Hampton 48 Mills: Stephen Tickell straining everything to get that last drop of cash from the auction. 3 bidders. Bought for $1,560,000.

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 49% for the 37 auctions we attended. By 8pm it was 62% (seemingly a balanced result between buyer and seller).

Bidderman, our Demand Indicator, was at 1.6 – a level we feel continues to be a good representation of current demand: borderline – a  market that may be in balance but is on an edge.

Issues
This weekend was the first solid and uninterrupted auction market test since we all stopped for school holidays at the end of June. At that time we were seeing prices falling on big stock numbers. Since then the market has mopped up more than we expected. However the last few weeks have been very quiet. Saturday was no different – quiet – despite the largest auction offering for a month. With good stock tightening and an election interruption coming, it is looking more and more likely that the market will continue to flounder and gyrate until Spring.

A fortnight ago we thought prices had more chance of falling than rising, however to be completely frank it’s not as clear to us any more. The opposite is also possible. And next week we may have a different opinion.

Yes, good stock is selling, but good stock sells even during a depression. Most homes around a million dollars are selling. For the rest of the $M+market, there seems to be no clear direction at present. We are in balance but it does not appear a stable balance.

Highlights

• Everything sold in Stonnington - 12 from 12. Prahran was particularly impressive, with 6 bought out of 6
• There were two 5 bidder auctions – both by Tom McCarthy and Philip Moore of Biggin and Scott -  14 Green Prahran – $1,653,000 and 13 Hornby Street - $1,476,000.
• Prahran was hot – it had the second highest sale at 41 Closeburn, Prahran with Andrew Macmillan of Benmac – $2,586,000
• The top sale we witnessed this weekend was with Mark Wridgway and Michael Ebeling of RT Edgar at 58 Washington St Toorak – $3,350,000 post auction (for land buyers in the area that added up to $3900 per square metre).
• Flinders Caravan Park was reported as sold during the week for around $6 million. Stay tuned for subdivision plans and possibly a rare Flinders township land release.
• In Port Melbourne/Albert Park there were five single fronteds for sale in various different guises. One sold, four passed in, but three have since sold after. There were 7 bidders in total.
• There were a couple of $3,000,000 pass-ins in Bayside – possibly reflecting the large stock overhang at this level in the area.

Activity Levels – just look at the graph below to confirm what we are saying about large drops in activity levels for $M+ sales. It shows sales for the week ending June 26th v the week ending July 30th. The reasons for the drop in sales are partly seasonal, but also partly unusual – and it’s worth remembering that a number of those May/June 2010 buyers will have to become Spring 2010 sellers sometime.

Agent Comments - This week we asked if the election was affecting the market. The market wraps contain some very boring answers. (The agents aren’t boring – the election is.)

Mark Wridgway from RT Edgar: “The Election is having no effect in Top End Melbourne which is mostly pro conservative. People figure from the property angle that Labour should win so the choices are: as is (which is regarded as OK) if Labour wins or slightly better if the Libs win. As opposed to  2007  when incumbent Liberal Government looked like they were on the way out and therefore conservative sellers held off as 2007 Labour was an unknown. Fewer people act in times of unknowns.”

Family Homes – Not all family homes go up

7 Ardrie Road Malvern East

This home was bought in 2000 for $410,000 and resold again in 2007 for $1,995,000 by James Redfern of Marshall White. It was a great result at the time. For whatever reason the new owners decided to move after two and a half years and it was sold by Abercromby’s Robert Vickers Willis earlier this year in the mid $1.9 millions or slightly less than the 2007 price. The market was strong in February but unfortunately come May the deal had fallen through. We reported the re-auction last weekend.

James Auction Report: With the weather taking a turn for the worse, auctioneer Tim Derham opened the auction with a vendor bid of $1,650,000. With the umbrellas opening in the crowd and the atmosphere souring, no bids were made for the Malvern East property. Derham did all he could to extract a bid from the reluctant crowd before returning to discuss the situation with the vendor. Upon his return, he suffered an equal amount of bad luck. There were no bids made for the property and it was eventually passed in. The property has since been sold by Robert for a tad over $1,700,000.

What to learn from this? – and please no smarty pants here – I lost money on my first marital home 25 years ago. What we can learn is:

• Good properties do perform well over a longer period
• Properties that have to be sold over a shorter period of time have an added risk of being subject to short term market fluctuations
• Properties that are above the median price for the precinct are particularly susceptible to market movements
• Agents can get very strong prices from buyers – e.g. both James Redfern and Robert Vickers Willis got above-market prices which came back to the buyer at resale time.
• The market moves down as well as up in home buying.

What could be done to reduce the risk when buying a good home? After all, this home had a very good James Home Rating of 792/1000

1. Consider land to value ratios – the lower they are, the more susceptible you are to a reduced growth result.
2. Be clear as to why you are buying – Clarity. Then buy for the long term.
3. Buying homes well above the normal precinct price attract greater risk, especially when this is combined with point 1 – lower land to value ratios.

Apartments
Good insight from Gerry Gordon of Hocking Stuart (Peter you need to buy Gerry a new tie): “Sweet spot in apartments is when size matches price point. Many apartment buyers are attracted to a price. Price point people are being attracted to Bayside. Healthy apartment market below a million. Getting 5% return.”

Stock Levels
This week we trawled through old stock lists, off markets, stales and unsolds. The stock we trawled through was mainly unfinished or rubbish apart from the Top of the Top End – where there are good quality unsolds. We thought a few weeks ago (as we came back from holidays) that there was more good stock around than there actually was. What happened? More good stock got mopped up in the flurry pre school holiday break than we first thought (examine our Buyer Activity graphs in the Market Wraps). Around the traps, the word is that Spring seems to be shaping up OK for both buyers and sellers. Up until then you can see the reduced new stock levels  (graph below). Prices are holding at present.

Wormie - the chart below represents our best guess on what $M+ prices are doing right now.

James Buyer Opinion: This week we have reprinted our opinion article that was published in Business Age last week. We update our opinion piece every Wednesday and next week is we will start a 9 week series on Negotiation. Our first article is: “How to ask the “On the Market?” question – without being a smart aleck”.

Thank you for your continued support of our company in ratings, news and advocacy. Over the next month or two you will hopefully witness major improvements in the video quality as we improve our technical capabilities to match the incredible numbers of people now watching them.

We Only Buy Homes

Mal

Balwyn 80 City Road: A good crowd turned up to see not much happen - a common occurrence across Million Dollar Melbourne today.

What is it with redheads? They're running the country - and now they're taking over the auctions. We counted six in this photo in amongst auctioneer Phillip Kingston from Gary Peer. 7A Nightingale St Kilda East. Bought After $1,200,000. 1 bidder.

At 6pm Saturday the James Clearance Rate on the 22 $M+ Auctions we covered was 59%.

Our Demand Indicator Bidderman was 2.2.  Hmmm – an interesting increase but it was off a very low turnover.

Today’s Highlights

1)      Bidders were present at 18 of the 22 auctions we covered –  and at three auctions there were 6+bidders

• 23 Sunburst Avenue Balwyn North (Doug McLauchlan of Marshall White)
• 12 Lennox St Hawthorn (Russell Turner of Christopher Russell)
• 7 Monomeath Avenue Toorak (Justin Long of Marshall White)

2)      The Pies are top of the ladder – and the election is on

We couldn’t find many $M+ auctions worth covering and only one of the auctions we covered went over $2m this weekend. So with the small numbers – just coming out of  the winter hiatus – it was like a first back training run before we get into the winter season proper over the next few weeks.

Agent Quotes

Scott Patterson of Jellis Craig: “Sold 12 from 16 today throughout the company. Opens and auctions were well attended…those who wish to sell in next month or two could enjoy quite solid results due to lack of supply, because demand seems reasonable… August 28 is looming as big weekend, particularly as it is now the week after the election…only thing is that Hawthorn vs Collingwood might affect crowd numbers etc…’

Hamish Tostevin of Marshall White: ”Opens were steady without being over-run with buyers. Certainly a lack of property at the moment in terms of supply. Should be a solid spring, particularly when the election is out of the way.”

Now, where were we before we were so rudely interrupted (by the school holidays)?

It has been a month since we last reported, and we have seen more Top End activity at Tullamarine than in any other suburb. Was it sales? No. It was our selling agent brethren jetting off to Europe to recharge their batteries. This poor humble buyer agent can only give you a travelogue on the Dubbo Zoo so I won’t bore you with tales of kids and a 12-hour car drive or the fact it ain’t a patch on the Werribee Zoo.

The world is a different place since our last report: back then Kevin ’07 was in charge, Masterchef was still a competition to find the best amateur chef in Australia, not the luckiest cook as it is now, and our $M+ market had prices cooling quicker than a Melbourne winter, after a blistering start to the year (although there were still an incredibly high number of buys).

A month ago we reported that the early 2010 gains had evaporated in the five auction weeks of May due to the sheer number of listings. May’s record supply finally stopped what had, since March 2009, been a rising market, driven initially by international buyer demand and then solid local demand.

So what is happening in our Winter Market (June to August) right now?

To be frank we don’t know for sure yet. But here are some of our thoughts.

1. Prices Now
2. Stock Quality Now
3. Method of Sale Now
4. Risk v Reward Now

Prices Now
Selling agents love to use the ‘p’ word plateau (rather than the four letter ‘f’ word)  to reflect on, or deflect away, thoughts of a declining price market. Right now, we actually agree with the ‘p’ word – especially if you accept that prices fell significantly in May and June. (By the way, the ‘f’ word that selling agents don’t like to use is fall.)

Some reasons prices may be plateuaing are:

• Seasonally reduced action (winter)
• An election on the horizon –  so some buyers and would-be sellers will pause to wait for the result.
• We had a big price fall in May and  for most of us market watchers the way forward is still unclear. Will we see more price drops or …. who knows? Like many, we are waiting for a sign.

Demand in Relation to Price

• This weekend Bidderman was at 2.2 – but, please note, this is based on very low auction volumes and therefore statistical distortions are possible.
• As a buying company,  we have had commitments from a significant number of new clients over the past few weeks.
• We feel it’s better to reflect overall demand as more cautious rather than dropping – however another month or two may tell us a different story.
• Right now, buyers still do have the rare luxury of having their cake and eating it too – if they choose to. Prices have fallen in May/June, and in July we are in a market of reasonable choice. Hooray for buyers!

Private Sale Clearance Rate – the number of Proven Sales is only 11 from 50 – or 22% – over the past six weeks.

Six weeks ago we randomly selected a basket of 50 higher end Private Sale and Expression of Interest properties, right across our $M+ Melbourne market. We did this with the aim of  checking  what was bought 6 weeks later (roughly the same time as a “go to whoa” auction campaign), and to therefore calculate the clearance rates  to see how Private Sales and Expressions of Interest were really going.

We thought this snapshot would provide the best reflection of private sale market activity and confirm or question comments by some selling agents that: “Oh yes, auctions were not as good as March, but we are selling a heap via private sale”. The results proved that while in May agents were selling a heap, it wasn’t so much the case in late June to early July. However,  it could have just been that many agents were away.

• We have made an effort to contact those that were withdrawn without a sale price, and we may have missed a few sales – but overall the non-auction homes are NOT running out the door any faster than the auctions. In fact you could make a strong argument that, as an effective method of sale, auctions are still outperforming private sales in many cases – despite the declining clearance rates, given that only 1 in 4 private sale properties have been bought in 6 weeks.
• These figures must surely help smart buyers put together an offering strategy. It’s certainly prompted us here at James Buyer Advocates to change how we buy in the last two months.

Today’s final word on price – are you a glass half empty of half full person?

If you feel the double-dip recession is fast approaching and the world as we knew it is about to end, then, by all means, don’t buy – and in fact sell (and please give us a ring if you have a good home to sell).

If you feel Julia (Gillard) won’t be changing the legitimate immigration numbers any time soon (demand) and Justin (Madden) won’t be able to release large numbers of housing blocks in Inner Melbourne because they are not there (supply), you may wish to ignore the doomsayers and take advantage of this current price breather combined with good stock offering. The GFC lasted less than a year  (for us) and in July 2010 Melbourne $M+ home prices are still 20 to 30 per cent above 2008 GFC home prices. Remember the 2008 ‘bulls**t’ rumour of the year, which said the NAB and other banks were about to foreclose on 200 homes in Toorak alone – it never happened. Yes we are biased and make a living by encouraging buyers to buy – but the facts are still very positive for buyers.

Stock Quality Going Forward
Spring quality and auction numbers are the variables we don’t have a clear handle on as yet. Right here and now in July, we have a market with excellent stock numbers for buyers – if you know where to look and you actually act correctly (please see the following paragraph on methods of sale). We also think the quality is good. Going forward, quality stock levels are not clear to us, because traditionally when quality sellers see a declining market they are loathe to put their home on the market on a speculative basis (in that, if they don’t have to sell, they won’t). This obviously leads to less stock on the market, which may affect price but, more importantly, it affects choice. Good buying decisions are more likely when, along with good advice, you, the buyer, have good choice.  You have that now.

Method of Sale
As we said, there is choice now if you know where to look, whom to ask and how to deal. Look at the above private sale table – there are some good homes there. We keep overhang lists (stales and unsolds) and there are also a number of off-markets and quiet pre-releases available. Granted, some of the vendors are still in their price cocoons but  quality sellers who have adjusted their price expectations may have homes worth considering. The off-market (unadvertised properties) may well be the market of choice for a number of buyers and sellers in the next few months.  But, please note buyers, you will have to sharpen your negotiation strategies to take advantage of all that is on offer.

Risk v Reward
To digress – Risk v Reward is where Masterchef’s Adam and Claire had it all over Jono. While Jono was going for the big dish on every occasion – and you have to admire him for that – he wasn’t playing the game to the best of his abilities. Adam is the quiet master at the Masterchef game. He sees a situation and says: “Yeah, I want to try and make a dish that will impress the judges and maybe get me a shot at immunity – the reward – but I don’t want to push the boundaries that far that I risk getting in the elimination round if I fail.” Good Home Buying and Negotiation is absolutely the same as this. Why is that? Because in the first instance the strategy should be to get yourself into a strong position and not risk all for the pot of gold. Once you are in that strong position, then you can make a run for the prize. Another analogy is acclimatising at base camp before you make the assault on the Everest summit. This is Risk v Reward.

A full James Buyer Opinion on Risk v Reward in today’s Market will be published here on Tuesday – so look out for it this week. At the moment you will find our biggest ever ‘clicked on’ James Buyer Opinion article – The Learning Fee - right next to this article.

It’s good to be back

We Only Buy Homes

Mal

Balwyn North 23 Sunburst. Big Crowd for Doug McLauchlan of Marshall White - 125 in fact. Seven bidders. Bought under the hammer for $1,567,000.

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.

Hampton: 28 Amiens Street: Auctioneer Peter Kennett working on his beard. Hmmmm. Bought post auction north of $2,375,000. Bidderman 1.

Discussions this week with Robin Parker of RT Edgar Real Estate included the  firm’s initiative to disclose the reserve price at the commencement of the campaign of 12 Cowper Street, Brighton. Throughout the campaign,  Rowan Thompson (the auctioneer), advised prospective buyers that property would be on the market at $1,425,000.   Buyers were informed and it paid off.  Mr Thompson successfully auctioned the property, with 4 bidders and almost 50 bids, to successfully sell the property for $1,641,000.  Their forward thinking to disclose the reserve price to buyers from the commencement of the campaign, not only encouraged people to bid, it advised prospective buyers that if they did bid at that level and they were the last one standing, they would buy it.  On a day where pass-in numbers were higher than we are currently used to seeing, this strategy worked and it worked well.  Declared Reserves  a winner for both buyers and sellers.

Still on land sites or major renovations, the potential new home site at 76 Carpenter Street, Brighton, auctioned by Campbell Cooney of Hodges, saw 4 bidders again draw the price to a close at $2,220,00.   A strong result with the property calculated at a little over $2,600 sqm.   The large land sale further south, however, at 5 Rippon Grove, Brighton remains unsold passing in at $3,252,000.  There were still 3 bidders  on that property, and given it’s location, is sure to sell soon.  Another with 3 bidders,  also passing in, was 9 Jillian Avenue, Highett. Lack of bidders was not the problem on all properties.  Perhaps some vendor expectations are still rising when the market is not.  Of the 10 Bayside properties we covered, 7 passed in, one sold prior and two under the hammer.  There were bidders on all but two 65 North Road, Brighton – well sized home on low maintenance block and 35 Reid Street, Beaumaris a large family home in a great location.  Others passing in with one bid apiece were 17 Connor Street, Brighton East and 4 Smith Street, Hampton.   However, Jenny Dwyer of Hocking Stuart, again showed her skills, successfully negotiating the sale of 28 Amiens, Hampton.  A great family home in the Castlefield Estate, initially passing in for $2,275,000, eventually selling north of $2,375,000.

Another result from an expressions of interest campaign for Ross Savas and Stewart Lopez of Kay & Burton, selling a block of land in Mulgoa Street on Brighton’s Golden Mile,  for more than $4,000,000.

Definitely poor selling results this week.!  Were they due to the upheaval seen on the stock market on Friday, the quality of property, the Vendor expectation or reduced buyer interest.  Bidder man was still at 1.8 on the 10 properties we covered.  Perhaps the next few weeks will tell.

Happy Wife Happy Life

Brighton East: 17 Connor: Leigh Hallamore passes into a lone phone bidder at $2,125,000

Brighton 2 Manor: Bought After $5,580,000. Bidderman 1. Great home and great price. Well done to buyer and seller and agents Regina Schmidt and Brian Devlin - you're all winners on this one.

A quieter week in terms of numbers, given the Anzac  long weekend, and results were as expected.  Some sold strongly, some passed in, some sold after.  The ‘golden triangle’ in Black Rock continued to sell, with Nick Johnstone of JP Dixon selling 16 Glenmore Crescent for $1,820,000 and a well run campaign by Jason Gill of Hodges at 49 Were Street in Brighton, saw  James Paynter (auctioneer) bring down the hammer at $2,230,000.  Both properties, although liveable, will require work in the future.

The big auction for Bayside this week was with Buxton’s David Hart at 2 Manor Street, Brighton – a stellar location and property.  Initially passing in at $5,000,000, David successfully negotiated the price up to $5,580,000.  Chris Bevan of JP Dixon got another ‘biggie’ away during the week in Martin Street, Brighton, down on the ‘golden mile’ for a little over $8,000,000.

A few that passed in, were 3 Bruce Street, Beaumaris – land only with a north rear for  $1,080,000, 40 Edward Street, Sandringham  for $1,100,000 and 1 Roslyn Street, Brighton on a vendor bid of $1,450,000.

May will see 5 weekends of auctions this year and should provide us with information regarding the continuing strength and numbers in the market.  Speaking with Justin Follett of Kay & Burton on stock levels, he advised they have more auctions coming up for May than for the same time last year.  They have experienced a strong start to year and he believes the market may stabilize over the next few months.  Good news for both buyers and sellers.

Happy Wife  Happy Life

ALL MISTY EYED. Antony Woodley brings joy to one and tears to two others at 110 Drummond St Carlton. Bought for $1,500,000.

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate for the 33 Auctions we attended today was  71 per cent.

The Anzac Day Weekend – Lest We Forget – was not expected to produce bumper interest. This weekend auction stock levels were not high and quality was mixed. Today therefore turned out as expected. Some solid results, some reasonable crowds, some pass –ins and some marginally weaker prices.

Bidderman was 2.1. Still healthy for sellers. In line with previous low key auction weekends for this market.

All areas we reported on had mixed results for buyers and sellers evidenced with say a strong one bidder $5,580,000 sale at 4 Manor St Brighton (Regina Schmidt and Brian Devlin of Buxton) against two “$5,000,000ish” pass-ins at 181 Gipps St East Melbourne and 36 Walsh St South Yarra.

7 bidders at 8 St Phillips St Abbotsford (Chris O’Shaughnessy of Biggin and Scott) and sold for just under a million ($987,000) compared to 10 McCutcheon St Northcote a similar priced period home offering which had no bidders and was passed in.

What can we say this means. Not much.  Low key – steady as she goes.

As we reported last week the action has been behind the scenes in recent times  - with large numbers of private sales, auction mop-ups and bought befores. So today the $M+ auction market, like the older diggers, seemed to be marching time.

Two more bigger news items happening behind the scenes.

FIRB – a Personal View

FIRB was in the news for all the right reasons and hopefully some good debate will result. While we know FIRB was a significant catalyst for Top End price improvement last year (read our May 2009 onwards market reports or speak to Jellis Craig and Marshall White agents) we are not so sure if tightening up on these rules will have any immediate effect on the current $m+ market as strong local buyers have come in recently and the dollar appreciation since those early days in May 2009 has diminished the overseas buyer frenzy somewhat. In the longer term I personally believe a return to a version of the 2008 FIRB policy is the correct thing to do.

For some politicians and high ranking members of our public service to say the Chinese community or the FIRB rule changes has not had a major impact on Melbourne home prices says to us, simple buyer agents, two things.

1) They didn’t get many Saturday afternoons off last year; because all they needed to do was turn up  to an auction or two in Melbourne’s East to witness first hand what was happening. February – minimal bidding. May after the rule changes; 5 bidders, 6 bidders, 4 bidders.

2) They struggle with Economics 101 or they don’t subscribe to the Adam Smith’s demand and supply theories. More demand. Less supply. Prices go up.

But please I personally think the Chinese community did us a great favour last year with regards to our shorter term economic prosperity and the FIRB rules were not intended to allow open slather (they did however).

Longer term, I personally do not subscribe to having foreign investors buying large amounts of our community at the expense of local homebuyers. I personally have no issue with the government deciding the immigrations levels and once you are an Australian citizen you can buy what you like – it’s a free country. But like we have seen in many parts of America, home ownership rules that encourage no connection to the local community will ultimately destroy the existing mosaic of that community when the going gets tough. I personally think for the long term health of our local communities they need to be “owned” by those that care about them most – those that are connected to it and live within it on a day to day basis. I personally want my children to have a chance to buy a home in their local community if they wish to (and are prepared to work for it).

Congratulations to journalists such as The Age’s Marika Dobbin and those at the Financial Review for continually raising this major issue until, if we are to believe what we are hearing, something is being done to find a bit of balance.

Metung St Balwyn Auction 2009 - 3 months after FIRB rule changes

The Weekly Review

The second bit of behind the scenes big news is the Melbourne Weekly has a brand new competitor, The Weekly Review and on the surface it seems to have a high chance of success.

Why would a start up competitor have a high chance of success? Agent support. The Age, who runs the Melbourne Weekly has always had a love/hate relationship with Agents – The Age love the agents and the agents ………  The reasons for the Agents feelings are not important to this story but they are deeply held and long term.  Anyway there seems to be a groundswell of well-wishers hoping to see The Weekly Review (1^st edition out this week) make it and provide solid competition for the incumbent. Like most new ventures that bring fair competition to the $M+ market place we wish them well.

Watchout for it in your letterbox.

Whispers

Some agents continue to whisper there has been a dropping of numbers through opens and things are easing off a bit. This could be a sign of tired non buyers taking an Easter breather, they are saying that so we will say that in our news or it really is true. Its not clear to us. We thought there was an easing a month or so ago but then a high quality pre Easter auction weekend went bang – big results for sellers.

Overall this year we have a story – one of market strength and seller joy. The next five weeks will give a very solid indication of whether or not that market strength and seller joy is continuing.

A low key market news and insight this week – not much point saying a whole lot about nothing so please enjoy our 33 auction reports and stay tuned for some more analysis in the next coming weeks when the market gives us cause to do that.

Buy Happy and Lest We Forget

Mal

Camberwell: 16 Green: Bought $1,400,000. Bidderman 3. Doug McLauchlan, Marshall White about to bring the hammer down.

After a week or two off for serious buyers and sellers, the market in Boroondara keeps on keeping on, with clearance rates for most agencies around the 85 per cent-plus mark.

The weather in Melbourne was perfect today – perhaps the last breath of summer – and there were good people numbers at  auctions and at ‘opens’ enjoying the sun – two properties in particular of note – 42 Berkeley Street on Hawthorn’s Scotch Hill (James Scarff, Kay and Burton) and 55 The Ridge Canterbury (Daniel Bradd, Jellis Craig). Both big family homes in well known streets. Our ratings will be up in the next few days.

Land sales remain strong  – two of interest and both sold by Noel Jones Agencies were-

• 5 Ross Street Kew – 814m2 (John Cokalis) sold for$2,260m (or $2780/m2) – 6 bidders
• 151 Wattle Valley Road Camberwell- 1598m2 (Geoff Inglis) sold for around $2.6m (or around $1630/m2) – 5 bidders

While these properties were not vacant sites, most buyers would see a new home project down the track. Developers seem back in  full flight – there does seem to be an enormous lot of building sites out there and of the builders I talk to there is certainly no shortage of work.

No real surprises in the key auctions we attended -

• 22 Bellett Street Camberwell (Anne Mackie, Hocking Stuart) sold for $1,770,000 – 2 bidders
• 16 Green Street Canberwell (Kathy Malcolm, Marshall White) sold for $1.400,000 – 3 bidders
• 28 Lennox Street Hawthorn (Hamish Tostevin, Marshall White) sold for $1,305,000 – 4 bidders
• 44 Mary Street, Kew (Walter Dodich, Marshall White) sold for  $1,524,000 – 3 bidders

Add to this some big ones selling before – 108 Harcourt Street Hawthorn East (James Tostevin, Marshall White / Jock Langley, Abercromby’s ) sold for a figure  just over $4,500,000 and 17 Wentworth Avenue Canterbury (Peter Smith, Jellis Craig) sold for $2,150,000.

Overall confidence remains high from both buyers and sellers alike.  Some insights from Top End selling agents -

• Richard Winneke from Jellis Craig believes the market continues to remain strong – their company sold 23 from 27 today – the four did not sell were less than perfect properties which would struggle in any market.
• James Tostevin sold all of the five he auctioned today and believes the market is ‘flying’.
• Jason Scillio from Kay and Burton believed this type of activity could go on for ‘another 2-3 years!’
• Richard Earle from Jellis Craig also could not see any real end in sight, claiming that maybe a ‘flatting off of the market’ would be the best buyers could hope to expect for.

Not everything selling however – 52 Athestan Road Camberwell passed-in and 8 Stanhope Grove Camberwell has been withdrawn from sale. Both of these properties were ‘less than perfect’ at least that is what the market thought.

The median price trend chart, courtesy of the REIV, represents what we think is happening in $M+ Boroondara despite these charts being for all (above and below $M) member sales in the area. Prices have been going up dramatically. WOW look at the government’s law change (FIRB) permitting foreign nationals to buy land which came into effect and we reported on around March of last year (Mar 2009). Look at Kew.

We have added another chart below (focusing on Kew and Balwyn) to show you more clearly the effect on prices the FIRB rule changes had in March of 2009 and the leveling off that occurred when the Aussie dollar started to strengthen strongly against the US dollar (relevant to the Chinese community). With the help of Canberra, the Chinese community single handedly (a bit of exaggeration) rescued our Inner East $M+ property market and whether you like what is happening now with prices this was the beginning, one of the catalysts for the incredible price improvements right across Top End Melbourne.

What about Canterbury it looks like a wounded walrus – we guarantee you its statistical shortcomings – too few sales to give meaningful data.

Two biggish weekends coming up May 1 and May 8. We are almost half way through 2010 and no real slump seems in sight, at least in the foreseeable future. Even more reason to make good decisions and…

Design Smart

It’s 6pm and the James Clearance Rate for million-dollar-plus homes is another 70 per cent on the 20 auctions we attended today and will rise overnight. The picture above is of the guiding hand of James Connell from Marshall White as he works the crowd at today’s 2 Selwyn Court Toorak auction. Is that one more bid, sir?

Continuing on the value theme of last week, this week we’ll look at pricing.

Valuing, quoting and pricing in this current market is not the issue that bedevils our industry. On the selling side, there has, until recently, been an increasing lack of care, conservatism (“quote ‘em low, watch ‘em go”) and/or poor training. On the buying side, there’s been a lack of understanding of the market process, a selling agent’s role and how pricing is determined. These are the underlying issues, in our opinion.

Can we say, firmly, that we don’t support selling agents withdrawing from the quoting arena. As professionals, the answer, in our opinion, is not to withdraw from quoting but to get better at it and be clearer in the definitions of the advice given to both buyers and sellers.

You can find homes on the internet, a solicitor can email you the contracts, an auctioneer only needs a microphone … why would a seller pay an agent who can’t talk price? Why not just hire a security guard for open for inspections? If a buyer or a selling agent can’t talk price or demonstrate value in relation to the home’s characteristics, what are they doing?

Buyers and sellers want good quality buying agents to help buyers understand their needs, make good decisions, assess value, find properties, carry out due diligence, negotiate and – wait for it – talk price.

Buyers and sellers also want good quality selling agents and part of a good quality selling agent’s kitbag is to sell the virtues, open the house, direct buyers towards other alternatives (if not suitable), run a transparent auction or private sale process and – wait for it – talk price.

At James Buyer Advocates, we think buying agents and selling agents need to talk price. But those discussions need to be genuine if price talk is to add value to the buyer’s or seller’s decision-making process.

So let’s talk price. When we talk price, we talk many different numbers, which we at James call Price Points. For example:

• Individual Price Points: your price now, your price next week, other buyers’ price, the vendor’s wish price, vendor’s bottom line price, the agent’s quote price and your Uncle Peter’s best advice price.
• Timing Price Points: pre-sale prices, deadline prices, prices just after a negative The Age headline, offers-with-condition prices, auction day prices and post-auction day prices.

And so on…

So how do we know whose price is right?

Nobody is right or wrong. There is no wrong or right price unless you think opinion is a right or wrong thing. The final price is nothing more than a reflection of two agreeing opinions – the buyer and seller – at a point in time.

Is it possible to predict what this price will be?

Yes, in many cases, but not all. Nobody can predict with complete certainty the behavior of each individual buyer or seller in a property exchange; however – and this is where selling agents’ quoting and buyer agents’ estimates come in – it is possible to predict with a high level of certainty how large groups of human beings will react to a property. Taking it one step further, it is possible to get, say, eight out of 10 estimates close to the mark (maybe a bit less in this current volatile market).

No, Mal, you ratbag, tell me the price. You are sounding like a selling agent. Stop “crapping on”. How much is it worth? How much do I have to pay to buy this house?

Please, it is so important that buyers understand this from the outset. There is no magic or set price in many of the sales we are involved in. There is no one price and no way of getting the “price quote” right every time in a fluid market situation where we have a process (auctions, expressions of interest and now many range private sales) that allow for all opinions to be expressed openly.

Price should not be a noun; it should be a verb. Price is a living, breathing thing.

Price differs from one hour to the next; it does not stand still.

Price is a conduit in a process of distilling opinions.

Good selling agents try and influence opinion upwards and, over the years, I’ve found that good buying agents try and find the pricing points, inform the buyer of risks associated at each offer point and follow instructions given after a client’s decision.

As an aside, we find that, when dealing with highly skilled selling agents on good quality homes that are reasonably priced, truth on both sides has been the elixir of many deals.

We at James Buyer Advocates talk to our clients on our initial thoughts on price ONLY after we are sure they understand what price is and what version of it we are talking about. And when selling agents re-enter the market with sensible quotes and more explicit communications, then it will still be up to buyers to understand and manage what they are being told.

At James Buyer Advocates, this is how we work out “price” or work through the price process (and in this order):

• We form an opinion on good value buying – this we call the James Control Price and we base it simply on Land + Building. This gives us a base to begin with.
• Next, we rate the home – James Home Provisional Ratings. This gives us a number out of 1000, some clarity on the characteristics of the home without the influence of a specific PRICE. It is vital to be able to compare quickly and focus on the goodies and “delete” the baddies.
• Next, we send that to our client for their feedback.
• We then visit the home and confirm or adjust the James Home Rating and/or the James Control Price.
• We look at current comparables (history often repeats) in greater depth.
• We look at Bidderman – bidder or buyer depth on similar auctionable, private sale and off-market properties. We keep detailed records of Bidderman. This is why we almost always mention bidders in our auction reports.
• We look at other alternatives on the market.
• We ask our clients their thoughts on other homes and how much they like this one and what they wish to spend on it.
• We consider renovation costs and overcapitalising or undercapitalising.
• We speak at length to the selling agent and other selling agents not in the selling company who may know the home.
• We look at the records we keep on individual agents and agency policies on how they conduct the sales process for this type of home.
• We start forming our opinions on price points (that is all our and valuer’s and agent’s and bank’s numbers represent – somebody’s opinion).
• We put those thoughts in writing to our clients and the numbers may have moved considerably from our initial James Control Price, or they may have not moved at all. Generally speaking, we find we give our clients three price points and help them distill one:
  a) long-term good buying price;
  b) minimum price the vendor will accept; or
  c) hot market price.
• And the price we help our client distill is what price they are prepared to pay in their chosen risk versus reward scenario at that point in time. Eg the higher you go, the lower the risk but the less the reward and, of course, the lower you go, the higher the reward if successful but the greater the risk of missing out.
• Once things are becoming clearer on OUR price, we encourage flexibility and we keep saying to our clients “Are you buying a price or buying a property?” (that’s a naughty trick of ours, but it works).
• We then begin the strategy planning and the processes we will follow, in conjunction with our client’s wishes to achieve the desired result.
• And we either buy the home or we don’t and the seller either gets our price and we get theirs or we/they don’t.

Finally, at James, we honestly don’t care what price our client pays. We have no emotional attachment to a number. It’s not possible for buyers to have this feeling of detachment. What we do care about is our professional obligations to our buying clients in providing the due diligence for our client to assist them in making informed decisions (on pricing among many things) and our emotional outcomes are determined by how well or poorly our clients think we deliver on these obligations. With the processes above and this attitude to price, we have negotiated, bought and missed out on hundreds of million-dollar-plus homes and our business continues to tick along.

So “our final price” is determined at the end of the process, not the beginning, and that process only ends when we lose interest in a property or it’s bought by us or somebody else.

That’s how we do it; that’s how we talk PRICE.

Hope this helps and, if you would like to talk price, give us a ring.

Buy well for the long term.

Mal

Adam’s article this week is on the importance of feel and he uses 5 Hopetoun Road Toorak as his example. We are now starting to see a number of his $1 million-plus builds (renovations and new) for clients we have purchased for. If you would like to see some of his impressive work, please contact our office.

Two really strong auctions in Bayside yesterday

43 Victoria Sandringham with Buxton’s Mark Earle and Bill Jowett.  5+ bidders – selling under the hammer for $3,350,000 (2700 sq metres of land, with no restrictions and a bulldozer home – which the new owner will do). This means prime Sandringham land (non beachfront) is selling for $1,243 per sq metre. I know Sandy is an extra 10 minutes beyond Brighton but at $1200 per sq metre it’s worth a thought. We are happy to buy for our clients here.

Speaking to Bill Jowett afterwards, whom James Market News likes, we got talking about the market and Bill’s take is that his company has come off a few record months (that’s agent code for we are making a living again) and he says the Bayside has been solid all year and while some buyers and sellers are telling him we are in a bubble, Bill doesn’t read it like that. Stock, in his opinion, is not likely to increase dramatically in the coming months, although if it unexpectedly does in say October then that will tell us the real truth as to whether or not we are out of the mire. But from a sellers point for view Bill thinks things are looking pretty rosy right now.

2a Shandford Brighton sold a week or two ago – beachfront -Golden Mile land. – 531 sq metres with 2 town house permits and water  views – $3,150,000 or $5932 per sq metre. More expensive than Toorak and right up there with Domain in South Yarra and St Vincents Place in Albert Park as the most expensive residential family home land in Melbourne. The laid back but very effective duo of Regina Schmidt and Brian Devlin presiding over the sale.

And speaking of Golden mile views – the second standout auction of yesterday was 180 and 182 The Esplanade selling through Rod Richardson for $4,105,000 or $4863 per sq metre -  3 bidders confirmed this price at auction. With the Esplanade you have the views and near Golden mile beachfront prices, but with traffic.

40 Elwood St Brighton didn’t sell at auction, two weeks ago and is currently for sale at $1.7m. Surprising, although it does show that even in a tight market, issues (3 brs and south facing rear) can prevent a home that is overall quiet appealing from selling.

Our absolute James favourite, 25 Cosham Brighton sold for $5,600,000+, congrats to owners and Sturt Hinton and Stewart Lopez of Kay and Burton. As we said the 7 Cosham St auction sale confirmed land value at $3m and the build was a $2m+; so add in a heap of class and $5,600,000+ is the right money for buyer and seller. Personally I would have loved to have been the buyer.  Speaking of Kay and Burton our missing link from JP Dixon – Ian Jackson is now a director at Kay and Burton. I do think we will now see a quality shoot out on the golden mile between the two top end heavy weight agents; JP Dixon and Kay and Burton – which is healthy for competition, our market and our industry.

66 Black St Brighton sold for $1,930,000 on 814 sq metres. Which makes it $2371 per sq metre for Church St precinct land with an issue (south facing rear). Good result for James Paynter. I think our Bayside wrap is becoming a Buxton tribute show this week – they have done a lot of deals.

Another important Land sale of interest in June

24 Seymour Grove Brighton sold through Kay and Burton for $2,400,000 or $2152 per sq metre for south facing rear land (1115 sq metres) in the Were St Precinct. 66 and 76 Were St Brighton through Hocking Stuart’s John Clarkson and Barb Gregory for $2,250,000 and $2,237,500 respectively (similar land sizes) and we think we have a good land value yardstick around $2000 to $2200 per sq metre for Were St precinct land (south facing rear). North facing rear could be up to $2400 per sq metre and still be at market price.

We also watched 24 Seymour because it sold at the absolute Brighton peak for $2,920,000 or $2618 per sq metre which means that in this case Dec 2007 to June 2009 your saw a 20% drop. To keep it in perspective the $2.9m was a very strong price and by Feb 2008 (3 months later) land in that area was selling for $2100 per sq metre with sales at 29 Seymour (1011 sqm) at $2,160,000 and 13 Wolseley (1040 sq m) at $2,275,000 both with a northerly rear aspect, so superior blocks.

We think Brighton land is coming back strongly in value, although not as quickly as say Kew, Hawthorn and Canterbury land; and has returned to near the 2007 peak, but across the board it has not exceeded all the strong prices paid in late 2007.

As an aside and makes a bit of a mockery of our comment that things are quiet but according to our records Brighton alone has had 27 sales over a million during the school holidays. Which is a “blip on the radar” statistic as Bayside $1m+ sales are still down around 30% for May and June 2009 compared to May and June 2008 (142 down to 112). Almost a quarter of them were in Brighton during the school holidays – trivia but interesting.

Mal was speaking to Nick Johnstone of JP Dixon a few weeks a go over a coffee and heard a similar rumour to what we read in the papers today that the Glyndon Road home on the market for $16m might be selling near that figure. If that is now the case, then that big number is a record for Brighton as far as we are aware. Recession – what recession?

Not a lot of riveting auctions this weekend – 2 or 3 in Elwood worth watching and when I speak to Chris Bevan of JP Dixon next I will have to find out what 19 Dawson St in the Golden Mile sold for as it was to be auctioned this weekend – but has sold before.

Happy Wife, Happy Life

Malvern East: 55 Ardrie Road. Lovely day for a quiet auction. Trouble was 120 people showed up with six bidders and it sold for $1.21 million against an $850,000+ quote. Tim Derham of Abercrombys was directing traffic.

Andrew McCann of Bennison Mackinnon says we are now very close to 2007 prices.

Apartments
Sam Wilkinson and Tim Blackett of Kay and Burton got 2-4 Lansell Road Toorak away pre-auction. It was a $2 million-plus sale but the apartment market at the Top End really does appear to be non-existent right now. Unless this offer was considered a stand out, it was sold because they felt the auction may have proved embarrassing. Chastleton in Toorak, asking $4 million and one of the best apartments we have seen this year, still hasn’t attracted a suitor, despite Peter Kudelka’s best efforts. We may look stupid some time soon, but we really don’t think there is a $2 million-plus apartment low rise market (now ), of course there will be one in the future. Also with Asian buyers now being able to purchase land, we think a driving force in high-end high-rise may have also moved on.

Big Sales
1 Horsburgh Grove Armadale: As a postscript to last week’s auction, during this week, the sellers took the antidote to “40Lambethitis” and accepted the top bidders’ very good offer of $2.3 million. Eventually, most people come to their senses. Well done to James Redfern of Marshall White for a good result.

55 Ardrie Malvern East: The Ardrie Park area is a precinct to watch. We remember buying a little single-fronted in Repton Road (around the corner) post-auction for $600,000 only a few years ago. Today, we saw five bidders fight it out to more than $1.2 million for a double-fronted home that needed a big reno. But the buyers were smart. North-facing rear, good feel to home, across the road is an almost completed French Provincial (worth north of $2.5 million?), the tram is 100 metres away and access to the fantastic Ardrie Park just across the road. Speaking of roads, what a beautiful olde English type street Ardrie is. Don’t worry about the price, this was a great buy – well done to whoever it was. Tim and Michael Derham of Abercrombys managed the sale and managed it well – except the usual courageous quote. We required two quick visits on the same day and they accommodated at short notice – good agent work. 55 Ardrie confirms to us the young renovator yuppie market has returned and is now a force to be reckoned with.

68a Clendon Toorak: Nicolas Day home. Auction report: ”A huge crowd of 150 people turned up to this auction but just one bidder was prepared to play. The bidder opened proceedings with a $5.6 million bid but, with no further bids eventuating, the property was passed in.” This auction was to tell us if the jury is still out on $5 million-plus homes. It still is out.

Stock levels are the issue in Stonnington.

Jeremy Fox, director of RT Edgar, says he has almost nothing in his forward auction book for the 8^th, 15^th and 22^nd of August weekends. He says the Top End $5 million-plus market is still not moving like other markets but there are both buyers and sellers, so it’s not interest but price discrepancies that are holding things up. He re-emphasised buyer frustrations: do you go now or wait and is waiting going to mean lower prices? Jeremy says no, because there is little stock coming on.

Andrew McCann, director of Bennison Mackinnon says there is no pressure for sellers to sell and August auctions are looking very quiet. He says sellers are still watching the market. Finally he doesn’t see Spring homes flooding the market and dropping prices and, even if there is an increase in stock, there is enough pent-up buyer demand to soak up increased stock levels without a noticeable price drop.

Next auction weekend seems to be a renovators auction week.

We think the renovators and developers are coming back. Here are two of a number of sales that will tell us one way or the other. See our ratings on:

33 Murray St Prahran – Guy St Leger of Biggin and Scott – great area – love the Flying Duck pub.

25 Central Park Road Malvern East – Andrew James of Hocking Stuart – how much will the $4 million renovated version across the road affect things?

Pricing

Wormy’s not seeing a lot of action in the Stonnington area, so we need to be careful predicting any medium-term trends but pricing action to date seems upwards.

Following our recent snippets on high-end apartments, we thought it would be good to get JP Dixon’s Ian Jackson’s take on Golden Mile apartments. He has a major article above on the Golden Mile.

Mal:
From an investment point of view, what do you think of Golden Mile apartments versus Golden Mile Land?
Ian:
It’s land. You buy Golden Mile apartments because you want them for lifestyle, not because of accelerated capital growth over say land in the Golden Mile. However, compared to other investments, they may well still stack up OK.

Mal:
How are sales of high-end apartments going this past six months?
Ian:
Slow.

There’s not much else to talk about, so these are my personal thoughts on Golden Mile apartments at present.

Of the apartment blocks in the Golden Mile on St Ninians, the old Mathieson site in Sandown, Martin St surrounds and so on, I am not aware of a significant sale in recent times. Of the recent developments that had not sold before the GFC* took its real effect, if there were sales since, then I believe they could well have been at significant discounts to initial asking prices.

There is currently a $9-10 million penthouse for sale and, if it sells, we will report it here.

It’s not our place to be negative for no reason (not good for business) but, if we are telling you that the housing market is better, than you may think it’s only fair that we report the state of the high-end apartment market as we see it.

Lack of sales in Brighton’s Golden Mile is not all about the GFC and money. It may also be about product offering. Two of the bigger developments on the Golden Mile have issues: one is looking very dated and, with the other, we struggled with the flow and floorplan and maybe other buyers have as well.

There are apartment buyers around and, in time, we will follow up how the very large – by Brighton’s standards – apartment development is going at the rear of Church St. We have bought, and will continue to buy, apartments. It’s just that, at present, there is minimal action, meaning almost no market at the higher end. Therefore, there is a lot of room for price misunderstandings between buyers and sellers on the rare occasion that one might be offered/bought.

So, interesting times in apartment buying.

Ian Jackson, sales director of JP Dixon, is a man we can relate to: single malts, fly-fishing and a Brighton lover. Geez, I can’t believe I just wrote this – we’ve lost half our audience already. Seriously, Ian is a man I have enjoyed doing deals with. He does stick to his word and he will help with some honesty rather than hinder with some trickery to get difficult deals over the line. Of course, if you are a buyer, it is not all plain sailing and there are traps for the inexperienced and you will, at times, find any JP Dixon sales person’s quote challenging, but they have a renewed vigor and are a real force at the Brighton Top End. If you are serious buyer, then, more often than not, you will be considering a JP Dixon property and probably one Ian Jackson has his hand in.

Mal: Welcome Ian. What’s been happening at the Big End of Brighton – the Golden Mile?

Ian: Thank you Mal.

• Prior to Xmas, the majority of Top End Brighton was being bought by overseas buyers, mainly Chinese people. This year, in 2009, it is a very different story and, while there are still overseas enquiries, there is zero –  or very close to zero – transactions happening involving overseas clients.
• However, the market is stronger in terms of bidders but still less in terms of price than most of 2008.
• Properties are changing hands and they are being bought in the main by locals trading up. In other words, the local market, or many in the local market, feel we have reached some sort of bottom and their confidence is such that they are now putting pen to paper and deals are being done.

Examples are North Road, Leslie Grove, The Esplanade, Mytton Grove, Foote St and so on. All five of these are around $4 million-plus and Ian felt he could rattle off 15 Brighton sales in excess of $2 million this year.

Mal: Tell us about buyers and sellers in 2009.

Ian: Buyers:

• Right now there is a genuine feeling that this may be as low as it is going to go.
• Buyers are nothing like they were in 2007. They are doing their research and working out what they think a home is worth and then putting in an offer. They are also moving on, if that offer is not acceptable or very close to acceptable.

Sellers: Need to meet the market or they don’t sell, no matter how good they are.

There are still a few good homes on offer that have not been sold, despite a significant increase in buyer confidence. Golden Mile examples are 9 Dudley St Brighton and 15 Kent Avenue Brighton, great locations but have been around for a long time. Tell us a bit more about Absolute Beach Front Golden Mile.

• There are a shortage of absolute beachfront properties and there are buyers waiting.
• Some vendors are trying to get $1000 per sq ft and, to date, they are struggling to achieve that.
• Don’t get me wrong, Mal, if there is a place where the downturn has had little effect, it’s beachfront Golden Mile.
• I think $800 per sq ft is more the mark.
• Beachfront Buyers will pay the 2006-07 record prices; they just won’t exceed those prices in a hurry.
• Beachfront Golden Mile is rock solid. Other parts of the Golden Mile have seen values drop around 20%, unless it is one of genuine rareness (is that a word) and I think even the one we sold at auction that you featured in your news achieved less than it would have in 2007.

You mean 15 North Road?

Yes.

OK, the market has dropped at this elite level. Are you seeing many distressed sellers?

This stuff about a tsunami of forced sales about to land is the biggest load of garbage I have heard this past year. There is absolutely no indication of that.

In fact, to the contrary, the reason we have an acute shortage of stock is because people have decided not to sell unless they have to.

It may happen – these forced sales – but I have seen no indication of it en masse in Top End Brighton.

Outside the Golden Mile, what are the areas you like and what is happening over, say, $2.5 million?

• I think, Mal, you call it the Diamond Kilometre, bounded by Normanby, Beach, Were and New St, with great streets like Albert, Sussex and Manor.
• At the peak, Sussex St was selling at $330 per sq ft and Carole from Hodges just sold 24 Sussex for around $300 per sq ft, if you say the house was worth $150,000.
• Directly opposite that, Kay and Burton sold a single level home well in excess of $4 million this year.
• A lot of Brighton did struggle last year, especially in the $1 to 2 million range and that was because there was just too much stock but a lot of that is no longer on the market. Some has been withdrawn, yes, but a lot has sold after vendor adjustments.
• The Golden Triangle of Brighton Beach/Hampton is another area I like – particularly the streets like Gordon; and, finally
• Foote St/Drake St at North Brighton. As with The Golden Triangle, this area attracts people looking for larger blocks and, in the case of Foote St and Drake St, it is particularly appealing to families moving from Middle Park who want to be near the city, have more space, get their children to the good schools easily and still maintain some of that Elwood feel.

Investing for the longer term, not just what’s happening right now.

I have a bias because I live in the Diamond Kilometre but areas like Sussex St have seen even greater growth than the Golden Mile in the longer term. It was undervalued, until people worked out it had the same land size and similar beach access (granted you need to cross a road) as the Golden Mile but it was also a lot closer to Church St shops and cinema and restaurants and the train. In other words, you didn’t need to get your car out every time you wanted to go out.

However, anywhere in Brighton has been great long-term investing and you, of course, know that Mal. Shops, nearer the water the better, good floorplan and light.

Much rather put my money in Brighton than, say, outer Melbourne.

In a nutshell now.

Last year, buyers were around but not putting pen to paper; this year they are doing that, but at their levels and the successful ones are almost invariably local buyers trading up.

Mal: Thank you.

Ian: My pleasure.

Apartments: Ian has answered some questions on Golden Mile Apartments and they are contained in the Apartment section. If you are thinking of selling and found what Ian has to say makes sense, why not give Ian a ring on 0419 593 663 or drop into JP Dixon near the railway line on Bay Street Brighton.

Richard Earle at Vista Avenue Kew, in full flight for his vendor and Jellis Craig

On Saturday at 5pm, we have a James clearance rate of 47% on the 19 auctions we attended – by Sunday this has moved to a very strong 79% (our highest in 2 years). On first blush, it doesn’t necessarily say the market is moving ahead positively (for sellers) but, in fairness, it may say that it is no longer moving backwards either.

However it’s only one weekend albeit it was a lot stronger clearance rate than any of us (buying or selling agents) would have expected before Christmas and further evidence of a shift in buyer and seller sentiment that started 2 weeks ago.

Our main focus this weekend has been getting out there and reporting what is really happening at auctions.

Big numbers of people are turning up at auctions; big numbers are going through opens; multiple bidder auctions over a million. There are more positive vibes from selling agents and deals are getting done. This is what is happening in the million-dollar-plus market in the past 10 days- whether it lasts – time will tell.

Why is this happening? In our opinion, there are six reasons.

1. Shortage of good stock. There’s still plenty of rubbish that wasn’t bought last year and still plenty of overpriced homes (although this number is diminishing), but not many new and exciting homes are coming to market. And why would you sell, unless you had to or you have traded. It’s not champagne and caviar for sellers – more like beer and vegemite – well not until the last 10 days.

2. Mood shift. There has definitely been a mood shift in the past two weeks by buyers who now feel the Grim Reaper is still there but he may not be as all-conquering as previously thought.

3. Interest rates. Investors can’t ignore cash-flow-neutral or better situations forever.

4. Vendors. Some are definitely getting instructions from nervous spouses, banks or friends to deal and they are. Don’t underestimate that a reason more deals are getting done is that more vendors are understanding that past glories have gone (well at least for the moment)

5. Quality selling agents. Many sellers turned to the “bulltishing selling agents” when prices started to drop in 2008 – hoping or believing their place would be different. As those agents leave the industry and the more professional remain, sellers are returning to selling agents that won’t tell them “pie in the sky” but will tell them reality and these sellers are actually selling their homes.

6. Some buyers and sellers who had put their life on hold in 2008 have decided to get on with it in 2009, as time is precious.

Is there a trend or a prediction from us? Nope. Let’s wait and see what the next two weeks of results bring before we can say maybe this or that is changing.

A huge auction at 21 Finch St Malvern East of a really great property resulted in a buy just under $4 million by a lucky family (I assume it was a family). 250 people (pictured above) at this auction saw John Bongiorno run a very strong auction with three bidders. Three bidders over $3.5 million in the Gasgoine Estate Malvern East is a sign of a healthy market.

Just down the road in Maitland St Glen Iris saw three bidders again bid strongly, resulting in a buy above $1.1 million, as expected, despite the quote.

An exceptional result is rumoured to have occurred in Bayview Crescent in Black Rock – exceptional for the seller that is – in a pre -auction bidding frenzy conducted by Jenny Dwyer of Hocking Stuart.

Just round the corner in Iona St Black Rock, Bert Geraerts of Buxton achieved a good result on one of the better townhouses in that area. It sold for more than $1.6 million.

In Hawthorn, 10 Connell Street was bought beforehand at an undisclosed price through James Tostevin. Properties are being bought in the past 10 days.

All main selling agencies have, in discussions with our advocates, stated that multiple million-dollar-plus buys have occurred in the past two weeks and there’s also been increased buyer enquiries. We can corroborate this through what is happening in our business – we have made more purchases in the last two weeks than we have in the past two months.

However, let’s see what happens from here – if stock levels or overpriced homes suddenly shoot up again or we see some more and consistent bad news headlines then this weekend may have been a bleep on the radar. But as of Sunday it’s a bleep that we as $1m+ buyers need to monitor.

Good property buying is more like a marathon than a sprint. One result, one weekend, does not require a complete mental re-engineer.

Can I recommend an interesting article below on a new trend – lifts – from our in-house architect Adam Woledge, who is now managing million-dollar new builds and major refurbishings on behalf of our buying clients in Boroondara, Bayside and Stonnington.

Buy Well

Mal

Sundays Reflections: Wow it was a positive day for the market yesterday and it maybe an indication of the bottom but it is still very early days. Four things stick in my mind and why as buyers a little bit of circumspection doesn’t hurt.

1.Stock Levels are at the lowest we can remember (new stock that is – still a fair bit of last years)

2.Vendors are listening to good selling agents if they really want to sell. The heady days of 2007 were just that; the heady days of 2007; we are now in 2009. Many vendors have accepted this and therefore they are selling.

3.We reported on ten $1m auctions last week and two sold on the day – since then only a further 2 have sold (that we are aware of) and both were good homes – Invermay (Hawthorn East ) and Head (Brighton). So there is still 6 that remain from last weekend. 2 of those that remain unsold in Hillcrest (Glen Iris) and Cowper (Brighton) were bought and sold last year and they cannot now (2009) get near the prices paid then (2008).

4.Let’s look at 2 auctions of yesterday – 21 Finch St Malvern East – by any test that was a stellar result for the seller- this year, last year, even in 2007 that was a big price (please no criticism of buyer, we would have recommended paying that price on that house under those circumstances) – however 23 Maitland St Glen Iris also got a price well above quote ($230,000 above quote) at $1,130,000 and it was a great home with huge interest – we had over 60 people (unique visitors)on the public version of our James Home Rating – however in our opinion in 2007 this would have been over $1.3 million.

Our point re above – yes we have had a flurry of activity this last week or so and if you are buying something specific then you may need to recognise that individual markets shift on a daily basis and maybe a buy requires a few more dollars more than it did a few days ago but we have not yet seen enough consistent evidence to show what some of our “selling cousins” may be shouting from the rooftops on Monday – the boom has returned and you have to pay whatever we say.

Buyers the bargains are there – how long for – the next six months? Yes. After that! Don’t know!

Stay tuned, let’s see what happens next week and next month – then we will really start to get a 2009 feel.

At 5pm Saturday, the Auction Clearance Rate of James Attended Auctions was 38%. Nothing new here; but the market does have a slight sense of upbeatedness (if there is such a word), as a number of long-running deals and expressions of interest were concluded during the week.

4 Deepdene Place Balwyn – good home on more than 1770 sq metres – reportedly had three interested parties, and sold for in excess of $4.6 million via a Jellis Craig Expressions of Interest.

9 Bramley Crt Kew – on about 13,000 sq ft with a good but not great home – has been on the market for most of the year. Quiet auction with one bidder saw Richard Earle pass it in at $3 million. A reserve was declared at $3.5 million. It has been bought for under $3 million less than two weeks after the auction.

21 Park St South Yarra – classy terrace home that went to auction on a windy day in September. No bids at the auction forced RT Edgar’s Jeremy Fox to pass it in. A reserve was declared at $3.5 million. It sold this week between $2.8 and $2.9 million.

36 Clendon Road Toorak – large luxury 38-square apartment is believed to have sold for in excess of $3.5 million, making it the first $3 million-plus sale in apartments in four months (that we are aware of). This was a Kay and Burton Expression of Interest campaign. The trend has been downwards for a number of apartments that are owned by people that need to sell, seeing some sold for as much as $500,000 less than what they were purchased for.

112 St Georges Road Toorak – a deadline private sale through TBM and Kay and Burton ending 8 December. Was sold during the week for in excess of $2.5 million.

8 Davis Avenue South Yarra – auction was due today. A solid pre-auction offer launched interest from multiple bidders, with the eventual price being $1.45 million. This was $150,000 above the quote. A well organised campaign by Will Walton from Hocking Stuart South Yarra.

17 Byron St Brighton – Good quality Art Deco, north-facing rear home on 750 sq metres. Failed auction a few weeks ago. Quote was around $1.8 million. Reserve $1.6 million. Later advertised at $1.5 million. Sold sticker up this week. Believed to have been bought around $1.3 million. All that within a month.

So what do the above results tell us? The market is hot or changing? Nope, not yet.

What it tells us is that there is action outside auctions. It tells us that non-auction campaigns are increasing and buyers will need to develop a whole new set of skills if they are to manage the smarter sellers who are insisting on better ways to market their home than a pass-in and failed auction.

Furthermore, buyers who do “work a campaign of price lowering”, or monitor a falling quote that is perfectly reasonable when we see such wild swings in quotes as we have witnessed in recent times, also need to keep at the front of their mind the “end game”. Is it to buy at a reasonable price or to go low but miss out? Most of the above had multiple bidders – in other words, while initially the vendor was your competition, as the prices lower, other buyers or bargain hunters become you, the buyer’s, competition.

We cover this in more detail in Negotiation Corner below.
What this week also shows is that Christmas time is a great deadline. Overpriced properties get reduced and fence-sitting buyers fall off as they realise that eventually, no matter what you read or hear, you still have to live somewhere.

That is why buying properties is such a good investment!
Demand will always go up and supply drop, thus forcing prices up in the longer term.

Next week is our final week of 2008 and we like to have a bit of fun – no auction reports. We are at the coalface on the buying side week in and week out. You really do get to see who the good agents and auctioneers are. So all our reporters and advocates have got together and come up with:

Top 10 Sales Agents – including best younger sales agents;

Top 10 Auctioneers – including Best Auctioneer and Best Young Auctioneer;

and we will finish with a review of 2008 and a couple of predictions for 2009.

Over the Christmas break, we will be settling into our new Brighton offices. We will reopen on 12 January and auction reports will begin in February.

Our James Home Rating main office at 313 Glenferrie Road Malvern will open 19 January.

Buy Well

Mal

Auctioneer Julian Augustini of Hodges, one of the good selling agents in real estate, who sold a lovely townhouse at Hastings st Hampton on the weekend after a pass in at auction.

This week has seen a continuation of the market that buyers and sellers have witnessed for the last month or so, one of caution and uncertainty. This weekend saw the continuing trend of around 50% of (million dollar plus) homes selling at auction. The number of bidders is usually one or two (in 2006 and 2007 it was 3 to 5). However our reports show below this week saw a few of those 2007 – 4 and 5 bidder auctions.

For the last month the freefall in prices that we saw earlier this year (a number of million dollar plus properties dropping between 10 and 30% on 2007 expectations) has slowed and we have even seen sporadic signs of optimism from buyers and sellers. Eg a number of strong results by anybody’s standards on top end off market period homes such as the reported sale in Armadale at just under $10 million and a few auctions we attended this week.

Today in this market, if the home is good and the price is right then there is a buyer and a transaction. However if the home is poor and/or the price is too high then the market of today is a far harsher judge on value than it was last year and the property is often not selling (and remaining that way for some months). As we said last week following pass-ins could be a good strategy for buyers.

So many buyers and sellers now understand we are in a completely different market to 2007 and the transactions are more forthcoming when all compare results and prices against similar properties that have sold since March 2008 not Spring 2007.

The financial market commentary seems to be united that we are about to have an interest cut and while we would all see this as a positive our thoughts are that due to a large overhang of unsold properties and buyers that are still, in the main tentative, this Spring could see prices stabilising at these new levels eg below that of last year. For sellers this may not be that good a news but the market is what it is. For buyers who can get over the hurdle of caution and act there are definitely a number of good homes out there priced very differently to 2007.

The question we can’t answer is will they better priced in 2009 from a buyers point of view – our only reply is as it was last year – who knows. Are you a gambler or a homebuyer? If you are a homebuyer and purchasing for the long term and you have seen a home you really like then what happens now or what might happen next year should be of low importance if it’s what you really want.

Good Buying.