidder. So where is the value level if there are no actual bids?

Opportunity is now here, which makes it important to have more information on hand than the vendor thinks you have and than what the agent  is telling you.

Auction Clearance Rates

19 monitored – 13 bought – 68% clearance rate ( last week 54% / week before 32%)

Know your market

Middle Park 118 Hambleton: Oliver Bruce - He looks good and he is good. No bidders, yet bought immediately afterwards for $1,760,000.

St Kilda 35 Vale St: Today with the rain, it's indoors, up close and personal. Matthew Young of Buxton firing up two bidders on the way to a bought price of $1,192,000.

At 6pm Saturday the James Million-Dollar-Plus Clearance Rate on the 35 auctions we attended was 51%. Our Demand Indicator, Bidderman, was up at 1.7 – still hanging in there.

PRICE CORRECTION
There is no doubt the market has eased, “corrected” – call it what you like. One easy word to understand  is “dropped”. On a few properties it has dropped by 10% since Anzac Day.  Some homes – mostly the higher quality ones – haven’t missed a beat. But for the majority, what seems to have occurred are minor falls – although that’s hard to prove specifically.

The statements from the selling agents seem to be leaning strongly towards a “supply based correction”. At this stage we agree. If we keep seeing large amounts of stock come onto the market in June then it’s logical that prices will continue to fall, until some balance returns.

SUMMARY CLEARANCE RATES
Overall the clearance rate was 50% for 124 auctions we monitored in Port Phillip, Boroondara, Bayside and Stonnington. That’s in line with our James Million-Dollar-Plus Clearance rates – confirming it again as an accurate measure of Million-Dollar-Plus Melbourne.

• Bayside – 35 monitored – 14 bought – 40% clearance rate (last week 46%)
• Boroondara – 46 monitored – 24 bought – 52% clearance rate (last week 70% )
• Glen Eira – 9 monitored – 5 bought –  55% clearance rate (last week 55%)
• Port Phillip – 11 monitored – 6 bought – 54% clearance rate (last week 32%)
• Stonnington – 23 monitored – 15 bought – 65% clearance rate (last week 69%)

Highlights

• While 8% were not reported, indicating a reasonably high degree of accuracy for clearance rates, the numbers of unreporteds are increasing.
• Stonnington sellers seem to have made the price adjustments that some Boroondara owners (“wannabe” sellers) have not.
• Some ripper auctions included 50 Hawthorn Grove Hawthorn (Paul Keane of Jellis Craig), 23 Ferncroft Ave Malvern East and 2 Carmyle Avenue Toorak, both with Jeremy Fox of RT Edgar. These auctions saw four or five genuine bidders (well above the 1.7 Bidderman average)
• Selling in Million-Dollar-Plus Melbourne seemed a coin toss – you had as high a chance of your property passing in, as selling on the day – the first time since 2008.

SUPPLY OVERHANG BUILDS
First some stats. Last Saturday’s (May 29) Auction results showed strong evidence of “auction overhang” in Port Phillip where the clearance rate was 32% clearance rate on the 22 auctions we monitored.

Seven days later the reported clearance rate had lifted from 32% to 45%, with only three of the pass-ins and unreporteds reported as having been bought. On this evidence, it seems a stretch to say that in Port Phillip Million-Dollar-Plus homes are being bought soon after auction. There is overhang elsewhere in $Million Melbourne but not as much as Port Phillip. Which suggests the chance of bargains there.

What Supply Overhang means to you, the buyer
1. More choice, given that new stock has to compete not only with other new stock, but with old stock which hasn’t sold yet.
2.  Better pricing on all homes as there is real competition for the first time in a long while – providing of course you understand the negotiating game and know how to play it.

UNREPORTEDS
Practically all last week’s unreporteds were still for sale on Friday – suggesting that the REIV view that 50% of unreporteds are in fact sold does not seems to apply to the Million-Dollar-Plus  market.

ARE METHODS OF SALE CHANGING?
Perhaps in Bayside but not yet in other areas. Look at the latest 50 homes advertised for sale on the website www.realestateview.com.au

THE SEARCH & NEGOTIATE GAME HAS CHANGED
We feel there are at least four things all buyers should be considering:

1. Most importantly – home buying is still about best meeting your needs and taking a 5-10 year longer term view
2. You need to sharpen your methods on checking all homes – especially pass- ins
3. You need to monitor stales (old unsold homes)
4. You need to reconsider offer techniques

Let’s look at point 4 in more detail:

RECONSIDER OFFER TECHNIQUES
Let’s look at a real life example in detail: one particular property we bought today was 27 Eddys Grove, Bentleigh with Chris Hassall from Buxton. It had a quote range of $975,000 to $1,050,000. We thank our client for his permission to publish these exact figures.

From the top:

1. On pre-auction Friday we were told the property was on the market at $1,150,000 and that it would be sold that day (Friday).
2. We checked the website on Friday and saw that it still had a quote of $975,000 to $1,050,000. We asked: Would we buy it if we paid $1,150,000? We were told that we could if no better bid came in.
3. We hadn’t made a bid – so we were trying to work out how it was on the market at $1,150,000.  

First Offer Technique considerations (pre auction). What would have happened if you had bid then based on that information?

Anyway it didn’t sell, and come auction day the quote on the website and in the paper remained at $975,000 to $1,050,000. At the auction there was an opening bid of $1,000,000. Another bidder joined in and so did we – making a bid for $1,040,000. From $1,100,000 onwards we asked auctioneer Craig Williamson if the property was on the market. We were told “No” – despite the fact that each time we asked we were $50,000, $60,000 and then $70,000 above the top end of the quote. (Please note we make no claim this is out of the ordinary or an illegal practice as the REIV and CAV state this behavior is fair enough).

Second Offer Technique considerations (during auction). What happens if you had not bid, bid differently, or put in a killer bid?

Eventually the property was passed in to us at $1,120,000. We stood there in the sprinkling rain for five minutes before a Buxton salesperson came to us – they were too busy talking to the underbidders and other interested parties. My client, through us, was the last person Buxton spoke to. We are sure there is a perfectly acceptable explanation for this curious behavior. But versions of this happen at many auctions.

(Let’s point out at this point that we have good relations with Buxton Brighton and less than a fortnight ago we bought another $1m+ home through the Bentleigh office and were treated well by Ivan Blow and Craig Williamson.)

This story is not about Buxton or Chris Hassall (whom we think is a solid agent) – after all they got a good price and did nothing that many on the selling side considers untoward.  No – this story is about whether you as buyers have the right offer technique and strategies to best manage your options in this changing market. It shows the importance of good offer technique pre-auction, during the auction and post auction.

Back to 27 Eddys Grove: we were eventually given the reserve of $1,150,000 – with the additional strong advice that if we did not take it, then the underbidders would immediately be given a chance to submit their offers, and that the highest offer would win. While that would have been intimidating to the uninitiated, for us it was no problem. Technically we were being given first right of refusal.

After consulting with our client, we accepted. We felt the reserve was reasonable, we felt we needed to separate ourselves from the other bidders and our client really wanted this beautiful home. It was not a time for bravado but a time for cool heads, was our recommendation.

Third Offer Technique considerations (post auction). What happens if you decline or the stated reserve is a lot higher?

The case of Eddys Grove, like many others, begs the question of why the agent wouldn’t just quote the home at the fair reserve level of $1,150,000? That’s another story and a never ending battle with many agents. But we digress – our focus is Buyer Strategy and Offer Technique.

During any auction campaign you have three very distinct offer times: Pre, During and Post. As the going gets a little tougher for sellers so it will for buyers. So, as the stakes get higher, you will need to sharpen your offer technique before you count your chickens.

OFFER TECHNIQUE – THE CLAYTONS RESERVE  (The false reserve)

1)      What happens if you don’t know how to play the pre and post auction games? Do you join in and just keep bidding against yourself in this market; given you are possibly the only bidder – or do you miss out if there really is another bidder?

2)      What is there to stop the auctioneer at a pass-in telling you the reserve is $400,000 above the quote or their real reserve - and that if you don’t pay it they will offer it to the others? What can you do to defend yourself against a Clayton’s Reserve when you are the highest bidder playing by the stated rules? What strategies do you have?

3)      If, as a buyer you are offered a property with a Clayton’s Reserve and you refuse – does that mean the auctioneer can offer the property at a different reserve to somebody else? Or do the others have to be given the same Clayton’s reserve?  Do they come back to you? How do you as the highest bidder manage this?

For now, in the interests of our clients and to discourage this illegal behavior (The Clayton’s Reserve), in cases where we have won the right to hear the reserve and we consider we have been given a Clayton’s Reserve we will now publish (if we get our client’s permission) the agent’s name and the Clayton’s reserve given to us, We will also send a note of complaint to the REIV and ACCC. If any of our behaviour is as inappropriate as the Clayton’s Reserve, then by all means return our return serve back to any of our advocates.

We have a good many excellent selling agent relationships. They are important to us personally and professionally. We are shown many courtesies and keep many confidences (as we should and will continue to do so). However we are giving fair warning to selling agents, who, by way of example, quote $2 million and then tell us, when we have won the highest bidder right at auction, that the reserve is $2.4 million.

Agents, we would much prefer to deal fairly with you. Why abuse the auction system? If you want to do that why not use Expressions of Interest or some other method of sale?

Our offer technique management, in this instance, is to return the serve right back at you as hard as we can. We will still negotiate, but our relationship on the home in question will continue beyond the buyers and sellers signatures. If you think we are bluffing a Clayton’s Reserve from you will find us both out.

Apologies if this seems a tad emotive or self serving but the Clayton Reserves are continuing and we represent buyers and think these kinds of “Reserves” are legally and morally wrong. Simple as that.

Let’s move on.

Congratulations to Andrew McCann of Bennison Mackinnon on 115 Stanhope Grove Malvern, whose company to our knowledge is still the only publicly declared Melbourne based real estate company with reserves in their quote range. We videoed their auction today – it should be up tomorrow. Their quote was $2,100,000 to $2,300,000. The property passed in at $2,150,000 and with some negotiations was bought post auction for $2,255,000 by the buyer it passed into. That seems solid agent work. Fair buyer quoting; stated reserves.

Now let’s really move on – did you hear the joke about the leprechaun …

Buy Happy

Mal

PS  No Market News next week as its Queens Birthday Weekend and Council Wraps up tomorrow (Sunday)

Toorak 2 Carmyle: Looking like an almost drowned rat - Jeremy Fox from RT Edgar firing 3 bidders up with his banter and a smile. Bought under the hammer for $3,375,000.

Sorry did you say 5 bidders! This is June not April. A great Jeremy Fox RT Edgar auction took place at this home 23 Ferncroft Avenue Malvern East. Bought under the hammer for $3,560,000

Stonnington seems to have got itself back into the game with a second “OK, sort of – almost normal” auction week in the 60’s clearance rate wise. We monitored 23 homes of which 15 were bought; that’s a 65% clearance rate (last week 69%). Of the auctions we  attended 7 of the 10 were bought.

What’s happening? Price reduction is happening. The buyers are there!  Buyers got hit early May with a lot of stock and could see a lot more coming and they paused. That meant things didn’t sell as easily as April, pass-ins occurred and prices dropped. Stonnington sellers have had two more weeks than those in Boroondara to face the “new order” and they have used those two weeks to price adjust and things are now beginning to move again at auction. Welcome back sellers – lets see what happens from here.

High Noon for K&B

It was a case of Toorak High Noon for Kay and Burton today with 3 substantial properties for sale around midday. One sold before (3 Cleeve with Andrew Baines) and two failed to attract any auction bidding interest (9 Kenley and 10 Moonga). The thing of interest is Kay and Burton’s new style of auctioning.

1)      Run the campaign and gather intelligence but give little way

2)      Tell everybody the ball park figure on Auction Day via a Vendor Bid and then shut it down quickly.

3)      Deal with the brave and inquisitive under pressure afterwards.

For the most part we thought this was not working early May – early June I’ve become a believer for now. It’s a well thought strategy. Early July let’s see …… Kay and Burton is a very strategic company; they run campaigns in waves – feeding off each other, regrouping and then going again. It was no coincidence that May was a stellar of stellar months for their vendors and themselves - they had obviously been planning it since Christmas. K&B appeared to lose their way for a short time when they focused on others; but the generals have pulled hard and the well oiled Millionaire Machine is back in full swing.

EOI

They are back and moving along. We have just assessed a really interesting home at 3 Avalon Road Armadale (Ross Savas of Kay and Burton). We have a rating on it and price thoughts. If we can help you through the EOI maze please give us a call.

Andrew McCann of Bennison Mackinnon’s thoughts on EOI to the question, “do you think EOI are increasing and working at the Top End”?

We don’t deal in a lot of EOI campaigns and as a company we don’t think they work as well as the Auction method so they are rarely suggested. Buyers tend to find them confusing and prefer to either know an asking price for a Private Sale or bid in a transparent and open environment which an Auction allows for. They do have a place at the “very top end” of the market and for some “unique” properties however from the more recent EOI campaigns we have seen they don’t seem to be working.

Twoday.com.au

Marshall White – the ever innovative have launched a new under a million, new age, internet savvy, younger persons company (I think I got that right). The main aim is to give a focus to this very important market while still allowing Marshall White to keep its exclusive high end identity. Darren Saunderson heads it up and while it is not our market, we will watch with interest. Good Luck with the new venture. 

Its not million dollar news but intersestingly South Yarra produced 18 results for a 78% clearance rate today however not one of  the sales was over $1million. Below are the results around and over a $million.

Make Good Decisions

Looking good Lachie! One of our favourites Lachlan Fraser-Smith ably assisted by Simon Dale gets four bidders zinging to an "under the hammer price" of $1,672,000. Prahran 1 York Place.

Nathan Waterson – Focusing on Stonnington

Nathan Waterson of Bennison Mackinnon

Kristen: Hi Nathan.

Nathan: Hi Kristen. How are you?

Kristen: Good thank you. I’m here today with Nathan Waterson one of the partners at Bennison Mackinnon, he’s been there for five years now. We are just going to have a bit of a chat about the market and what’s been happening. The first thing I think would be Clearance Rates, how have they been going so far this year?

Nathan: Look there’s no doubt we’ve seen a leveling in the market right across the board, but as a company we’ve still been transacting on or before the day at about 87 per cent, so a little bit down on the 94 (per cent) that we were tracking at last year.

Kristen: Okay and if we look at land prices – I mean we look at Armadale – you look at land prices there at what sort of price range at the moment, per square metre?

Nathan: Per square metre – generally in the better suburbs and probably the bigger blocks of land they’re tracking at about $3500 a metre, for the smaller properties at a little bit less than that at the moment.

Kristen: So if we jump across Glenferrie Road, perhaps to the Haverbrack area, what sort of price ranges do we find there?

Nathan: It’s been a little while since something has transacted in that sort of precinct, whether it be Haverbrack or into the Stonnington State. But they’re generally at a similar sort of price around $3500 (per sqm) maybe a little bit more for a home that you’re not going to see come to the market too often.

Kristen: Okay. Now Prahran’s been pretty strong this year, your thoughts there?

Nathan: I think it’s been driven largely by the fact that we haven’t had a huge amount of property to offer out into Prahran this year. It’s been quiet on the front of the single-fronted cottages where they’ve been creeping into that $1,000,000 to $1,300,000, $1,400,000 price point – if they’ve got parking.

Kristen: And then the buyers, where are they coming from do you find?

Nathan: The buyers into that Prahran market on those sorts of cottage type homes are generally trading up within the suburb or a couple of suburbs surrounding. Or they are downsizing coming the other way back from suburbs such as Malvern – where they’ve been on a double fronted home with a pool and the kids have maybe already grown up and moved out.

Kristen: So if we look forward to the future. The listings that you’ve got coming up, I know that stock levels at the moment have been pretty strong we’ve found across the board.

Nathan: They have been, absolutely.

Kristen: What are you finding for the future months?

Nathan: We’ve got really strong numbers of listings up for the 19th and 20th of June already, and then we’ve got a little bit of a break over the school holiday period.  And we are already starting to list very strongly for that period of the 31st of July and beginning of August. And we’ll see pretty good numbers coming up just prior to spring.

Kristen: And we’ve seen a lot of properties selling on main roads. Are you still getting those sorts listing? Are they still selling well?

Nathan: We’re probably not carrying any just at the moment and the ones that we have seen go up this year have probably been the harder type of properties to sell as they always are. But while the market was good they were moving like everything else. It’s now that we’re starting to see those just thin out like the rest of the market place.

Kristen: Okay. And if we finish up with your predictions for the market, what are your thoughts there?

Nathan: I think the market will probably track along pretty similar to the way it is at the moment, where we’re seeing 1 -1.5 buyers at most of our auctions whether it be on the day or before – as we’re starting to see more sales come about that way. So I think you’ll just see a pattern that continues like it is.

Kristen: All right, well thanks Nathan. Thank you for coming in.

Nathan: My pleasure. Thank you very much.

Kristen: That’s Nathan Waterson from Bennison Mackinnon.

Albert Park: 81 Vincent St: Good Crowd (70) but no action; Passed In on multiple vendor bids for $1,670,000

Not a lot on offer today and despite our headline a few were put away albeit on lower interest levels than last month. Of the reported sales we saw 7 from 13 go under the hammer or sell soon after for a 54% clearance rate. The standout auction was 65 Beacon Vista Port Melbourne with David Lack of Biggin and Scott. In front of a big crowd of 150, 2 bidders fought it out from $2,500,000 to $3,135,000. A strong result by anyone’s standards.

Some Opinions

Michael Szulc from Cayzers believes “the market has dropped right back – peaked back at the end of February”.

Kaine Lanyon of Bennison Mackinnon thinks things have dropped off a lot also.

To quote Damien O’Sullivan of Bennison Mackinnon: “Buyers are perhaps not acting in their best interests”. Implying there are some bargains not being taken up.

Is it demand or supply? At this stage there are a number of single fronted homes in Albert Park, Middle Park and South Melbourne – all around the 900K mark so it maybe supply and lack of qualty, just as much as it maybe buyer caution caused by outside influences.

St Kilda West and 24 York St had a sold result last Sunday just under $2million through Andrew Turner of Cayzers. Again reinforces quality land is anything up to $6,000 sqm with York selling for over $4,500 per sqm with a wide frontage and good redevelopment possibilities.

Dropping further down the bay we see Elwood finding plenty to put onto the market with 5 sales and an off market in the early to mid $1’s being bought. However once the number approaches or exceeds

 $2million it’s a different story. There are few bidders and homes take longer to sell (as a general rule). Cases in point are 2 Kendall and 11 Addison but granted 57 Dickens with Torsten Kasper of Chisholm and Gamon did sell. And what’s with Addison St – I’ve never seen so many homes for sale in this prized stretch before.

Another big week coming with 23 scheduled auctions over a $m. The big question is it lack of quality, quantity of supply (choice) or buyer mood changes from external sources that are currently affecting the market? What will this mean going forward? Lots still happening just in a diferent manner, at a different pace and on a different level to last month!

Buy Opportunity

Port Melbourne: 65 Beacon Vista: BANG: Bought under the hammer for $3,135,000: 2 bidders: Biggin and Scott's David Lack in charge!

Lined up like ducks; but the ducks didn't perform. Prahran 32 Harvey St: Passed In $875,000: 2 ducks, I mean bidders: John Manton of Marshall White (to the left) was the duck hunter.

In Toorak and South Yarra it was 50% at auctions today – which actually wasn’t that bad when compared to the last few weeks. Stonnington today had a reported clearance rate including Glen Iris over $1m of 66% (12 from 18). Not a lot to be taken from specific results today except to say that some average properties on main roads got some bidding interest; cases in point Williams and Orrong results. We reported on 7 and only one property – 48 Park Place South Yarra failed to register a bidder.

For those that had awell priced property and an agent who could get it on the market seemed to get a  good result. Case in point: 19a Tintern Avenue Toorak – John Bongiorno Marshall White

James Auction Report: A high action, fast-paced auction was the scene from 19a Tintern Avenue, Toorak this afternoon. Under the glorious Melbourne sunshine, John Bongiorno started off proceedings with a modest vendor bid of $1,700,000. The first bidder announced themselves after a moment of hesitation from the 70 plus crowd. After several bids back and forth, one party declared themselves out of the race which brought about a flurry of fresh aggressive bidding from a new party. Back and forth between the new and original bidders, twenty or so times, brought the price up to $2,380,000 at which point the original bidder waved the white flag and accepted defeat. Having declared the property to be on the market at $1,825,000, the vendors would undoubtedly be thrilled with the result, selling the property under hammer for $2,380,000. A strong atmosphere in the crowd produced three bidders on the day.    

Above does not happen that often in a completely down market.

So why have we eased?

We had lengthy interviews with Justin Long and James Connell of Marshall White and this is a synopsis of their takes on the market:

• Market still has strength evidenced by MW’s clearance rate in the 70’s per cent wise and as Justin put if 644 Orrong can get two bidders and a sold sticker on a $2,000,000 reserve then we will still be feeding our families for a month of two
• Properties must be priced appropriately as buyers have choice. Choice is the reason we have seen the disappearance of the ridiculous price paid.
• The market is in better shape than the press are saying and the proof may well be in the pudding as stock levels pull back going into the winter depths.

We had another discussion with Gowan Stubbings and Andrew Baines of Kay and Burton while waiting for the 58 Llaneast Auction. A summation of their comments are as follows

• $11 million sale in Flinders
• 4 Elgin Armadale which we reported on at auction last weekend – sold after a pass-in.
• Previous 80% Auction clearance rates have spoilt us but the times have changed. We (meaning selling agents) need to work differently. Expressions of Interest are now the way to go.
• There is sale after sale happening and unlike a month ago no result looked surprising – meaning too high.
• Buyer urgency has definitely dropped

Our take on the events of South Yarra, Toorak and Malvern in recent times

• Get ready for Expressions of Interest and if you don’t know how to play this game then you will learn at your peril. Get some help. Why will EOI’s happen? Simple; many auctions are not working  well in this market.
• The Kay and Burton claimed results can’t be ignored despite the pathetic South Yarra, Toorak auction clearance rates of the past few weeks. The market is not in freefall.

If we all agree yes the market has turned; then the interesting question to ask now is why?

 The real truth will mean different medium term outcomes for buyers.

Make Good Decisions 

He's happy. Lachlan Fraser-Smith aka Uncle F. of Bennison Mackinnon. He truly is one of Saturday's great auction characters; right up there with Marshall White's Disney twins. Go watch Lachie at an auction near you; it's an emotional experience and more the point it's usually a success. Malvern 15 Winter: Bought under the hammer: $2,010,000: 2 bidders.

Sam Rigopoulos of Hocking Stuart was in fine form at 33 Barry Street, Northcote

The market is holding up in the inner suburbs of Melbourne – no run-away results, just a stable market with depth.

Hocking Stuart, (Richmond) &  Biggin and Scott (Richmond) reported a 100% clearance rate today with 11 out of 11 sold. Both agencies reported multiple bidders and a stabilising market.

Andrew Gibbons of Hocking Stuart noted the biggest auction of the day was 319 Highett Street, Richmond, a big turnout of 250 people watched the property sell under the hammer for $1,492,500 on a reserve of $1,395,000. Five bidders and a strong result considering the property has no off -street parking.

The 2 bedroom Richmond market is still solid with, 31 Wall street, Richmond -  bought $785,000, 68 Bendigo Street, Richmond – bought 775,000, 16 Rose Street, Richmond – bought $826,000. All these property had issues and still sold well with 3-5 bidders across the board. Mr Gibbons indicated that the current market is seeing a noticeable reduction in open numbers however those that are attending are quality buyers.

Further North – Sam Rigopoulos of Hocking Stuart put on a great performance to rev the 100 strong crowd at 33 Barry Street, Northcote. The property was announced on the market at $880,000, 5 bidders emerged from the crowd and the property was finally sold for $950,000. Its was a solid result for the well located single fronted period dwelling.

Two big listings in the past two weeks that I thought I would mention, 571 Canning Street, Carlton North and 501/28 Tanner Street, Richmond.

571 Canning Street with Tom Roberts of Nelson Alexander (James Rating 765/1000) 
Link: http://www.james.net.au/rating/571-Canning-Street-CARLTON_NORTH 
is a wonderfully renovated and extended terrace with all the bells and whistles. The outdoor space of this property is equally as attractive with meticulous landscaping, which includes lap pool come water feature, inbuilt BBQ/Bar, retractable canopies and surround sound. It will be very interesting to see the result as there are not many dwellings in the Carlton North area that attract offers over $3 Million.

501/28 Tanner Street with Nathan Waterson of Bennison Mackinnon (James Rating 771/100)
Link: http://www.james.net.au/rating/501/28-Tanner-Street-RICHMOND  
is a two bedroom penthouse with arguably the best views in Richmond, 270 degrees, un-interrupted of the CBD, MCG and out to the Eastern Suburbs. Winning apartment of the year in 2003 this property is sure to impress and with a price tag around the 2.5 million mark it will be a landmark apartment sale for the Richmond area.

Little to report in Banyule (Eaglemont, Ivanhoe, Ivanhoe East) this weekend.

Until next time, know your market.

Breathtaking Autumn surroundings but Not Happy Jason. Where have all those $2m+ buyers gone. Toorak: 12 Flintoft Avenue: Passed In just like 50% of the auctions we saw today: Kay and Burton’s Jason Scillio left with Gary Ormrod to the right.

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate for the 36 Auctions we attended today was a limp  58%.

Bidderman continues to slide in all price ranges except Inner Melbourne lower $M+.

The Mood is Subdued for the most part across the $2m+ board. When we say Subdued and cooling we mean prices are leveling even on the good properties. We hope you enjoy our attempted 28 day forecasts in the main Market Wraps.

There are three distinct markets (1) Brighton cooling (2) Toorak – cold and (3) Hawthorn and Kew easing and leveling more slowly.

The Toorak and South Yarra market is downright frosty and again leading the way with auction pass-ins.

Below gives a representation of 29% reported bought on 17 scheduled auctions.

With the majority passed in on a Vendor Bid we estimate Bidderman across South Yarra and Toorak auctions was 0.5. One of the lowest on record (including 2008)

In Brighton and Brighton East it was a similar story although a lot more were reported with only 4 of the 18 auctions being bought or a clearance rate of 22%.

By contrast Boroondara agents who were able to report all bar 2 of their 47 scheduled auction results today had a reported clearance rate of 75%

Some tidbits from around the grounds: 

• In Bayside we witnessed another Pre Auction Declared Reserve with Rowan Thompson of RT Edgar Brighton. No the sky didn’t fall in. 4 bidders and sold under the hammer for a solid $1,641,000 result. Well done – buyers love this transparency. On the market at the declared reserve.
• One $3m+ sale that we witnessed today that went against the trend was 159 Victoria Road Hawthorn East (Jellis Craig – Maurice Di Mazio ) with 5 bidders and a strong $3,460,000 bought under the hammer.
• Auctioneer Alert – 7 Bethell St Ormond: I haven’t seen Andrew James in action for a few years and wow; what an improved auctioneer he is. This was a powerful, vibrant and totally controlled auction that started on time, had a crisp and short preamble and then from minute one a very electric feel to the bidding process. Opening with $1,085,000 – on the market 3 bids later. Andrew then worked over two bidders, with great suggestions and good bid retention until he could drag no more from the underbidder. Whilst not technically difficult with 4 bidders this was one the most emotionally powerful and compelling performances I have seen this year. Great theatre.

The “Clayton’s Reserve”: The reserve an agent states when they are not stating the real reserve.

What is the Clayton’s Reserve? You are the highest bidder and a property is passed into you. You are taken inside by the selling agent and told a figure, a figure that bears no resemblance to any reserve figure the seller would have accepted 15 minutes ago at the start of the auction. That is what we call the second reserve or the Clayton’s Reserve – the reserve you have when you’re not having a reserve (it’s an old joke, for those under 40). It seems a complete breach of the rules laid down by the seller and their agent in the auction conditions read out at auctions. It also appears to be a breach of the spirit of Fair Dinkum Aussie Auctions.

How common is the Clayton’s Reserve? It happens every weekend, everywhere.

Every week a buyer is singled out by a selling agent as the best buyer – the one above the pack. And, in many cases, no matter what that buyer bids, the property is going to be passed in to them. The home could be worth $1.4 million and the pre-auction reserve is at that level and the buyer bids $1.7 million – it will still be passed into them and they will be told a second and much higher, or Clayton’s, reserve, not the seller’s true reserve of 15 minutes ago..

Why do sellers and their agents use this technique?

1. In some cases, we have seen incredible buyer jumps post-auction, well above any reasonable expectations on price, usually because buyers have been in a heightened state of anxiety brought on by post-auction pressures. (Mr Auctioneer, these are not the rules you set down at the start of the auction. Why not sell through an Expression of Interest campaign if you want few rules, minimal care and no worries?)
2. Secondly, it’s a trigger so that when the buyer refuses the Clayton’s – sorry strategic – reserve, it immediately releases the agent (in his or her mind) to deal outside with all and sundry, thus rendering your stated exclusive right completely invalid.

Is this good business practice or misrepresentation? You tell us!

The crux of the problem: Sellers and selling agents are not playing by their rules – the rules they laid down at auction.

Background

Sellers: When you sell your home, you choose the agent and you choose a set of rules. If you select an auction process, your auction rules are, in part, embodied in statute, and also partly determined by the agent (Bid to Buy or Bid to Negotiate) and partly determined in your contract and the Section 32 that you display before the auction.

Buyers: We read the seller’s auction rules and listen to the auctioneer and, by our participation, we accept the rules (if we can’t change them) and we turn up on a Saturday to play a game by those rules. I have no problems with Bid to Negotiate or Bid to Buy auctions – it’s the seller’s choice – but why misrepresent this in the contract with two reserves?

There are two types of Auctions in Victoria: (1) Bid to Buy where there is a reserve and, if you exceed that reserve, you buy (eg Keatings and Bennison Mackinnon etc), and (2) Bid to Negotiate where you might be bidding to buy (discretionary) but many times all you are doing is bidding to negotiate post-auction (most other major real estate agencies who don’t have declared reserves or declared reserve ranges are Bid to Negotiate Auction companies.) Bid to Negotiate Auctions allow, even encourage, Clayton’s reserves.

And, please, I know that properties often are passed into buyer agents because selling agents believe we will talk our clients up and up and up as we need to earn a fee. There is some truth in this; however, there is an antivenin for that agent affliction – but I digress.

How specifically is there misrepresentation? Some Bid to Negotiate auctioneers misrepresent to the public when they read out “the vendor has a reserve. If that reserve is not reached, I will pass the property in to the highest bidder and deal exclusively with them at the vendor reserve.” They misrepresent because they have no reserve or they have two reserves (the real reserve, which may have actually been reached during auction, and the Clayton’s reserve figure that is offered post-auction).

So, in many cases, are buyers given that exclusive right to negotiate at the reserve as per the seller’s auction rules?

No.

What buyers are given is a miniscule amount of time (the auctioneer has his or her next job to go to) and a figure well above what the seller’s reserve may have been 15 minutes ago. Buyers are given what is called a second, or Clayton’s Reserve.

Aaah but… we hear the protagonists saying, Mal you’re exaggerating, the vendor moved his or her reserve post-auction. Occasionally, but hundreds of times – in fact, almost every single pass-in – the vendor has moved their reserve well above the last bid. Really, Mr Auctioneer, of course they have and I’m thin, polite and attractive to women. I don’t think so.

What happens when the seller or the auctioneer doesn’t play by their stated auction rules and perform a strategic pass-in with a Clayton’s Reserve?

1. Nothing: The seller and auctioneer get off scot-free – no stripping of premierships here, thanks very much – they have a never-ending “get out of jail” card.
2. Buyers lose a little more confidence in a wonderfully fair way to do business (a true auction, where everybody plays by the game)

What to do? Fixed reserves could be stated on auction day – well it’s worth considering. This gives time for market movements during a campaign, which is fair to the seller, and the buyers know what they need to do at auction to buy the home. However, as long as the government continues to allow this vendor and auctioneer reserve flexibility (that’s us being polite), these two sets of books, or misrepresented Clayton’s reserves, they will have buyer – and voter – unhappiness.

In the meantime, we call on buyers to consider a FIGHT BACK. There’s no point whingeing or waiting for the powers that be to act.

Please, we are not advocating disrupting behaviour at auctions. We are totally against poor buyer behaviour, agent abuse etc. It’s no good for you if you lose it. Don’t get mad; get even. Think Gandhi and all that sort of stuff. You need to keep your cool as buyers, but you must FIGHT BACK until the government fixes this issue. In two weeks we will give you five  ways to FIGHT BACK.

In some ways poor agency behavior is like Melbourne Storm and Carlton who were great teams and involved in great games; but they felt a need to not play by the rules, thus not only damaging themselves but the game they loved to play.

Buy Happy and Happy Mothers Day Mum – I love you very much!

Mal

PS We have held over till next week the Diary of a Buyer Agent which was to be published today.

Pre Auction Declared Reserve. Brighton: 12 Cowper St: Rowan Thompson of RT Edgar. In a cooling market, buyers loved it with 4 bidders and sold well above the declared reserve at $1,641,000.

Chris O'Shaughnessy and Edward Hobbs of Biggin and Scott in the middle of battle at 43 Laity Street, Richmond.

Its been a few weeks since our last update and despite the recent interest rate rises the market broadly is still where we left off – moving upwards.

Starting at the Top End of Town in East Melbourne a crowd of 60 strong witness 50 Berry Street pass in on an opening vendor bid of $1.9 million. Rob Vickers-Will of Abercromby’s gave the crowd every opportunity to bid but no one emerged. Things were slightly different at Albert Street where the penthouse with excellent views of the Fitzroy gardens was aggressively pursued by 4 bidders. The property sold well above reserve at $1,355,000 – solid result for Andrew Macmillan of Bennison Mackinnon

Richmond is still  strong with 2 bedroom dwellings like 17 Reid Street, 149 Lennox Street, 125 Brighton Street, 15 Bendigo Street & 21 Type Street all selling around the $ 900,000 mark with multiple bidders at all auctions. The depth of bidders indicates that well located 2 bedroom dwellings in Richmond are moving closer and closer to $1,000,000 – indicating significant market movement from 2009 where high $700,000′s was the norm.

Craig Shearn of Jellis Craig indicated that the Clifton Hill office had a 100% clearance rate with prices well above reserve anywhere from 5% – 15%. Mr Shearn noted that ” limited stock is still the main contributing factor behind the high clearance rates” and that “the recent interest rise appears to have had no affect on prices as the majority of purchases have already factored rises into there budgets”. Most importantly Mr Shearn noted that in his 26 years of real estate he has never seen  the market continually surged as it has in 2010.

Stefan Dzanovski of Collins Simms has also commented on the market strength with company clearance rates being between 97% – 100% in 2010. Also adding that open’s have been very well attended specifically double storey terrace’s in Carlton North, Carlton and Fitzroy.

Things are also hot in Essendon with 28 Schofield Street selling under the hammer and well above reserve – basically a land sale there were 4 bidders in total, one of them the next door neighbour. Solid result for the vendors and complements to Milo Rasinac of Nelson Alexander for an entertaining auction. At $1,267,000 this buy says land is valued around $1500 per sqm for the Salmon Reserve Green Belt.

The month of May has been talked about amongst many agents as a month of good stock levels and we concur, seeing May 1st shaping up to be a big weekend.

We are sure buyers would appreciate any kind of relief coming into the market as evidenced by the rising median price indicators courtesy of the REIV. While there are anomalies caused by small number of sales in some quarters this chart clearly shows prices have been on the march since the start of last year and circumstances seem such that it is likely to continue.

Know your Market