Picture of concentration: Tim Fletcher (Fletchers) at 2 Barnsbury Rd, Balwyn. Bought after auction $2,585,000, 1 bidder

Key Points:

• Crowds smaller and less bidders with a clearance rate at 62% – lowish for Boroondara, however there were around 50 auctions over $1 million.
• Hottest market is for the $1,200,000 to $1,600,000 double fronted timber home in need of some work with a market price tag on it.
• Scott Patterson MD of Jellis Craig: Clearance Rate expected around the mid 60% level, but that is normal for this time of the year. The Asian community is complaining about the high Aussie dollar and their market is tracking down. Well credentialed and well-priced homes are going, but those vendors priced a little bit too high are simply not selling. A high ask strategy is nowhere near as successful now as it was this time last year or even earlier this year.

Highlights:

• Kew, 50 Charles, Paul Keane of Jellis Craig – going nowhere for some time then some interest, then – bang: a boardroom auction and a result well north of $4,200,000 was achieved on the night.
• Hawthorn 41 Wattle Road – good home on the market for some time. Bought for well over $5,000,000 also through Paul Keane Jellis Craig
• Balwyn 6 Ropley Laurence Murphy of Hocking Stuart – brand new French provincial believed to be over $3,000,000. The Aussie dollar may be hurting but the market still has a passion for these sorts of homes.

$3m+ not so highlights:

• Hawthorn 5 Yarra: Passed In $4,500,000: Zero Bidders
• Canterbury 35 Logan: Passed In for $2,860,000: Zero bidders

Agent Q & A: In terms of real estate, what has happened this year and what do you expect to happen next year?
Scott Patterson, Jellis Craig, Hawthorn:“2010 started very strongly with healthy demand in February and March.  Sellers realised that this might be their last chance to capitalise on a rising market so they flooded the market in May and June.  Increased volume had an adverse affect on auction clearance rates and we started to see a softening in the market by about June.  School holidays interrupted July and then we had the Federal Election in August which was unresolved for several weeks – again adding to the uncertainty.  Clearance rates dropped back to around 70% compared to 85% in 2009.  September/October saw two football grand finals play out, which meant the predictions of a late Spring were correct.  An interest rate rise on Cup Day and the threat of further increases has dampened enthusiasm and we now see clearance rates hovering around 60% compared to 80% for the corresponding period last year.  On a positive note, properties in quality locations are still attracting strong interest – however it is fair to say that we are noticing less desperation amongst buyers.  Vendors now need to revise their expectations if they are serious about selling this side of Christmas, otherwise the market will go to sleep from December 24 – January 18.  Next year will be ‘steady as she goes’ in my opinion.  We are predicting slow growth rather than the dramatic price increases we have seen in previous years.  A lot will depend on interest rate rises next year as a series of rises tends to affect buyer confidence.”

Grinners are winners: Sam Paynter (Hodges) sells 10 Menzies Ave, Brighton after auction for $2,600,000, 1 bidder

Highlights:

• Hampton’s Golden Triangle continues to perform very strongly with 3 Lorraine Hampton (Nick Johnstone of JP Dixon) over $3,000,000; 23 The Avenue Hampton (David Hart of Buxton) $2,350,000 and fringe there but actually Brighton Beach – 10 Menzies Brighton (Sam Paynter of Hodges) $2,600,000. These, the three buys at this level we reported a few weeks ago plus others says that this is the or close to the hottest “estate” in $M Melbourne right here and now.
• Clearance Rates steady at 1 selling out of 2, or 50%
• Sandringham continues to underperform the area with little action
• 11 sales reported over $1 million in Brighton and Brighton East in the last week – mostly small

Agent Q & A: In terms of real estate, what has happened this year and what do you expect to happen next year?
Scott Hamilton, Buxton, Sandringham:”This year started with a bang. Buyers were bidding furiously at auctions and prices were increasing steadily. Most Bayside properties were selling well ahead of their reserves. Late May to early June buyers started to back off a little bit after a few rate increases in a row. Most good agents recognised this but a number of vendors were still riding the wave from earlier in the year. It is quite evident now that some normality has returned to the market and no matter what an agent or vendor may think, buyers are deciding where they believe the value of a property ought to be. Good agents can direct a buyer’s thinking to a degree and negotiate as hard as we like, but without competition many vendors are failing to meet the market. I would like to think that if interest rates remain as they are, the new selling season will see buyers competing hard at auctions again. People will always want bigger or smaller homes, they will always want to improve their position or their financial situation and they often make the decision to change their circumstances at Christmas. I’m sure we will begin the new year with a bang.”

Price Check:

• Brighton East 11 Clive with Craig Williamson of Buxton.  Bought for $1,350,000 or $1450 per sq metre for land in the Hawthorn Road Tram Terminus area.
• Brighton 52 Carpenter with John Clarkson of Hocking Stuart. Bought for $1,360,000 or $2,810 per sq metre of land in central Brighton. This time last year we had a number of land sales in Central Brighton in Carpenter St and you can see the big holes of development next to the old police station. We reported land, also a corner site, as going for $2437 per sq metre

Bidderbuzz Auction of the Day: Bill Stavrakis (Biggin & Scott) keeps cool, calm and collected at 14 Prentice St, Elsternwick. Bought under the hammer, $1,537,000, 6 bidders

Agent Q & A: In terms of real estate, what has happened this year and what do you expect will happen next year?
Tom Kurtschenko, Barry Plant, Eltham: 2010: “Early in 2010 we witnessed unprecedented growth in the local markets with strong buyer demand for all types of property.  Particularly the lower and middle end of the market attracted fierce competition and some very strong results.  As Melbourne medium house prices hit record highs, we had local suburbs in the area performing in a similar manner.  Eltham peaked at $645,000 in June 2010 while Montmorency peaked at the same time at $584,000.  In the last quarter of the year we have seen a minor correction in the local market with the combination of high levels of property available, the hangover from the federal election and recent increases in interest rates.  Over 1000 Auctions are currently booked for every weekend until the Christmas break which will give a strong indication as to the strength in the local markets.  2011: Both the ALP and Coalition have announced pre-election promises with changes to Stamp Duty to be implemented early next year.  Victoria Stamp Duty Taxes currently remain one of the highest in the country.  Liberal Leader Ted Baillieu has promised to slowly introduce new and reduced tax rates over four years, with a 20 per cent cut from July 2011, followed by another 10 per cent each year if elected.  The ALP’s policy does not reduce stamp duty for all home buyers but continues its policy of targeting first home builders, particularly in regional areas.  Both are expected to increase buyer activity early in 2011 and we expect to have plenty of properties still available to the market. ”

Keiran Whaley, Barry Plant, Ivanhoe:”The real estate market in 2010 has been a complete rollercoaster with prices soaring through a bull market in the first two quarters of the year, and the flattening of prices in the third quarter leading into the final quarter of the year where we have been inundated with supply and clearance rates dipping. The market has shown a resilience of sorts through the second half of the year through the over-supply of property.  It would be fair to say that the 10% increase in prices in the first half of the year has been partially wiped out, but our evidence suggests that we have still kept around 5% of the gain.  It will be interesting to see where the market in early 2011 goes.  If the current supply levels remain, we will be in a similar holding pattern. However, if the stock tightens up, it would be no surprise if prices slightly increase as the underlying demand still exists.”

Elsternwick, 53 Shoobra, The man with the movie star looks, Bill Stavrakis (Biggin Scott), passed in $1,775,000, 1 bidder

Key Points:

• Mixed bag around the grounds with an overall clearance rate of 58%
• Across Melbourne there were 143 reported sales over a million dollars yesterday
• Biggest auction was 16 Brooke, Eaglemont, with Damien Carter of Miles. On a quote of mid to high $2 million it was bought for just over mid $3 million

Agent Q & A:

What are stock levels looking like post Melbourne Cup Weekend?
Nathan Foley, Fletchers, Eltham: “At this stage I think we will continue to see high stock levels right up until Christmas. Demand is still high and we expect to see something of a late spring rush going right up to the end of the year.”

Eaglemont, 31 Mount St: Friendly, chatty crowd but no action. David Oster (Jellis Craig) passed in $1,850,000, no bidders.

Around the Grounds:

Elsternwick, 53 Shoobra Rd, Bill Stavrakis, Biggin Scott, Passed In, $1,775,000, 1 bidder
“Among the assembled crowd of 40 were many curious neighbours and families with young children. Auctioneer Bill Stavrakis had a clear and considered manner and described this property as being in a ‘wonderful location’. Mr Stavrakis asked for an opening bid but the crowd was silent and so an opening vendor bid of $1,750,000 started proceedings. Mr Stavrakis worked hard to entice the reserved crowd and eventually there was one bid of $1,775,000 from the assembled group. With no further interest on the day, the property was passed in at this figure.” (Kate Agnoleto)

Heidelberg, 20 Cleve Grove, David Oster, Jellis Craig, Under the Hammer, $1,325,000, 3 bidders “David Oster fielded bids from three keen parties at this Heidelberg auction. An opening bid of $1,050,000 was received from the crowd and the home was quickly on the market at $1,200,000. Bought under the hammer for $1,325,000 in front of a big Super Saturday crowd of 80 people.” (Mal James)

Northcote, 9 Tanner Grove, Tom Alexiadis, Nelson Alexander, After Auction, $1,200,000, 3 bidders
“There was a large crowd gathered, but it appeared they were mainly neighbours as this auction was a little slow to get going. After an opening vendor bid of $1,100,000, a couple of people put their hat in the ring before it was referred inside. On the auctioneer’s return there was no further movement from the crowd and the property was passed in at $1,160,000. With the crowd numbers, the expectation was greater than the actual event.” (Linder Slater)

Northcote, 9 Tanner, Tom Alexiadis, Nelson Alexander. Big crowd of 100, bought after for $1,200,000, 3 bidders

Results

Port Melbourne, 272 Esplanade East, Kaine Lanyon, BenMac. Where have all the bidders gone? Don't know Kaine - they weren't in Stonnington either. Passed in, $1,220,000, 2 bidders.

Key Points:

• None of the five auctions we attended sold under the hammer -  one sold before
• Last Sunday, 55 Blessington St Kilda, Graeme Wilson, a ripper home, sold at auction for just over $3,500,000

Biggest Pass In: St Kilda East, 7 Pilley St, Jeremy Fox, RT Edgar, $2,300,000, 1 bidder
“Auctioneer Jeremy Fox gave an honest and graceful description of the pretty East St Kilda home on this cold, dark Saturday afternoon in Melbourne. The façade of the property was truly superb and Mr. Fox alluded to this several times in his pre-auction pitch. Deciding to wait for an opening bid from the crowd, Mr. Fox decided against making a vendor bid to start proceedings. Having suggested an opening of between $2,400,000 and $2,500,000 and receiving no bids, Mr. Fox returned inside the home to consult his vendor. Upon his return, and calling it down twice more, a gentleman in the crowd offered an opening bid of $2,300,000. This was the only bid made for the property, and Mr Fox eventually passed it in at that price. There were 60 or so people that made up the somewhat vibrant crowd; half of whom observed proceedings from inside the front yard, while the other half watched from outside the premises.” (Daniel Ehrenreich)

Bidderbuzz Auction: Port Melbourne, 272 Esplanade East, Kaine Lanyon, BenMac, Passed In, 2 bidders
“The drizzle did not deter the crowd of 50 assembled to witness this Port Melbourne auction. The onlookers, many of whom were neighbours, were chatty as they awaited the commencement of the auction. Auctioneer, Kaine Lanyon was business-like in his preamble and used humour throughout proceedings. With no opening bid forthcoming from the crowd, Mr Lanyon opened with a vendor bid of $1,150,000 and with some encouragement two bidders emerged to compete for the property. Bidding reached $1,220,000 and stopped at this figure and the property was passed in.” (Kate Agnoleto)

Agent Q & A:

What are stock levels looking like post Melbourne Cup Weekend?
Damian O’Sullivan, BenMac, Albert Park: “Supply appears to be somewhat tight post Melbourne Cup Weekend which will no doubt disappoint many buyers desperately hoping to acquire a new home Pre-Christmas. That said, we find that many vendors often leave real estate plans to the last minute, not necessarily by design, but simply due to the fact that time catches up with them. If we see a last minute surge of homes for sale, I will not be surprised at all.”

David Lack, Biggin Scott, Port Melbourne: “Stock levels post Melbourne Cup are looking very positive, with lots of auctions already booked for the last two weekends of November. Many vendors have chosen to auction prior to December if they can, and the State Election scheduled for the 27^th November has not had an impact.”

Nick Yannopoulos, RT Edgar, Albert Park: “I’m not sure if the two grand finals had an impact be we are certainly seeing a bit of a late run this year. We are finding that stock levels will be very similar to last month, in particular the 27^th November and 4^th December being busy weekends. Hopefully if interest rates stay on hold, it should be a good finish to the end of the year.”

Kaine Lanyon, BenMac, Albert Park: “So far we are definitely finding stock levels for post Melbourne Cup Weekend looking on the thin side compared with previous Spring selling seasons, no doubt the State Election on the 27^th November hasn’t helped. That being said, the quality of the listings appears to be solid. Given this we urge buyers to act on properties they like, as the choice is a little limited.”

Results:

This coming weekend is a “Super Saturday”, one where the market has  a larger than normal amount of stock on offer at auction. We call them majors, and for agents and market watchers they are like the Masters in golf or the Grand Final in footy.

Why do they occur? They happen because of Melbourne’s numerous public and school holidays, and because of our obsession with big sporting events like the Melbourne Cup and the Grand Final, which interrupt even the momentous occasion of home buying and selling.  Smart agents plan holidays around these times in order to stay married and in touch with kids. So miraculously, few auctions or opens seem to fall on holiday time.

Many high end homes are sold by auction, which by tradition takes four Saturdays to arrive at its crescendo. So avoiding holidays and sporting fixtures for a four week run is considered vital.

Another point is that human beings are herd animals. We like to sell homes in the New Year and in Spring and we are not keen on selling in Winter. As buyers we can only do our thing when the home stock is there to do it. So our buying activity follows the selling patterns.

At this time of the year, in order to have a clear four week auction campaign you need to start after Grand Final and finish before the Melbourne Cup.  Only one Saturday qualifies for that timing – the 23^rd of October. Hence the more than 1000 auctions across Melbourne and the more than 200 $M+ auctions in this magazine’s focus area – a Super Saturday.

In Spring there is often a Super Saturday just prior to the Grand Final, but the election uncertainty ruled that out this year. There will be one or two in late November/Early December, especially because of the likely late finish to the markets this year. That’s due to the nervous nellies who waited and waited and those who bought late and therefore could only sell late.

Next year we will get Super Saturdays in the last two weeks in February. The Australia Day weekend is the starting gun for the markets and four weeks later, like a quick romance, the babies begin arriving. The following Super Saturdays are determined by fitting in selling campaigns between Labour Day and Easter. And finally there are always one or two pre-winter Super Saturdays in May – depending on school holidays and Easter.

So why are they important? Well, they are a real battle where large numbers of gladiators (some without a bloody clue) do battle all across Melbourne. With 10 skirmishes in Glen Iris, 14 brawls in Toorak, one or two scuffles in Canterbury and a couple of rip roaring ding-dongers in Brighton the generals (agency owners) will get clear feedback on where the fighting is headed and what the strategies should be in the aftermath. With today’s communications most selling agents and some buying agents can get trend knowledge by midday from 10.30am results and can apply this to the afternoon auctions. That is why we go to so many auctions.

Mere mortals will get this knowledge a bit later. So by this time next week as you prepare to put your bets on, we all should have a pointer as to what will happen in the property market between Melbourne Cup and Christmas. Bring it on – we love these Super Saturdays. They let us all know what is really happening in the market.

Printed each week in The Weekly Review – Melbourne’s Million Dollar Plus Magazine

National Breast Cancer Awareness Month was celebrated at the auction of 12 Sunnyside Grove, Bentleigh (Andrew Chisholm, Buxton). Elmo was on hand to watch as the home was bought under the hammer for $1,165,000, 4 bidders

Key Points

• Ascot Vale, 13 Fisher – Ray White – With views over the Maribyrnong River, this was bought for $2,000,000. Land value $2,000+ per sq metre
• 8 buys over $1m in Caulfield and Elsternwick this week, including in the heart of the Bagel belt – 31 Aroona with Rochelle Butt of TBM at $2,511,000
• Templestowe, 70B Newmans – Robert Sordello – Bought Before for over $2,000,000
• Warrandyte, 31 Oakland – Spiro Drossos – Private Sale over $1,700,000

Agent Q & A

What advice would you give a buyer wanting to purchase a property between now and Melbourne Cup Weekend?
Bill Stavrakis, Biggin Scott, Elsternwick: “My advice to any genuine buyer would be to look at purchasing a property that suits their requirements, if the price is right. Procrastination might very well lead to buyers being ‘caught out’ through the lack of new listings coming onto the market post Melbourne Cup. Stock levels seem to be nowhere near the volume of last year and this may very well result in very few buying opportunities leading up to Christmas.”
David Oster, Jellis Craig, Ivanhoe: “I would suggest to a buyer that wanted to purchase between now and Melbourne Cup… to go for it. There are (higher) stock levels and the opportunity to enjoy a more balanced market.  If you are the highest bidder and it’s passed in to you, make sure that you enter into a reasonable negototiaion. Don’t outsmart yourself.  Be flexible.  And you aren’t paying or competing with the same market as 12 months ago. Enjoy it, as the market can swing again such as it did from 2008 to 2009..and it wasn’t in a buyer’s advantage.”
James Davis, Miles Real Estate, Ivanhoe: “With rates having stabilised, it’s a good time to solidify your position and take the next step on the property ladder and upscale. As the market keeps steamrolling on, now is the perfect time to buy property…today…if not yesterday!!”

Around the grounds
Moonee Ponds, 135 Park St, Brad Teal, Bought Under the Hammer, $1,230,000, 2 bidders
“A crowd of around 60 gathered to watch Brad Teal auction 135 Park Street, Moonee Ponds. A vendor bid of $1,050,000 opened the proceedings and things progressed slowly with the half time break, which occurred after one actual bid of $1,070,000. Then the sale was fought between two parties aggressively until a final result of $1,230,000. Solid result for the vendors.” (David McMillan)

I give up! Milo Rasinac (Nelson Alexander) at 15 Jacka St, Essendon. Passed In, $2,500,000, no bidders

Essendon, 15 Jacka St, Milo Rasinac, (Nelson Alexander), Passed In, $2,500,000, no bidders
“Just as the auction started the heavens opened up on 15 Jacka Street, Essendon and despite auctioneer Milo Rasinac’s best efforts no bidders emerged from the 100 strong crowd. The property was passed in on a vendor bid of $2,500,000.”(David McMillan)

Ivanhoe, 51 Robbins St, Rod Watson, (Jellis Craig), Passed In, $1,050,000, no bidders
“By the scheduled auction time at the Robbins Street auction, only a sparse crowd was evident, obviously having been frightened off by the torrential rains earlier in the day. Just as the sun was slow to come out, so were the spectators slow to gather. Yet assemble they eventually did, to witness a largely uneventful auction, despite the quality of the property up for offer. And, despite his best efforts, auctioneer Rod Watson was unable to elicit a response from the crowd to his numerous requests for an opening bid (unless a dog casually sauntering his way through the crowd can be taken as interest!?) and the home was subsequently passed in on a vendor bid of $1,050,000, leaving the surprised crowd silently stunned.” (Nikki Hills)

Templestowe 20 Edwin: Passed In $2,600,000: 1 bidder: Auctioneer Adrian Santini:

Templestowe, 20 Edwin: Adrian Santini of Barry Plant: Passed In for $2,600,000, 1 bidder:
They breed ‘em tough out Templestowe way. This was a knock down, drag it out affair and I was exhausted just watching it. Forty minutes – seven or more vendor bids and one genuine bid. Adrian Santini passed in this home at $2,600,000, having started it at $2,000,000 with a vendor bid. One bid from the crowd at $2,300,000. Next time I’m taking a cut lunch and if it’s that cold again – a sleeping bag as well. I’ll be honest I didn’t see why it took so long to achieve the result it did. A crowd of around 50. (Mal James)

Some of our buyer prayers have been answered

Market: Even with significantly reduced auction numbers this weekend (owing to a more important event which finally delivered a result that proved there was justice in the world), we still saw a pretty healthy market result for sellers – with a 74% Clearance Rate on the 55 $Million+ auctions we monitored. Of those 55 auctions, 9 results were not reported. But even that is not unreasonable under the circumstances of the GF Replay.

There seems little doubt that the market is on the rise. The big interest now is how the market will absorb the stock surge that will culminate in Spring/Summer’s first Super Saturday on October 23rd.

And it really is Super Saturday - with a massive 81 $M+ auctions booked for Boroondara alone, and around 200 $M+ auctions booked in our key focus $M+ areas – Bayside and Inner East. Check out the size of the Weekly Review this week (it’s as big as a phone book). By comparison this weekend saw only one quarter of that number of auctions. So if you were at an auction this weekend, those four bidders you competed against may well be spread across four homes in a couple of weeks. Well that’s the “buyer-hope” theory anyway.

This Week’s Highlights:

• Two land sales showing vastly differing land values
  a) Land at 101 River Avenue Plenty (39,500 sqm), which can be subdivided, was auctioned  by Rob Stefanovski of LJ Hooker Greensborough and  bought for $3,830,000 or $96 per sq metre
  b) A large land parcel (1,813 sqm) at 3-5 Heath St Sandringham sold after a failed auction by Bill Jowett of Buxton for $2,800,000 or $1,544 per sq metre
• The major stock inflows that took place on Monday, Tuesday and Wednesday when agents began their marketing campaigns for the next Super Saturday – October 23rd.
• The continued improvement of the $3M+ market – two examples below
  a) Off market in Black St Brighton (Peter Bourbaud and Barb Gregory) – bought for around $4 million
  b) 27 Moorhouse Armadale with Gowan Stubbings of Kay and Burton – bought after an Expression of Interest campaign for more than $5 million
• The Pies Forward Line pressure (whoops, sorry – I got distracted)

Auction Snapshot from this weekend: 133 Rathmines Fairfield: Michael Fry and Grant Leonard of Nelson Alexander. Bought under the hammer for $1,116,000. 5 bidders.
There was a buzz about this well located timber period home, which had had its quote lifted to $930,000 during the campaign. It was a surprising development given Grant’s comment that the property failed to attract any interest in the high $800s a few months ago with a quiet sale campaign. It was on the market with the first bid at $900,000. Second bid $950,000. Third bid $970,000. Fourth bid-  bang $1,000,000. Three more bidders joined in before the action stopped at $1,116,000. It was a well run auction campaign. I always enjoy a Michael Fry auction. He has a sophisticated grace about him incongruent with the fact that he is yanking the dollars from buyers’ pockets. Enjoyable to watch unless you’re an underbidder – which unfortunately this time we were.

Bumper Market Insight: We have an information packed Market Insight this week; even though there are no Market Wraps, Bidderman, reports or videos.  The footy replay threw this auction weekend into a bit of chaos, with a few auctions even changing days. But it was a very low stock weekend anyway, so no major damage. All $M results are at the end of this Market Insight. But the big news now is the next three weekends that will lead full bore into the Melbourne Cup Long Weekend.

Stock Levels and Price Assessment:
The big question the market will be asking now is: What will happen to prices on October 23rd? With this big stock influx, how is the price game of snakes and ladders going to pan out? Are we going to see the slippery snake and big price slide of May 2010 or will the market just take this in its stride, as it did this time last year, with prices climbing further up the ladder? Time will tell. Importantly as buyers you need to get yourself organised – and don’t count your chickens before they’ve hatched.

With this apparent largess of choice, perhaps you don’t need brilliant home-seeking skills right at this moment. But you will need first class assessment procedures (e.g. sorting the goodies from the baddies in terms of capital growth prospects, and working out which one is best from a “happy wife = happy life” point of view). You will also need good negotiation strategies – because while you may have more choice, you will also have competition. Remember, our bidders per auction indicator Bidderman was strong on lower numbers in September, especially on good homes. On the flipside, some sellers expectations may be disappointed, so planning good negotiation strategies will improve your chances of grabbing a bargain when it presents.

Have a look at our Forward Auction Booking graphs below to get an idea of what is ahead of you: (click on a graph to enlarge)

There are also some exciting trophy homes on offer through private sale and off market – especially in the $3m+ segment.

Have a look at the New Stock Graph at the top of Market Insight – which compares the last week in September to the last week in June, (private sale and auction weekly new stock numbers are combined).

Special Report on the $3m Market

The $3m+ is back, after the self induced May hiccup that led to a very quiet winter.

There have been over 50 buys in the month of September at this level, with buyers coming from all quarters. Let’s pick one of the segments – around $4million. We have bought 3 homes at this specific level in the last few weeks. All were classic period homes with land of over 1000 square metres. Two were bought post auction (eg after a pass-in) and one was off market (Black St Brighton). However, the interesting thing were the buyer profiles. One buyer was a change of life family, one was a growing family that needed more space, and one was an expat family returning from overseas. This is a fairly accurate representation of the range of people we look for homes for. Of the last case – expats returning from overseas -Brighton high end agent Peter Bourbaud believes “this group will push the market along for the next few years, after a couple of very quiet years from the expat community”. We concur. Last year we conducted very little in business terms last year for expats. However in 2010 there has been a distinct pick up in action from expats returning home.

The James September $3m+ Report with all reported $3m+ boughts and solds can be viewed from the Home Page (next to Market Insight and below Buyer Masterclass) or click here

If you are new to the $3m market you may find the charts below (using 2007 to 2010 Valuer General, REIV and our own James Databases) of some value, as they help to show how the overall $3m+ market works. Note particularly that:

• The two powerhouse $3m+ suburbs are Brighton and Toorak (see 2009 results graphed below). However these two suburbs behave quiet differently from each other (see median graph). More on that another time.
• More $3m+ is bought later in the year than early. (2009 graphed below)
• There are some real name streets around and there are some falsies (where if you pay top dollar you will stand out like a beacon)
• Less than a quarter (25%) of $3m+ homes sell under the hammer at auction (click on September Graph below)
• A lot more activity is off market (not advertised) at this $3m+ level than any other price point, e.g. sub $3m.

Click on any of the graphs below to bring them up to full size

Agent Comments on the current $3m+ market

• “Prior to the school holiday period there was some renewed strength in $3m+ market due to things stabilising after the election and to the shortage of good quality homes. With the spring market in full swing it will be very interesting to see what happens with the increase of volume. But if the enquiry rates are anything to go by, October will be a strong month of sales.” Andrew Hayne of Marshall White Malvern
• “The $3 million plus market is strong, and we are expecting a big finish to spring in this market for good family homes.” Nick Johnstone of JP Dixon Brighton
  
• “There seems to have been a resurgence of buyer enquiry for the upper end properties recently.  It will be interesting to see if this follows through once we see increased stock levels after the school holidays and round 2 of the Grand Final.” Julian Augustini of Hodges Brighton
• Andrew Baynes from Kay and Burton South Yarra “Last Monday was the busiest auction sign up day for me in 10 years.”

Media Monitor: Domain – The Age 2/10/10. Headlined: “Hands up if you don’t have a clue” by Josh Jennings. Basically a solid article – but Josh, how many homes has Dr Damien Eldridge, Economics Lecturer from La Trobe University, bought using his quoted bidding advice this year? Would it have been 5 or 10 or 50? Going by his auction comments we were unclear as to whether you were holding him out as an expert – or simply providing supporting evidence to your headline.

We are not all brickbats here for the mainstream press. Congratulations to Chris Vedelago from The Age who this year has been consistently reporting the market as it really is and who actually seems to get out of the ivory tower (that so many property reporters are stuck in) and goes to auctions and talks to agents. We mightn’t always agree with you Chris, but we respect your work. Keep it up and keep getting out into the market.

Market News TV: On Tuesday of this week we ask the question: Is the ACCC or CAV the right watchdog for the real estate industry? Check out our Agent Opinion Videos.

Buyer Masterclass: We conclude our Negotiation Masterclass series with an article on Backward Bidding. From next week until Christmas we will be looking at “Pricing and Values” in Million Dollar Melbourne

Reported Results:

Paul McDonald moving things along nicely at 98 Primrose, Essendon: 3 bidders: Bought under the hammer for $1,312,500

The rest of $M Melbourne Melbourne slipped a cog this weekend with a 64% clearance rate on 25 $M+ reported auctions – a fair way down from last week’s stellar 83% on our 30 monitored $M+ auctions.

Some Highlights

• In Yarra (Richmond to Fitzroy) there were six properties up for auction at around a $million, and six were bought
• Elsternwick 9 Gladstone – Bill Stavrakis - bought at around $2,500,000. Land in that area is pushing $2000 per sq metre if you presume you’d bulldoze 5 Gisborne Elsternwick, which was bought yesterday for $1,505,000 (750 sqm) – Daniel Ashton of Biggin and Scott
• Caulfield saw three from three $M+ bought at auction on Sunday – all with Gary Peer: 7 Palm with Eyal Malka, 22 Pental with Daniel Rees and 53 Bundeera with Darren Krongold
• Williamstown 2 Hannan – a nice little double-fronted, bought this week for $1,720,000 – Michael Harvey of Williams

Agent Questions: Stock Level and Premierships

David Oster, Jellis Craig, Ivanhoe: “Stock levels are looking very good after a soft September. It will be a late Spring.”

Stewart Oldmeadow, Miles Real Estate in Ivanhoe: “We’re finding numbers pretty strong at the moment in this area.  I think it’ll hold at this level through to Christmas now.  People have seen that the sky is not falling in, so emotion alone will determine if it has hit the apex or not. And I think Collingwood will win this year.  To win, St. Kilda would need Riewoldt to do something amazing, whereas with Collingwood each man does his own thing on the team.  I think that’ll win it for them”

Paul Anderson and Paul Anderson Real Estate Essendon: “Stock levels are low for the general Essendon area and we are hoping, and that is all at this stage, that stock levels will pick up towards the end of October”

Around the Grounds - Auction  Flavour

Elsternwick 5 Gisborne: Daniel Ashton; 3 bidders, Bought After $1,505,000
Bill “I love every street in Elsternwick – but this particular one I’m auctioning today just that little bit more” Stavrakis, of Biggin and Scott, gave his usual entertaining and polished performance extracting bids between $1,300,000 and $1,440,000 from 3 bidders within a crowd of 50, before a strategic pass-in took place at $1,440,000. Feels like it was going to sell soon afterwards for a bit more. Bought after for $1,505,000. (Mal James)

Essendon 98 Primrose: Paul McDonald: $1,312,500; 3 bidders, Bought under the hammer
Paul McDonald is one of your quieter auctioneers – he starts things on time, moves through the rules and proceedings at a good pace and gently brings the bidders into the start position. Unlike many others he doesn’t yell and scream and dance – he just tells you where things are at – consistently, firmly and without agro. I found it a refreshing change. The first bidder started things at $1,200,000 and the third bidder finished it under the hammer at $1,312,500. Solid. (Mal James)

Alphington 22 Yarraford Avenue: Craig Shearn: $1,390,000: 3 bidders, Bought under the hammer.
This peaceful, tree-lined street was the picture-perfect setting for an entertaining auction. With an air of anticipation within the crowd, Craig Shearn was surprised and delighted when offered a decisive opening bid of $1,000,000 right off the bat. Whilst two other bidders bravely entered the fray at times during the auction, there remained little question as to whom the successful party would be. Each rising increment offered by other bidders was immediately thwarted with a confident and definitive increased bid. The knock-out bid came at $1,390,000, which brought spontaneous applause from the crowd as the happy couple marked the momentous occasion with a warm embrace! (Nikki Hills)

Ivanhoe East  489 The Boulevard: Stewart Oldmeadow: $1,740,000: 2 bidders: Bought under the hammer
The chance to snap up a home overlooking the Yarra Flats was enough to attract a good crowd to this auction. When Stewart Oldmeadow’s request for audience participation brought silence from the crowd, he commenced proceedings with a vendor bid of $1,400,000. It had the desired effect and what continued was a two-horse race, with strong and steady bidding from both parties until the final bid of $1,740,000, which took it across the finish line to victory. (Nikki Hills)

Monitored Auctions

We only buy homes

Alphington 22 Yarraford: Craig Shearn of Jellis Craig: 3 bidders and bought under the hammer for $1,390,000

Glen Coutinho (Hocking Stuart) means business at 12 Beaconsfield Rd, Hawthorn East. Under the hammer, $1,256,000, three bidders

Key Points:

• We covered 11 auctions across Boroondara on Saturday. Of those, 4 sold under the hammer, and 4 were bought after.
• Bidders on all bar one auction.
• Big crowd increases.
• The biggest auction of the day was 42 Wattle Valley Rd, Canterbury (Richard Winneke of Jellis Craig), which had an after-auction sale price in excess of $3,400,000 and a massive crowd of around 250 people.
• 2 Berkeley St Hawthorn suprisingly sold – considering it was surrounded by for a number of overlooking flats – Robert Vickers-Willis of Abercrombys – good get at over $3,000,000

Biggest Auction of the Day: 42 Wattle Valley Rd, Canterbury, Scott Patterson, Jellis Craig, Bought after (undisclosed in excess of $3,400,000), 1 bidder, crowd of 250
“Like most people in Melbourne I love going to the football. Now, those reading this might say “what are you on about Guy? This is a property report”. Well, the picture I am trying to paint is the auction at 42 Wattle Valley Road was just like going to the football – the crowd has huge! Probably close to three hundred people. Inside the house there were queues to get into the bedrooms and trying to get upstairs was near impossible. This was anticipated as this was a very special house. You don’t get a James Buyer Rating of 805 unless it ticks all the boxes. Now back to the auction, what an anticlimax! If you were the vendor you would think there must have been a number of parties amongst the crowd looking to lock horns and fight to the death to buy this stunning home. Unfortunately there was little bidding action . After a vendor bid of $3,425,000, there was a very last minute bid of $1,000 just to secure right to negotiate after the auction.” (Guy Angwin)

Agent Q & A: What is your view on pricing?

Scott Patterson, Jellis Craig, Hawthorn:“The  market is patchy at the moment and we are seeing mixed results. The homes with the ‘wow’ factor often attract concentrated bidding at auctions and with the properties that don’t need work, there is always more interest in those as many people don’t have the time to fix them up. As for the homes with poor floor plans, it certainly affects their appeal. I would say there is a 20 per cent difference in price to those with good floor plans.”

Glen Coutinho, Hocking Stuart, Hawthorn:“Now that the government is sorted out, the market should remain healthy between now and Christmas. There is a shortage of good houses. Apart from the usual disruptions of the AFL and the racing season, there are still some good selling days.”

Bidderbuzz Auction of the Day: 34 Kinkora Rd, Hawthorn, David Oster, Jellis Craig, Under the hammer $2,690,000, 6 bidders
“Auctioneer David Oster led a ripper of an auction in the highly sought-after Grace Park Estate. There was interest from the get go with an opening genuine bid of $2,000,000, promptly followed by two others from the crowd of around 150. As the price rose so did the bidder numbers – 6 in total, joining the quest to secure this Hawthorn home. The determined bidding of one at $2,500,000 saw the property go on the market soon after at $2,506,000. At $2,690,000 five bidders bowed out to the unwavering bidder left standing. The crowd erupted in applause at this strong result and quickly disappeared, most likely for a coffee at nearby “Liar Liar” to recall the entertaining spectacle of this Spring mid-morning auction.” (Julia Atkinson)

Clearance Rates & Monitor Table:

Forward Auction Stock Levels

Not everyone in Melbourne was home watching the football on Saturday. Around 250 people watched Scott Patterson (Jellis Craig) in action at 42 Wattle Valley Rd, Canterbury. Passed in $3,425,000. One bidder. Bought after, undisclosed.

We only buy homes

David Oster (Jellis Craig) stands high at 59 Studley Rd, Ivanhoe. The historic property sold under the hammer for $4,300,000. Two bidders and a crowd of around 80.

At 6pm on Saturday the James Million-Dollar-Plus clearance rate was 65% for the 43 auctions we attended. Of those, 15 were bought under the hammer.

Auction numbers were up across the board, but results were very mixed. Fringe $M+ areas such as Moonee Ponds, Bentleigh and Eaglemont performed very well, but Bayside put in an all too familiar poor performance – and Port Melbourne through to Elwood had a bigger shocker than Collingwood. Boroondara was steady as she goes.

Overall we saw strong results this weekend, all things considered.

Bidderman, our Demand Indicator, has increased to nearly 1.9 bidders per auction. This is significant, especially when across the board 3 in 4 auctions have at least one bidder. If Bidderman continues like this we could see a market gaining momentum. Bidderman has been on the up for 3 weeks – if next week it cracks 2 bidders per auction and the predicted September stock levels remain tight, then there is a case for saying the market will improve for sellers. However if this was just an exceptionally good stock week after a non stock week last week (because of the election) and Bidderman falls going forward, then the market is likely to be as “softish” as it has appeared for the past few weeks.

Market: Positive – Maybe?
Last week we said market watchers would move from Stock levels to Demand indicators. Thus we wanted to get out this weekend to see what the election aftermath was doing to the market (if anything).  What we can report to you is that after 43 auctions (drum roll)  …..we’re none the wiser. If anything the demand signs this week were as positive as they have been since June.

This felt like the first up week in around 10 weeks. However not all agents thought that, and if you were a seller in Bayside under $3m you would have said it was faulty to say demand was solid. But sellers over $3m in Brighton would agree there is demand (7 bought last week and counting). Meanwhile Port Phillip was a buyer-free zone – in fact there were less buyers in the whole of Port Phillip than at the one auction we got beaten at in Milverton St Moonee Ponds.

Confused? Well if you were backing horses this weekend at the same success rate we had in picking prices at auctions you would have been walking home before the last race.

Our take on today’s demand is slightly positive compared to previous weeks, but still flukey. Overall there is no doubt about demand being out there and where quality stock is tight the market has some strength e.g. Kew to Ivanhoe. However Bayside is awash with supply choice and homes are only moving if the vendor is very realistic.

Our graph below shows how the 43 auctions we reported on faired.

Highlights

• The $3m+ market is showing some very early glimpses of a possible recovery. But it’s very early days and it may be a false dawn with a few vendors dropping their expectations.
• $4,300,000 in Ivanhoe: 59 Studley Rd, David Auster, Jellis Craig: “Auctioneer David Oster cleverly chose to hold the auction in the elevated gardens with city views – so as to underline the attraction and value of this property. The home itself was unavailable for inspection prior to the auction. A strong opening bid of $3,300,000 opened proceedings and soon another bidder joined in. This two-sided contest elevated the sale price by a cool million dollars to end at $4,300,000. A strong result for the Jellis Craig team.” (Doug Paget)
• $2,485,000 in Kew 16-18 Ridgeway Ave, Richard James, Jellis Craig:
  “This auction had it all – strong confident bidding, multiple vendor referrals, plus the usual clichés and jokes from auctioneer Richard James. Bidding was intense and at times very confusing. As the increments narrowed to $2,500, even the agent lost track of the current offer! The property was bought under the hammer for $2,485,000 to an applauding crowd and an ecstatic mother who rejoiced to her son “We won!”.” (Amy Wong)
• Kew, Hawthorn and, across the freeway, Eaglemont and Ivanhoe continues to be solid. There were 20 bidders at the six $M+ auctions we went to today. All sold with 5 out of 6 selling under the hammer.
• 94 Dendy St Brighton resold today for $250,000 more than its last sale in December 2009. 2 bidders. Miriam Carraro of Hodges.

Some strong results in other $M suburbs.

• 6 Milverton Moonee Ponds – Matt Febey of Nelson Alexander –  5 bidders and bought for $1,502,500, $200,000 more than a strong but fair reserve.
• 4 Susan St Sandringham – Bill Jowett of Buxton – 3 bidders and bought under the hammer for $1,400,000.
• 46 The Esplanade Maribynong - Craig Teal of Brad Teal – Sold before auction – over $2,000,000.

Lowlights

• Only 6 out of 17 sold in Brighton and Brighton East.
• Did the auctioneers even show up in Port Phillip? Did they perhaps print the wrong times? Only 2 out of the 14 homes we were monitoring sold this weekend. Townhouses and apartments did better, with  3 out of 3 selling in Port Melbourne and St Kilda for between $1,015,000 and $1,055,000
• Stonnington was mixed with less than 50% bought; but there was little to get excited about quality-wise.

Agent Question: Has or will the election have any effect on the market?

Steve Burke, Jellis Craig, Hawthorn: “A large number of vendors have waited for the election to be over. Unfortunately, as we know, there has still been no resolution as yet. Those currently selling now have timed it well because there isn’t the usual volume of stock in the Boroondara market for this time of year. Less competition creates a greater concentration of buyers at the auction and higher selling prices on the day. We saw this last weekend at 56 Manningtree Road, Hawthorn where we had 5 bidders: 2 investors and 3 owner-occupiers. We are expecting the Spring market to start later once things have settled down and once the Federal government has been decided – and to continue right through to Christmas.”

Nick Johnstone, JP Dixon, Brighton: “My feeling is it has made a slight impact. It is a bit like being in a church at a wedding and everyone is just waiting for the bride to arrive. Once we have a resolution we will be away.”

Chris Hassall, Buxton, Bentleigh: “Good quality, $1m+ homes, close to amenities, are selling well. There are currently no signs of buyers holding back as a result of the election. The next big test will be the football.”

BidderBuzz Auction of the Day (6 Bidders): 41 Silverdale Road Eaglemont – Stewart Oldmeadow of Miles – Sold Under the Hammer – $1,167,000
“Unfamiliar to this neck of the woods, I found Eaglemont cute as a button! Clearly the crowd of 120 did too. Six bidders kept auctioneer Stewart Oldmeadow on his toes and created a riveting contest. Each time the hammer was about to fall, a new bidder appeared and nudged the price up. Mr Oldmeadow proclaimed that Eaglemont properties turned over only every 21 years on average! Well this auction certainly emphasised the demand level: it was bought for $1,167,000 after a solid half hour auction that included two vendor conferences.” Doug Paget.

Issue: The 3M+ Market

The August Bayside Conundrum: the $2m market is drowning, almost dead – while above $3m it is seemingly breathing again.

Look out for our detailed report on $3m+ sales in August which shows a bit more noise at this price level as deals seemingly come back onto the agenda.

However to put this into perspective: we are a long way off Autumn’s deluge where, for example, in May we saw 47 homes reported as sold over $3m as compared to around just 15 this month.

Why is this little lift happening? Because the buyers are there.

Why now? Our best guess is that the buyers never left, but that we needed some vendor price adjustments on old stock and that this came this last week or so. If this is the case, what we are seeing now may simply be a statistical coincidence as opposed to a market change. But it may also encourage more quality stock to come on, which may give the market a more sustained lift. September is going to be lean for stock due to the election interference at listing time (August) – so October will be the month to see if this market is trending back up or remaining flat. But we are still thinking positive, as the agents are continuing to report enquires from those wanting to sell and Bidderman is looking OK.

Check out our $3m+ State of the Market Report on Monday

Video Auctions: This week we showcase auctions at Foote Street Brighton and First Avenue Kew. Check them out below. These are fast becoming our most popular news pieces.

Agent Videos – This week G-E-R-A-L-D Delany of Kay and Burton goes under the hammer with regards to Quoting and Reserves -check out the agent opinion videos to the right of this article.

Buyer Opinion: Our Negotiation Masterclass series went on hold while we had a quick look at a Hung Spring – the Caretaker Mode Market. On Wednesday we return to negotiation with an article on ‘Mindset’.

We Only Buy Homes

Geoff Hall (Noel Jones) in action at 35 Hosken St, Balwyn North. Two bidders, passed in at $1,600,000 and bought afterwards.

Scott "Pretty Boy" Patterson (Jellis Craig) fields bids from five bidders before 60 First Ave, Kew, is bought under the hammer for $1,205,000. Check out our video on this auction.

Key Points:

• We covered nine auctions, three bought under the hammer, 2 post auction and 4 passed in
• Jellis Craig had an 80% Clearance Rate today
• Big numbers of $M+ auctions today – 42 monitored
• Bidderman is over 2 on a day when we monitored over 40 $M+ auctions in Boroondara. That’s “strongish.”
• Surprisingly Camberwell only 4 from 10 and some that passed in were good offerings eg 8 Canterbury and 46 Brinsley
• Hawthorn and Hawthorn East 7 from 8 bought.

Agent Comments: The election question

Steve Burke, Jellis Craig, Hawthorn: “A large number of vendors have waited for the election to be over on August 21 and unfortunately as we know there has still been no resolution as yet. Those currently selling now have timed it well because there isn’t the usual volume of stock in the Boroondara market that there usually is this time of year and less competition creates a greater concentration of buyers at the auction and higher selling prices on the day. We saw this last weekend at 56 Manningtree Road Hawthorn where we had 5 bidders, 2 investors and 3 owner-occupiers. We are expecting that the Spring market will start later once things have settled down and the Federal government has been decided and continue right through to Christmas.”

Tom Ryan, Jellis Craig, Hawthorn: “While on our car runs, viewing new stock I have been pleasantly surprised by the amount and quality of homes about to hit the market in Spring and in particular there have been a number of good quality family homes.”

Hamish Tostevin, Marshall White, Hawthorn: “In regard to the election, there has been nothing in last couple of days – no different to the last couple of weeks. Open numbers were the same as previous weeks around 10 to 20 but Melville St had 50. The election will not do that much. Volume  may be back a little already and uncertainty (with government) will not help or have an impact on (the market).”

Chloe Quinn, Jellis Craig, Hawthorn: “Certainly people will raise that concern (that the election has effected the market) but to be honest we had high numbers of people at our open for inspections and auctions last weekend on the day of the election. Because of the election, people are actually in Melbourne. If people want to buy a home then the potential change of political parties isn’t going to effect them getting their house, they’ll make it happen.”

BidderBuzz Auction: 60 First Avenue Kew; Scott Patterson Under Hammer $1,205,000  5 Bidders
A fantastic auction from Auctioneer Scott Patterson and the Jellis Craig crew – Richard Winneke and Chloe Quinn. Mr Patterson commenced with a vendor bid of $980,000 as the crowd of 50 stood silently. Only one bidder piped up before half time. A little rain, a little break and the crowd were fired up. Five bidders in total, the selling price was called at $1,090,000 and the property was bought under the hammer to the enthusiastic buyers at $1,205,000. Great vibe, great auction. 

Clearance Rates & Monitor Table:

Mark "Lama" Dayman (Marshall White) does his best to drum up some interest from the crowd at 51 Leura Grove, Hawthorn East, but with only one bidder is forced to pass the property in at $1,725,000.

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.

Balwyn North: 60 Tuxen Street; Toby Parker of Hocking Stuart trying to see all the bids from a crowd of over 300. The story of the day. Huge crowds. Very strong Bidderman. Bought for $4,300,000

It is 6pm Saturday and the James Million Dollar-Plus Clearance rate for the 39 Auctions we attended today was 77 per cent and we have no late REIV results so could be higher.

Bidderman was well up at 3 bidders per auction and any talk from us of the last two weeks looking a bit soft has been well and truly proven as wishful thinking. 

The market of today is showing no signs of any weakness as proven by Bidderman and the $m+ clearance rate.

As a buying group we had nine auctions/buys on today and in my opinion we had an element of luck to buy the five that we did. 

Market Mood

The market according to Gerald Delany from Kay and Burton was astounding today. Rock solid says John Bongiorno from Marshall White. Scott Patterson from Jellis Craig expanded even further with these facts and comments

Strongest day he has ever seen in his 20 years of real estate with 62 of Jellis Craig’s scheduled 75 auctions selling under the hammer or shortly after. Easily their biggest day in real estate dollar wise – ever. In fact at Jellis Craig 88 million dollars of real estate exchanged hands during the past week including around $7 million for Paterson St Hawthorn (Nick Elmore/Tom Aylward) and 5 Moore St Hawthorn (Paul Keane/Alastair Craig) was bought under the hammer for $6,435,000 with 6 bidders. This is 2007 bidder strength.  I think Scott made another salient point when he said it was local not overseas buying strength today.

We mentioned that the last two weeks were down in terms of Bidderman and that it may have been a turn or it maybe due to stock quality. Today seems to have proved it was stock quality. Today was as strong as the other 2010 Super Saturday (February 27 th), as strong as late last year and as strong as the December 2007 peak. It was all about quality and buyer depth and local not overseas buyers.

For every buyer there were two who missed out. Best evidenced by our  trips in the last fortnight to The Boulevard Aberfeldie for no result. 110 The Boulevard,  on the Maribynong river, was sold last week for $1.77m on a $1.2m+ quote with no recent sales to give any guidance. This week a similar knockdown 118 The Boulevard (Fabian Rosin of Nelson Alexander) which may have sold for a tad less actually had 4 bidders over $2 million to eventually  be bought by a most determined bidder for $2,189,500. 4 bidders over $2 million and 20% or $400,000 more than last week’s benchmark. It re-emphasizes the incredible power and momentum of the market on properties that are considered quality.

Stonnington the same – 16 Mercer Road Armadale (John Bongiorno Marshall White). $6,240,000. 4 bidders.

Bayside and Port Phillip was no different. Buy after buy. $2mllion, $3 million. 3 or 4 bidders.

Easter Reflections: You’re young and you maybe panicking. Please don’t give up!

Now that the Easter break is upon us, and the temporary madness of two Super Saturdays (wedged between Australia Day and Good Friday) is abating, it it a good time to have a quiet moment and reflect where you, as a buyer, are at. Even the most balanced and resolute buyers can be thrown off-track by the highs and lows of this year’s property market: it’s overwhelming (when lots of new stock comes onto the market); it’s intense (Super Saturday auctions on February 27 and March 27); and it’s emotional (especially the let-down feeling if you miss out at auction).

This piece aims to (to use the word of the moment) “recalibrate” your thinking back to where, for many, it perhaps should be. In particular I have focused on the young.

I want a home with solar heating – I want a home with no renos – I want a home with a courtyard – I want a home with a nice kitchen and pine floorboards. I want a home next to my latte shop. Fair enough.

But if I can shake your thoughts up a bit, that’s small beer and perhaps overly focused on a narrow set that may lead to a short-term fix but a longer-term problem or it may, in fact, lead to nothing at all – meaning, in this current market, you don’t buy.

Our question to our clients is the same on each property. It’s the same at the start of the process and it doesn’t change as we work through every one of our  pre-auction  and private sale meetings. That question is: what will make you and your family truly happy now and also truly happy in the longer term? What financial and emotional outcomes do you want to achieve when buying a home?

Since Christmas, we have had at least 10 families come and see us to help their kids get a leg into the housing market. Housing is the new private school fees; the new club membership that you introduce your child to. For many, if you don’t help your child into home ownership, then they ain’t getting into it anything short of Bairnsdale East and 2025. And please don’t sit there and say “I did it, why can’t they?” The current state of your wealth – most of it in your home – is one of the reasons you are wealthy but it’s also the main reason your children can’t easily get into the housing market without help.  But I digress. 

Buying any home at any level is PPP: Price, Property and Position. They are the three choice levers you, as a buyer, have some control over. How much, type of home and where? Price, Property, Position. 

You buy a home for emotional and financial happiness. Whether you think through it consciously or not, all your outcomes relate back to financial or emotional happiness. 

What should you buy? What makes you truly happy. It’s the Christian, Buddha, Muslim home philosophy all rolled into one. What really makes you truly happy now and in the future?

When buying a home, two things make you truly happy: good decisions and land.

Good decisions come from luck and goals (financially and emotionally). Bad decisions come from the same places: luck (lack of) and goals (or lack of).

You’re in your late 20′s and early 30′s and you need a home. Relationship pressures are usually the spur – your parents may be helping a bit and you have a good job.

Your name is Freddy and you are sitting down for a coffee with me, because your dad told you to.  

Freddy: I’ve got $500,000 and I want to buy a home in Hawthorn.

Mal: Nice meeting you, Freddy. Waiter. Bill, please.

Freddy: What are you doing?

Mal: I’m leaving because I can’t help you.

Freddy: I could buy an apartment

Mal: But you are getting married and said you wanted some kids. Space, Freddy, space!

Freddy: OK, what about going further out?

Mal: What to Officer or Coolaroo or Tecoma? Freddy, you don’t even know how to use your sat nav.

Freddy: You’re a snob and a very rude man, Mal. My father was right.

Mal: Freddy, homebuying is not about me, it’s about you. Today in 2010 you need to find $900,000. Sell your car; get your wife to get a second job; hold back on the kids and get that big-noting dad of yours to throw in a few bucks and show me the money. Freddy, your life is in Hawthorn or inner Melbourne; your friends are here, you’re happy here and, if you move out to Pakenham, then I’m afraid you may never come back. And I’m also afraid that is not where you want to be. Freddy, I’m telling you what you need to do. You need to fight, scrounge, cajole, weasel and push, push, push with all your might and you need to get as much money as you can manage together and you need to do it now.

Freddy: You’re an old fart, Mal. I don’t want those pressures. I don’t want to encroach on my lifestyle. I would rather be among the trees and without the pressures of an all-consuming mortgage.

Mal: Then, Freddy, that’s fine. If that is truly what you want, then, as Nick Renna says at all his auctions: I respect that and good for you.

Freddy: Who’s Nick Renna?

Mal: Don’t worry. Hey, Freddy. Does your wife Christine want to live in Upper Ferntree Gully among the trees? It’s a beautiful place.

Freddy: No, she wants to live in the inner city and she is applying the pressure to me big time. She wants kids, she wants culture and she wants Hawthorn. The only thing I’m not sure she wants is me! I hate this pressure.

Mal: This is good.

Freddy: Good? – are you a sadist as well, Mal?

Mal: It’s good because it shows you are getting some clarity on what you want and what your family wants. Now we need to be smart. Do you really want to live in Outer Melbourne?

Freddy: Not really and not because I don’t like the areas. It’s just it’s a long way out from work and it’s away from my friends and family and it’s not where Christine feels comfortable.

Mal: OK, well, we have one P worked out and that is Position (sort of). Only I think it’s not going to be Hawthorn, initially,  because we agree an apartment is not a goer with kids on the horizon and we don’t have the cash for land and a home there. What is important for now and your future is that we look for as much land in an area we can afford.

Freddy: What, like a knockdown?

Mal: Well, not really, because quite often that can be overcapitalising financially. Have a look at this diagram – you should have bought either of the renovated ones for a little bit more.

Freddy: So we go for big land?

Mal: No, it’s quality land – size isn’t everything, Freddy. See good land in Albert Park can be 180 sqm and conversely bad land in Swan Hill can be 1500 sqm. Quality land is about the combination of position and size.

Freddy: But in Hawthorn a good block costs $1.6 million and I’ve only got $500,000.

Mal: Actually, right now it is more but, in time, if Hawthorn, Grace Park, the Urquhart Estate or Scotch Hill is what you want then you will be able to get it, but you need to start right. Let’s look at Alphington – only 10 minutes from Hawthorn (outside peak); you said Christine’s favourite sister lives there; it has a really good cosmopolitan feel and has a number of period homes that have that good land content. 

Freddy: I get what you said about land quality but not land content. What do you mean by land content?

Mal: See this chart. All three of these homes have land but only the period home on the right has good land content. Land (the capital growth driver) is a lot less in new homes than older homes and even less in apartments – this example assumes you buy at market value all at the same price of say $900,000. But it’s also true at $2,000,000 even $5,000,000.

Freddy: And as you keep saying, they don’t fight wars over homes, they fight wars over land.

Mal: True. Land goes up and buildings go down.  It’s all about demand and supply. That is where growth comes from and another real pointer to show where demand is, is the Chinese.

Freddy: The Chinese!

Mal: When the FIRB rules restricted overseas buyers to new apartments, they bought new apartments as they had no choice. Now last year with the FIRB rules changing and Chinese nationals having choices as to what they can buy in Australia, many are choosing land over apartments and that is evidenced by apartment prices remaining lackluster and land prices, especially in your Hawthorn area, going through the roof. The price increases must surely be giving many people a message. Quality Land is a world language.

Freddy: So I’m getting the second P (Property) worked out. Type of home? Should have as much land content as possible.  What about the final P? Price. I’ve only got $500,000. That’s all the banks will lend and you reckon I need a million.

Mal: Freddy. You can do it. Make the lifestyle changes; get Dad and Mum to lend you some. Talk to the bank about a restructure and let’s see if we can’t find something a bit under a million and you put some sweat into the property – not a major reno but you fix it up a bit. I do think you can make $900,000 work if you want to.

Freddy: It’s a big ask. I want to go on holidays and my new Merc and ……..

Mal: You have choices. The choices you make now are what sets you up in your life. A new car and a holiday and its Frankston South or Aspendale and granite benchtops or none of these; hard yards and Alphington. One of these two has proven financial growth and for you emotional happiness, which you need for choices going forward eg better home, near better schools, a culture you prefer and seem comfortable with and the ol chestnut a happy wife = a happy life – the other has a two strikes policy.

Freddy: Two strikes?

Mal: If you are young and you buy a McMansion as home 1 and then home 2 in an  outer area new estate, then we feel that is where you will live for the rest of your life. Home 1 and Home 2 has to be on the ladder upwards if where you want to get to is where you are dreaming of now.

Freddy: I still think you’re rude and prejudiced but how will I convince the wife of this land content stuff?

Mal: Don’t worry, Freddy, my fourth wife said I was an expert on women and relationships. You start by telling them this …………………

Next market news in 3 weeks (school holidays and Easter)

Buy Well

Mal

Malvern: 39 Horace: Sold under the hammer for $1,670,000. Bidderman 5. Andrew Hayne asking the bidders to speak up over the crowd noise. Solid Result.

Toorak: 7 Teringa Place: Bought for $4,105,000. Bidderman 6 -Wow. John Bongiorno back from holidays and applying THE LOOK as strong as ever.

If the vendor and/or the vendor’s agent get a touch  aggressive concerning the price of a property in this market, the property is more likely to be passed in – and the only way to sell it is to meet the market. Andrew McCann of Ben Mac stills believes there is plenty of demand out there but some vendors have not taken their rose coloured glasses off and he even suggests that some (other) agents may be over promising on prices.

Today in Toorak, South Yarra, Kooyong and Malvern we attended 9 auctions. At 5:30 pm,  the results were seven pass- ins while two, 7 Teringa Place, Toorak (James Redfern Marshall White)  and 16 Belson St Malvern East ( both proxies for land value) sold well.  This ratio is a bit different to the REIV numbers where they report 4 pass- ins from 18 auctions.

Activity over the next week especially at the weekend will give a better idea of where the market is heading for the first half or the year.

The Belson Street auction (Ian McLennan and Danielle Waterton of Benmac) was interesting with 6 bidders making close to 100 bids for an ungraded property  on the Gascoigne Estate. The activity was increased by the presence of what appeared to be a couple of developers. If we fully discount any value for the house  then the land was priced at  approx $2650 psm- about what we would expect for this area.

Similarly Teringa Place could also be viewed as a proxy for land values. It was bought for $4770 psm, not quite as strong as the  $6000 psm achieved on Montrose Court just before Christmas, although both Courts are similarly positioned off major Toorak boulevards and the houses were of a similar vintage.

Of the pass-ins 263 Domain Road South Yarra (Anthony Cantor of Kay and Burton)  could also be viewed as land value. This site is 394 square metres and passed in on vendor bid of$2,000,000 or $5050 psm. What we would expect for the area.

Most results are being reported - except mainly South Yarra and Toorak – the Top End.

One that has been a long time on the market were bought this week. 14 Gillman St Malvern East with Mark Lawson of Jellis Craig was bought for an undisclosed but very solid price of around $2.2 million. Hats off to his patience on that fringe Gasgoine home – we didn’t think he would get that.

So if you are buying let us help you with the numbers – and be patient. Then strike!

Make good decisions

Beaumaris: 4 Scarborough:THE MINDERS - A NEW SATURDAY SHOW STARRING BERT GERAERTS and MARK EARLE of BUXTON. Bought under the hammer $1.355m. Photo Jen Milligan

It’s 6.00 pm Saturday and the James $m+ Clearance Rate on the on the 23 $m+ properties we attended today, was a strong 78 per cent.

HATS OFF to Torsten Kasper, Managing Director of Chisholm and Gamon who said their quoting policy now, was that their reserve was within their quoted range unless a last minute vendor hiccup. I suppose we could handle one vendor hiccup in 20 or so. Let us know if you as buyers are finding this to be the case. We congratulate Torsten on this transparency and we encourage buyers and sellers to support this Elwood and Port Melbourne company as long as this remains their stated policy and is proven to be the case.

Bayside Summary: Just another quiet week (not) in Brighton with 13 reported sales over $1m. Big increase in Bidderman at auction: 2.6

Boroondara Summary: 33 houses reported for sale today under $1.8m and 2 passed in. Balwyn was interesting today with 9 reported auctions and 4 pass-ins but drill down on the stats a bit more and you see anything under $2m sold and everything over $2m passed in. Drill down again and those pass-ins were all double storey new homes that have been so successful this year with the Chinese community. Chinese people (the catalyst for our improving market, so thank you) have (a) gone back for the summer break and (b) are being affected by the dollar and nothing states this so succinctly as the above observation.

Stonnington Summary: Strong day, seven out of seven auctions we attended sold.

Buying a Home Before Christmas

This 2009 run into Christmas is seeing an above average amount of activity and in the estate agency business activity breeds even more activity.

Everybody in late 2009 is coming out of the financial closet and admitting things aren’t actually as bad as they thought they would be. We are seeing buyers and sellers taking what is now in their mind acceptable risks – having two homes (buy first) or no homes (sell first) in their move from one home to another. The market is very healthy – good turnover – good prices and good Bidderman.

A focus for our clients at the moment is off market – I personally have looked at more off market homes this last fortnight than in the last two months. There are a number of February sellers who have committed to agents and those agents are testing to see if a buyer may well pop up before Xmas.

So how do you buy in the next 2-3 weeks, and more importantly how do you buy well.

Firstly you need to see the home and that maybe slightly harder than normal as many agents still have a lot of homes currently on the market to service – next week December 12th is Jellis Craig’s biggest auction day – ever – not biggest December auction day – not biggest this year – biggest day ever.

If you can see a “quietly listed”  home and you like it, then in this market the tricky pre Christmas questions are

1. Is it really for sale now or
2. Is the agent trying to secure the listing or
3. Is the owner just curious or
4. Is it really for sale right now

So a couple of simple questions to the agent

1. Mr Agent do you have a signed authority to sell this property?
2. Mr Agent does the vendor wish to sell before Xmas?
3. Do you have contracts and Section 32′s ready?
4. Do you have a specific asking price?

The answers you get will determine the next step and even if some of the answers are no they still may mean yes and vice-versa.

The tricky bit occurs if and when you assess that a sale may be possible and you want to buy it.

Agent: Yes Mr or Mrs Buyer the home is for sale now

You the Buyer: How much is pretty well your next question – you can ask it smart or ask it dumb but it is the next question.

The replies often become wishy washy in almost all circumstances and fair enough to some extent -

• the agent doesn’t always know for sure what it will take and it is early days
• the agent is also working for the vendor and is probably marking time to see what you may offer after some more questioning. Christmas time is a time of emotion and agents (both buying and selling) use emotion to maximize their clients position.

So maybe you will hear this: Well Mrs Buyer we told the seller $2,000,000; the seller/vendor wants $2,500,000 – I think; although the husband is not as fixed on that figure and we have some buyer interest at $1.9m.

Your (buyer) response to your spouse is………………hey Darls I’ll do the Christmas shopping with the kids at Chadstone can you come here and talk to this nice selling agent.

This is pre offer stage and you really do need to think about some expert help (if you are unsure)  - before you actually commit to a price or an offer  - even a low one.

Why – well a low price may get you offside very quickly and you may well be dismissed; when a sensible offer would have bought it.

I can always increase my offer you say – well sometimes no – not if you are dismissed or sometimes yes you can increase; but if it is a big jump the vendor and agent maybe waiting for another big jump from you because of your huge leap after your first offer – even if your second offer, if originally made, would have bought it.

It is truly a powerful dynamic the first and often last offer – where do you pitch it and how do you present it.

That doesn’t mean well pitched sensible lower offers don’t work at this time of the year – they do – perhaps not as well as last year because seller fear is not as rampant as 2008 but nonetheless they do sometimes work. Some sellers are happy to just move on.

A well placed, well timed and well presented offer can work

The question is when, how and how much?

We at James are happy to talk to you in depth as each set of circumstances are different.

Of course you can save a buyer agent fee and a lot of stress (right now – the stress will come post purchase time) by offering $2.8m on a $2.3m home – try it and watch Santa get killed in the rush – but you do save the buyer agent fee.

Finally on this matter it’s not all about money at Christmas – its about emotion. Way too many homes – and bad ones at that  - are bought at Christmas time only to find that in the cool light of a March settlement a big mistake was made – you just don’t like it – you should have investigated the floor plan more, the termites, the caveat and the plumbing – not to mention you just don’t like the area.

Happy Wife Happy Life yes!  but be careful at Xmas – you wouldn’t want to get a seven iron through your car window if you just went and did something without thinking.

Special Conditions are leaving buyers cold

Sellers this is a truth – you may be losing buyers because of the solicitor or conveyancer you hire. That’s right you are spending $600 to $2000 on contracts that maybe stopping buyers who have 10% deposit, are decent people and like your home.

We were down to a few minutes before an auction last week and refused to bid before the sellers finally agreed to some sensible special condition changes. Sure a conveyancer works for the seller but if it stops a buyer from having a go is that really protecting the vendor.

In the last fortnight we have had 3 separate legal firms refuse to allow our clients to buy until certain special condition clauses have been removed – 3 non starts unless things changed and they did – so my question is why put them in if you are prepared to pull them out. Answer: Because many buyers don’t ask to have them removed.

This has been going on for years but it is getting worse. Please we are not saying that penalties for defaulters are not an issue, but this article is not about any default clauses. Its about unfair special condition clauses including:

• 1) Removing general conditions from standard Law Institute contract – the few that protect buyers
• 2) Telling buyers they and only they are responsible for the home at time of signing – even when they don’t have access – instead of at settlement when they do.
• 3) Telling buyers they are responsible for things the vendor did prior to the auction. Hello!!!
• 4) Telling buyers they are not allowed to ask questions or dispute title even if title is wrong

You need to challenge these things if you are a buyer – you can’t stick your head in the sand – sh…t happens in this business if you do. In three of the past 20 contracts we’ve ultimately bought we have found issues re the size of the land – one smaller than claimed, one larger than claimed on the title but it was a laneway that hadn’t been put on title. One was an agent’s measurement and advertising error. Remember you are buying a title, a piece of paper and although we always measure up (with our measuring wheel) if you’ve given away rights in the special conditions and you find a problem, recourse is more difficult if not impossible. You as buyers should not agree to these unfair special conditions.

And on top of this, at Christmas time some agents are not getting contracts till a day or so before an auction making a buyer’s legal due diligence prior to auction very difficult.

Who cares the sellers may cry. No problems but if you are reducing your bidders you should care.

Lawyers believe they are protecting sellers and they need to. And yes we work for the buyers, but Mr and Mrs Seller we’re just pointing out buyers maybe walking. If I had to choose last minute between two identical investment buys – one with a buyer unfriendly contract and one with a normal Law Institute contract which still favours the seller but in a balanced way then I know which I would choose.

Please, not trying to be controversial – pointing out facts – if you stop a real buyer from bidding I can’t see how that is good for you the seller. I don’t see how your conveyancer has helped or protected you by removing a legitimate buyer.

This is our last Market News for this year – except for our Bumper Christmas Special in two weeks – best auction – best auctioneer - best deal and so on.

In finishing I would like to thank our brilliant reporters; Tom, Julia, Gina, Annette and David who with Jen help put our market news together each week. And I would like to especially single out our editor Melinda Brown who makes the wonky ideas we all have read like classic prose – well most times.

A big thank you to all the selling agents (yes I’m sucking up) and auctioneers and company directors who allow us to move freely around auctions and who ring in results and let us report as we see it without complaining; even when we say things they don’t agree with or when we take the micky out of them. Many of the selling agents are far more open minded than some negative press gives them credit for.

It’s a great job being a buyer or seller agent, you change peoples lives.

Buy Well now or maybe have a rest at Christmas and come back stronger and smarter next year. Stay safe.

Mal