The Question: After Super Saturday would these 3 not sell, sell lower or would the Mexican Wave** (see explanation below) kick in and they all sell once one had gone.
The Answer: The Jungle Drums beat loudly and the Mexican Wave kicked in with all three selling within 24 hours of each other. All three had quotes of $5m to $6m during their campaigns. Scotsburn was bought after a weekend pass-in (believed to be around $5m), Montalto was for most of its campaign a private sale (but finished in a Boardroom Auction at just over $7m) and Scott Grove was an Expressions of Interest closing Wednesday (reportedly 3 interested parties and sold 2 hours after the deadline for well over $6m).

October 29th: 54 Hanby St Brighton (above) (Kevin O’Brien) – The only auction I came out for today. Damian Davis – a bit out of his normal territory started up the engines with a solid opening spiel in front of a crowd of around 50. After he had finished his coverage on the home’s flow, light and feel, he asked for $3,300,000 from the crowd. Nothing was forthcoming, so a vendor bid at $3,300,000. Another vendor bid at $3,350,000 and a half time break did nothing to excite and so the words pass in brought an end to the proceedings on this lovely home that has a vendor at one level and potential buyers seemingly at another.

October 25th: 25 Scott Grove Glen Iris (Rae Tomlinson and James Connell): Bought within 2 hours of close of play for well in excess of the $6m+ price tag. This was a very good home on a very big parcel of land and the result was deserved and expected for a quality A grader – we rated it at almost 3 hats or 791/1000 (see our rating below). And a good night for Marshall White overall with 34 Chatsworth Prahran being sold through Madeleine Kennedy for $3,137,000.

October 24th: The collection of Expressions of Interest campaigns finishing in late October/Early November will be watched by many. There are some great homes, but the results this last weekend indicate they may not sell as strongly as September results suggested they might. We are monitoring a geographically widespread sample – all over $3m and will bring you the results as they come. Lets see if the K&B Mexican Wave** is in play for the Top End buyers or have taken their bat and ball and gone home.

**K&B’s Mexican Wave: It is possible that the above marketing campaigns could in fact produce higher results if we see more marketing campaigns in the style of Kay and Burton’s Mexican Wave effect. It’s just like at the MCG: Kay and Burton brings a group of homes together and push and prod till they get one buyer to perform and then uses that result to get other buyers to put their hands up on other homes. This is planned months beforehand, it’s totally legitimate, it’s brilliant in concept and it’s why people like Ross Savas and Mike Gibson are worth their fees and then some. Other Mexican Wave agents who plan and execute well are Marcus Chiminello, Rae Tomlinson, Heather Elder, Justin Long and Peter Bennison of Marshall White to name a few. However K&B are the absolute masters at the Mexican Wave.

Alastair Craig and Richard Winneke maneuver 3 bidders to a bought price of $2,855,000. This is where some of last spring's $3M plus action is right now at $3M minus.

October 22nd: During 2011 the $3M+ market has been as fickle as we can remember: it disappeared for most of the year, came back with a vengeance in September and has now seemingly run away lost again.
To demonstrate the point, only two homes out of 150+ scheduled $M+ auctions reported a sale price over $3 million today.  Yes two – that’s not many.

They were 34 Stevenson St, Kew with James Tostevin, which sold after auction and 7 Barrington Ave, also in Kew, with Scott Patterson, which sold before auction.

Mid- Week Apartment Auction: 3002/368 St Kilda Road (Marcus Chiminello) – Thursday night auction @ 7.00 pm. A similar property in the same building on the same side, same square metres, same décor, sold for $3.3m a short time ago. Quoting $3.3m plus then $3.5m plus. Surprising to have an auction in St Kilda Road but Marcus Chiminello and Nicole French (the new Batman and Robin) lined up auctioneer Growling Jack Bongiorno and 3 bidders fought it out past the last sale sales, past the first quote and the last quote and all the way up to $3,800,000.

Why did it sell so well? Demand exceeding Supply for North orientation; 315 sqm size with car parking on the 1st floor (no dizziness getting in and getting out) and Shrine views. Well marketed by one of the best in the business at this stuff.

Price: Has been gently improving in some key blocks on some key apartments – but it’s all about the apartment characteristics. There are literally hundreds of apartments above a million that have no buyers at all, because they have nothing unique to offer except a very cheap price.

Biggest Sale: 38 Kerferd St, Malvern East, Glen Coutinho (Hocking Stuart); Under hammer, $2,862,000, 4 bidders
Wow what an auction! This is as intense as it gets. Glen Coutinho has firmed as one of the best auctioneers in Melbourne in my humble opinion. What started out with meek interest from a lively crowd of around 70 people turned into the most hotly contested auction I’ve ever seen. A modest opening bid of $2,350,000 was announced from one party in the crowd and was quickly overtaken by another for $2,355,000.  The two went back and forth in increments of $5,000, then $2,000, then $10,000. Once the price reached $2,501,000 it seemed as though the action had come to a head, and Mr Coutinho retreated to his vendors to discuss the situation. Confident of reaching the price he and his vendors desired, Mr Coutinho continued unabated, knowing full well there were several other parties very interested in the property. As the property was being called down for a fourth time a third party entered the fray, bidding $2,540,000. This guy was ready for a showdown, but the original bidder stuck to it and was relentless in his pursuit of the Glen Iris home. Unable to continue, the young lion who made a worthy challenge correctly backed off, leaving the fight wounded but not insulted. At this point the crowd was able to breathe momentarily, but it wasn’t over! A fourth man entered the mix, and began his challenge. He proceeded to walk across the road towards the original bidder attempting to eye him down, but the original bidder was having none of it. As those who play enough poker know, when someone shows aggression towards you, it is generally a sign of weakness. Fortunately, the original bidder (who probably doesn’t play poker) picked up on the bluff and showed no signs of folding. Once the figure reached $2,862,000, the new combatant gave up announcing: ‘he can have it,’ and the auction ended with a standing ovation from the crowd, although it may have only been an ovation as they were already standing. (Daniel Ehrenreich)

Biggest Pass In: 11 Scotsburn Grove, Toorak, Jeremy Fox (RT Edgar); Passed in, $5,000,000, 1 bidder
A small crowd of around 40 and half are Toorak agents just looking. Jeremy Fox gives us a good solid spiel and we are away. Or are we? Jeremy calls for a $5,000,000 opening bid and gets nothing but silence. He goes inside for his half time break and leaves us all in the rain – actually he was pretty quick to return. I’m typing in Passed in on my Ipad and – whoops no – there was a genuine bid and $5,000,000 is taken up. Then it is passed in to the lone bidder. We await the outcome. (Mal James)

October 15th: Quality Stock Levels have improved for Buyers:
Good levels of good stock came into the market late September and buyers began to take deeper breaths and relax a little.  Angst dissipated somewhat as quality buyer saw more quality homes they could buy, diminishing the spectre of missing out on a home, leading to a drop in buyer urgency and ultimately price.

This Quality Supply Increase is best demonstrated at the Top End.

Want a home with a Tennis Court in Toorak? Got around $6 million dollars?

In the last week we visited, assessed and rated: 11 Scotsburn Toorak (Andrew Smith), 10 Montalto Toorak (Mike Gibson) and 25 Scott Glen Iris (Rae Tomlinson). All have tennis courts. So even if there are 10 buyers for tennis courts at this price level, there’s a fair bit a choice there. If normal market forces prevail and the buyers have good representation, then the prices on all three could be lower than if there was only one of these homes on offer. That’s unless, of course, one home is more strongly favoured than the others by a significant number of those 10 buyers – or if the Mexican Wave effect happens (see below).

Similarly in the last week we have been through some really good new home offerings at over $6 million, including 14 Kilsyth Toorak (Michael Armstrong); 15 Vista Toorak (Nicole Gleeson) and 33 Coppin Grove Hawthorn ( Scott Patterson) – see our ratings over the coming week.

These are just some examples. And in fact, quality stock levels have improved at all price levels. This is good news for Top End buyers and the reason we think October 2011 and hopefully November 2011 will be better months for buyers than were Winter 2011 and September 2011 in terms of:

1. More choice

2. Less chance of the runaway prices.

This price segment is all about either side of the Melbourne Cup – as a number of Expressions of Interest, Private Sale and Auction campaigns are scheduled for some sort of conclusion at that time. We anticipate publicly reporting in  early November as to market movements since September’s price and activity spiking.

The projected priciest offering of the four Richmond houses on The Block is 37 Cameron Street, renovated by the hometown couple Jenna and Josh, according to James Buyer Advocates. All four properties go to auction this weekend.

37 Cameron Street (Jenna & Josh)

The buyers’ agency deemed 41 Cameron Street a close second – the one renovated by sisters Katrina and Amie, who chose Hocking Stuart’s Glen Coutinho to sell the house.

The key attribute of the likely top seller is its double-fronted façade. Ruth Roberts of Woodards is quoting the three-bedroom residence at $900,000 to $990,000. Jenna and Josh won the right to choose which of the four houses they wished to renovate.

41 Cameron Street (Katrina & Amie)

The ratings difference between the two was 615 out of 1000 and 595 out of 1000 under the James Buyers Advocates rankings system.

Biggin & Scott sales director Russell Cambridge has marketed the listing for Polly and Waz’s house at 39 Cameron Street, which has a 535 rating.

The lowest ranking of 502 was given to 43 Cameron Street, where Clayton Smith of Jellis Craig represents the contestants Tania and Rod.

39 Cameron Street (Polly & Waz)

“As a bit of fun we rated all The Block properties,” James Buyer Advocates principal Mal James says.

“While all contestants had done some great things, we are not sure we would put any on our shopping list.

“The internals may excite but the externals of no car parking, industrial street and commercial neighbours do not,” James says.

43 Cameron Street (Rod & Tania)

James Home Ratings examines pieces of information about a home and matches them against established buying criteria.

A rating below 550 means the property “has issues.” Between 550 and 650 is at the low end of average. Between 650 and 700 is at the high end of average. Between 700 and 800 is well above average. Between 800 and 850 is the best of its type, and above 850 is a rare gem.

“Nobody can predict with complete certainty the behaviour of each individual buyer or seller in a property exchange – however, it is possible to predict with a high level of certainty how large groups of human beings will react to a home.

“That is, there are a body of facts or truths when systematically analysed that show the operation of general laws with regards to home exchange,” James suggests.

The winner of The Block will be determined by the sale price above its undisclosed reserve, which means all four contestant couples have a chance no matter what rankings buyers agents give their renovated houses.

Channel Nine – THE BLOCK Auction Postscript
Congratulations to Channel Nine and The Block producers and selling agents for keeping it real. They could have made the whole auction night a charade but they didn’t – this is how Melbourne Auctions are right now for B and C grade properties – they are a very difficult sell and that was evidenced with 3 from 4 passing in.

We loved what the contestants did inside, but there was no way we could have bought any of them for investors or OYO’ers with the major negative issues they had outside the wonderful renovations – poor street, industrial neighbors, no car parking. These were mortal blows to the contestants before they even started – position is so important.

Well done to all who participated – it was true reality TV. Our ratings are still up for the Cameron St Richmond properties if you want to Google them. Also, well done to Biggin & Scott and Jellis Craig for their substantial donations to worthy charities.

There’s no guarantee we’ll see a lift in the housing market as we go into Spring this year. On the supply side, there’s a build-up of long term unsold properties (stales) and a compounding shortage of exciting, well priced new stock. On the demand side, buyers have had a particularly hard time of late – not so much in finding homes, but in finding homes of quality; however when those homes are found they sell well, proving there is a solid level of underlying demand.

Buyers do want to buy and they’ve been out there in good numbers most weekends. Our demand indicator Bidderman, has shown an average of two bidders an auction some weekends. But they have proven to be stubborn on homes that are not market priced.

There are actually two Spring markets: early Spring (September and October) and late Spring (November). They’re intimately connected. According to Sam Gamon of Chisholm and Gamon, what happens in late spring is always greatly influenced by the early Spring results. It’s all about confidence says his Elwood auction partner, Torsten Kasper. “A few weeks of good results in early spring may lay the platform for an increased level of homes for mid to late spring.”

On the other hand, David Hart of Buxton Brighton says there’s a strong pattern favouring a late spring recovery – at least in Bayside. “Human nature being what it is, many people wait until they are almost out of time to put their property on the market. And there are those who purchase October onwards, who need to sell their own property prior to Christmas. I expect this year will be no different.”

So what about price?

Despite the continued negativity from overseas, Buxton’s Mark Earle can’t envisage any significant changes in housing prices. “Fundamentally there is a shortage of houses in Melbourne with population growth. And Melbourne has been widely recognised as the best performing city in the country in terms of stability over recent years.” Cycles seem to be getting shorter, he points out – “take the 2008 financial crisis and the subsequent boom market of 2009” – and things can change quickly.

According to Benmac’s Iain Carmichael, given the low stock levels, prices are likely to hold. “Agents will have far less trouble achieving full results for good family homes in the $2,000,000 – $3,000,000 range. Vendors at the very top end have a tendency to feel that their property is somehow guaranteed to appreciate in the face of a steadying market. Curious really!”

Kay and Burton director Ross Savas also believes that prices will be steady. “The fundamentals of our economy are still very good and we have amazing employment levels in our country. So as long as nothing occurs out of left field I believe prices will hold in Victoria.”

So when do you buy and sell?

Peter Kennett of Hocking Stuart, says his advice to sellers is to get in early rather than late. “Late spring is when supply usually increases with more motivated sellers as they have most likely bought!!” As for buyers, David Hart, of Buxton Brighton, believes that the later in the year before Christmas, the more motivated sellers are to lock in a result. “Although you should never pass up the opportunity to purchase the right property on the assumption that if you wait, you might get an early Christmas present!”

With the mix of school holidays, horse racing weekends and the shift in the Grand Final from the last week in September to the first week in October, there are effectively only 16 Saturdays that will give a vendor the traditional four Saturday auction program,  points out Richard Winneke, of Jellis Craig. “And of these no doubt some will be more popular than others – creating super Saturdays on dates like 27th August , 24th September and 3rd December.”

For bargain hunters, late spring may be a better market than early due to vendors having to sell and time running out. However you do take the risk that what you may not be there by late Spring.

This is where patience presents a conundrum for buyers: if many of us pass on buying in early spring then the late spring surge may not happen at all. And come Christmas time we will still be in a buyers’ market but we won’t have bought. The question is then: how long are you prepared to wait?

Printed each week in The Weekly Review – Melbourne’s Million Plus property magazine

Home market predictions are like footy predictions in many ways – a bit of fun, not to be taken too seriously and to be treated on the basis of past results.

Sometimes we agents get it right and sometimes we don’t. So why do we do it? We do it for the same reasons that footy fills up just as many pages at the end of the week as it does at the start – because buyers, sellers and market watchers like to read our opinions and insights and they do so in just as great a numbers as those who watch a blockbuster footy game every auction Saturday.

With Spring only a short time away, the musings, the theories and the rumours are surfacing again. Hence we called all the big guns into a Roman Toga type gathering to ask them what will happen in both the early and late Spring markets in the run up till Santa comes.

“Love is in the Air and there is no home more beautiful than one being auctioned on the perfect sun-drenched Spring day with the fence painted, the light streaming in and the garden looking stunning” says Marshall White’s Justin Long – with some poetry and just a little bias.

Historically though, over the last decades Melbourne buyers and sellers have agreed with this statement.  John Clarkson of Hocking Stuart says the market swells by as much as 200% even 300% in terms of activity in Spring months when compared to the winter ones.

However, while every agent assumes the supply of stock is sure to increase on what we have now, there is also a thinking that this increase will be less this year than what we’ve seen on average over the past 10 years. There is universal agreement at the moment that we will not see stock levels approaching what we saw last year. 2010 was a big year at the beginning, in the middle and at the end in terms of activity. So far 2011 has not been – and it will not be.

Why is Spring looking to have new stock shortages? According to Kay and Burton director Ross Savas, it’s because vendors are perceiving that the market is under pressure, so they are holding off placing their homes on the market till conditions improve.

Benmac’s Iain Carmichael agrees: “Unlike last year there are few opportunistic sellers thinking, ‘Wow, our home is now worth a mint – let’s go!’. So the only driving forces are the traditional sellers such as upscalers, downsizers, and job relocators.”

Is this just false spin to get sellers to act? We don’t think so. Richard Winneke of Jellis Craig for instance reports that most agents are admitting to a 25% volume reduction of high end stock being transacted between this year and last. Balwyn and Kew are down around 20% in overall transactions (not just the high end).

In Bayside Jason Gill paints a similar picture of diminishing turnover but uses a different measurement: “In Brighton in July 2009, 2010 and 2011 we have seen stock on the market go from to 92 to 125 to 150 meaning older overpriced stock is simply not selling.”  What this means, he adds, “is that the stock that comes on in Spring will need to be of good quality and be priced correctly, rather than more of the same, if it is to excite the market.”

In our opinion, with the type of market contraction (turnover more so than price) we have had in 2011 we are going to need some excitement to kick start the market in the way that it took the Chinese community in 2009 to lead us from the GFC.

Sellers want prices and while buyers do as well, they also want good quality at the upper end levels. More of the same will only compound the problems of this market for both buyers and sellers.

For vendors who are prepared to swim against the tide, there could be rewards, says Steve Burke of Jellis Craig says, and sure we know he’s biased but he’s right on this occasion. “Forget about when the roses bloom in the garden, it is all about the demand and supply equation. As we are currently in a market place of perceived negative conditions I believe that there will be a real shortage of stock at the start of Spring. This will definitely favor the brave vendors who will be able to capture a market place where there is little competition.”

Next we look at Stales, Price and The Late Spring Market.

Printed each week in The Weekly Review – Melbourne’s Million Plus property magazine

Last year auction clearance rates across Melbourne were regularly in the 70s percentage-wise. This year they are in the 50s – so it is fair to conclude that this year fewer buyers and sellers agree on price and therefore the market is regarded as weaker than 2010.

But while some journalists and publications are arguing that the ‘true’ clearance rate may in fact be lower because agents do not report every unsold auction, some agents  are arguing that the emphasis on a Melbourne-wide clearance rate is also misleading.

Jack Bongiorno from Marshall White, for instance, argues that while papers like The Age are reporting clearance rates in the 50s, his company has seen clearance rates in the 70s throughout May and June . Andrew James of Hocking Stuart Armadale agrees, saying his office is also seeing clearance rates in the 70s all year.

So The Age is saying one thing and agents another. Well there’s nothing new there.

Who is right and who is wrong – and does it really matter?

Well,  they are both right. And as for whether it really matters, the answer is yes – and no. Is that a splinter I can feel in my bottom from sitting on the fence? Well no, in fact this goes to the crux of what clearance rates can and cannot tell buyers.

According to Andrew McCann of BenMac, clearance rates measure across a very broad number of suburbs, price bands and demographics. “The reality is,” he says, “that some parts of the market will always perform better than others so it is not unrealistic to think that while some areas are soft, others are strong. A good case in point is that our firm sold 11 from 12 Auctions last weekend, while the market returned 56%.”

Scott Patterson of Kay and Burton supports this: “The clearance rate in The Age of 59% is a general rate for the whole of Melbourne and does not reflect what is going on in certain areas.”  Hawthorn for instance has had a clearance rate of 80% for the year so far, which seems a different picture from the outskirts of Melbourne.”

This makes it important for buyers to take Melbourne-wide clearance rates with a grain of salt.

Brad Pearce of Miles in Ivanhoe says that as a buyer you need to be area-specific on clearance rates to ensure you are in line with your market. “Buyers can become too confident with the lower Melbourne wide clearance rates and miss opportunities to buy in their area, where in fact properties are still selling well.”

Hawthorn and Kew, for instance, are currently shining with clearance rates in the 70s and 80s, according to Richard Winneke of Jellis Craig. But next door, Camberwell, Canterbury and Balwyn North have had clearance rates in the 50s so far this year, he points out.

Clearance Rates are wonderful things for analysts and journalists, says Steve Abbott of Jellis Craig, “but they are only part of the story for buyers and sellers.” Kay & Burton’s Michael Gibson reminds us too that clearance rates only represent a few hours within the selling week.

And according to BenMac’s Iain Carmichael: “Some weeks we have shockers and the next it’s a dream, so clearance rates are area specific, very cyclical and not always predictable.”

As a buyer, along with clearance rates, you also need to look at stats on areas, on specific agencies, on different types of homes, price ranges, stock level indicators, Bidderman (number of bidders per auction) and a variety of other measures.

Indeed, while $M+ Melbourne may be down on turnover this year, of the last 10 homes we as buyer agents went after in the last two weeks of May, all were sold quickly (and not all to us). So to our mind,  the late May 2011 “good home” index (describing the kinds of home we go after) had a clearance rate of 100%

The buyer message in terms of Melbourne-wide clearance rates is to understand what they represent and to not limit your research to the changing weekly auction headline number when determining your individual buying strategy.

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

HAWTHORN EAST, 56 St Helens Rd: Stop right there, and they did. Peter Batrouney (Jellis Craig) passes the property in for $1,520,000, no bidders. But sells after auction for $1,620,000

Are we in for some Super Saturdays at the end of this month?

Glen Coutinho, Hocking Stuart (Hawthorn): “Yes, some super Saturdays are coming. The Easter break had a lot of homes starting late, the first campaign date start was the end of April. So the end of May auction weeks will be big.”

BRIGHTON, 4 Iona Ave: A very dapper Peter Kennett (Hocking Stuart) basks in the autumn sun and sells the property under the hammer for $1,256,000, 2 bidders

Are we in for some Super Saturdays at the end of this month?

Jenny Dwyer, Hocking Stuart (Sandringham): “The market for the foreseeable future would suggest that a more balanced supply line is occurring at present – the days of “Super Saturday” may have come to an end until the Spring market appears for 2011 (unless we are in for an unexpected surprise!).  Stock levels are at a more sensible level with some owners considering private sale as a viable alternative hence lessening the likelihood of another 1000 plus auctions on the last Saturday of May.”

A few smiles were found on Saturday and here was one of them. David Hart (Buxton) with friend at 48 Regent St, Brighton East. Passed in $1,275,000, 1 bidder

At 6pm on Saturday, the James Clearance Rate for $M+ properties in Melbourne was 55% on the 29 auctions we attended. We covered around half the $M+ auctions this weekend. May is looking very lean for auctions and today was almost a non event auction wise

The Weekly Review Bidderman, our demand indicator, was 1.2 bidders per auction. Considering the low numbers on offer at auction this was not a good sign for sellers going forward.

The Perils of Emotional Bidding
The big auction issue for me this weekend was how bidders were bidding. I went to three auctions with a total of  nine bidders and saw some very surprising and costly bidding.

One example was the auction at 48 Emo Road, Malvern East. This is a lovely little single fronted in one of my favourite family and investment areas, the Ardrie Park precinct in Malvern East. Middle of the road quality, not bad for those just starting out in the home ownership stakes – plenty of space inside and outside and good flow. Good feel.

Anyway the auction is about to start and a nice healthy crowd of around 100 has gathered to hear the pearls from a not-so-old stager who rarely auctions these days – Peter Bennison.

Peter calls for an opening bid, to which one very enthusiastic bidder responds with a strong and emotional bid of $950,000. With repeated calls for further $10,000 rises unsuccessful, Peter takes a strategic half time break. On returning, he unsurprisingly declares that the property will be passed-in to the lone bidder if no further bidding. After a second bidder pipes in offering that elusive $10,000 rise, the original bidder responds emotionally and strongly with a crowd hushing $1,000,000. Perhaps the bidder should have asked the “Is it on the market?” question – because this was well above the original quote of $890,000 to $950,000.

What it also means is that the auction will now be completed behind closed doors with some argy bargy instead of cleanly in the street and under the hammer, which a good question could have allowed. The final result of $1,150,000 is decided inside a few minutes later. Wow! I know the buyer saved the fee of getting professional help and normally I am against such flexible post auction reserves but really if a  buyer wants to pay then they should be allowed to – it’s a free country. For the very experienced Mr Bennison this bidder was a gift, and he knew exactly how to work this  situation to the benefit of his client, the vendor (low quality agents may not have recognized the opportunity presented).

There are a couple of things that come from this as lessons to first home buyers and DIYers:

1) As a bidder, by all means look strong to ward off other nervous buyers. But it doesn’t help to look emotional – an experienced agent will pick up on that and it will cost you money

2) In this market you have to test every step of the way. Ask questions. There was nothing wrong with the opening bid but the winning bidder’s second bid could and in fact should have been presented in a very different way. Because it wasn’t, the post auction problems snowballed from this one decision.

3) In this market, on a $890,000 to $950,000 quote, and with no proven competition above $960,000 why would you be rushing up the pole to an incredible $1,150,000? If you have to pay it then at least take a few hours of testing to get there.

There’s no doubt that it’s a good home and I certainly would have recommended buying it. And maybe the result would have been no different if a professional was managing the buying side. But I think a number of safety procedures could have been implemented prior to agreeing to that amount.

There were further interesting results along these lines at the auctions at 13 Maskell St Brighton (Peter Kennett) and 7 McClaughlin Sandringham (Mark Earle). Please see today’s auction reports for more details.

Now back to the market – Future Stock:

Auctions – May is going to be very quiet compared to May 2010, when we witnessed well in excess of 1000 $M+ sales across Melbourne. Melbourne’s Inner East and Bayside represent a majority of  Melbourne’s Million Dollar Plus sales, and predicted auction numbers in these areas for the four weeks in May are as follows: this past weekend 45, next week 43, and the last two weeks in May, 105 and 106. Even though there were five Saturdays in May 2010, there would need to be an incredible number of private sales this year to get the final numbers of solds anywhere near last year, and that is not likely to happen with the current market mood.

Off Markets – According to agents there is a strong trend towards private and off-market sales. Nick Johnstone, of JP Dixon (Brighton) says: “We are seeing a definite swing towards private and off market sales which shows a transitional phase in the market.” 

Other agent comments:

David Oster, Jellis Craig (Ivanhoe): “The 28^th May will be a Strong Saturday. It is the last clear Saturday before School holidays.”

Richard Winneke, Jellis Craig (Hawthorn): “May 21, May 28 & June 4 are 3 bigger Saturdays and then many owners will hold off selling until August.”

Melbourne Wide April Wash Up :
Volume -  Has a lot changed in Million Dollar Melbourne between April 2010 and April 2011? Well, yes and no. April 2010 had around the same number of REIV reported $1m+ sales (there may be a 10% variance with the chance of late reported April 2011 sales to bring the April 2010 and April 2011 numbers closer together) but on a count of over 500 buy/sells, not much has changed in terms of volume.

However, even though the last market turned in April 2010, May 2010 was a boom month with well over 1000 REIV reported $m+ sales throughout greater Melbourne. Therefore May 2011 will be watched to see if it can get anywhere near those sorts of numbers, however we don’t think that will happen. We are still seeing a $M+ home bought every ninety (90) minutes somewhere in Melbourne and that was with Easter taking up a fair bit of the month.

Let’s look at a couple of suburbs which we randomly selected to give a spread of Greater Melbourne $M+ reported sales for the month of April 2011 compared to April 2010.

Price – In our opinion, backed up by REIV Median price results, we feel prices are definitely flat or falling and have been for the most part of this year and a lot of last year. When we say flat or falling we don’t mean plummeting – we mean a drop by as much as 10% over the last 12 months. However we are still seeing plenty of instances of the old property truism: If it is well located and has some WOW and the right price to attract multiple bidders then it is still possible for the ultimate buyer to be paying more than you would have expected last year.

Winter is upon us and buyers and sellers alike appear in a less enthusiastic mood than even a few weeks ago. Even so, we have bought more $1M+ homes this year to date than this time last year at the same time.  And why wouldn’t you buy now, unless you know something we don’t? Price and choices have been considerably better than last year.

$3M+ Market Report:
Back from a week or two off, this market now, has a fairly clear run till Christmas, with a only brief breaks for a couple of holiday weekends.

A couple of strong results today:

• Elwood 18 Normanby (Paul Sutherland) – Bought for $3,375,000, 4 bidders – see our video auction
• Camberwell 26 Alma (Alastair Craig) – Bought After – $Over $3,000,000 at asking – no bidders – there is that strange bidding thing again

Over the next four to six weeks we should see more choice and some reasonable activity (although not expected anywhere near the levels of last year), as the May market is a traditional agent preferred selling time. Why? Well there is a good stretch of time until Queens Birthday weekend to run an uninterrupted campaign. Stock Quality is the unknown.

Come July things will be relatively quiet as there is a general sellers’ feeling (rightly or wrongly) that good homes do not look their best at this time of the year and accordingly a number of high end selling agents take winter holidays in Europe and therefore do not program campaigns to be run in their absence.

In the post Easter week or so there have been ten or more high end sales including the representative  half dozen below

• 15 St Ninians in Brighton for between $8m and $9m – perhaps not a lot more than what is was sold for less than 2 years ago (need to look up sale time to be absolutely sure of date) – Justin Follett of Kay and Burton
• 255 New Brighton for between $5.5m and $6m – Regina Schmidt and Brian Devlin of Buxton
• 50 Hotham St East Melbourne which had been on the market for at least 6 months for $7million – Paul Richards of Hocking Stuart – on the market for a fair bit of last year and also a failed auction. Nonetheless a reasonable price – not everything the sellers wanted – but more than had been offered at times in the past by buyers. A good result for both parties.
• 150 Clarendon East Melbourne – the Salta apartments saw Anton Wongtrakun deliver another big sale at $5,200,000 for Unit No 4
• Out to the paddocks of Lower Plenty with a Marketnews favourite Rocco Montanaro of Morrison Kleemand who achieved close to $3m on an Expressions of Interest Campaign for a good home on 7 acres at 75 Cleveland.
• And we round up our selection of high end Easter Sales with a $6M+ sale at Mount Eliza 15 Freemans Road – Michelle Skoglund of Aqua

In summary over Easter the market at this level has not been dead, but definitely subdued – there is increasingly a dampening mood in terms of both buyer and seller confidence. Time will tell if this is a short or longer term phenomenon. Price will play a important part going forward as we seemingly move into more uncertain market conditions – i.e. ones that are not as clear as they have been in the past 2 years since we awoke from the GFC. Overall the market now and in fact all of 2011 has not been strong at the $3m+ level – but there are still enough transactions (especially in Bayside) of sufficient value to avoid holding a wake just yet.

With winter approaching and a fair amount of stock available we think it is a buyers’ market and the future is best described as – “uncertain times”.

Finishing on a positive note our James Investment Division has seen some solid interest with investors coming back into the market (rentals are improving) and one current flavor of the times is blocks of flats. Some examples of what we are talking about.

The Big Issue: Klarity Kris and Architect Adam discuss the big issue of the week – does this market, with prices currently dropping, have elevated risks for buyers ? See what the two have to say by clicking on the live action.

Auction Video: This week Cafe Guy heads to Elwood on what was a big auction day for the Port Phillip area. Watch  the auction video of  18 Normandy Rd (Sutherland Farrelly) by clicking on the live action.

Buyer Masterclass: Double-fronter or two storey, single-fronted cottage? Architect Adam explores this dilemma in this week’s Buyer Masterclass. It’s a great article check it out!

We Only Buy Homes and Happy Mothers Day Mum and in fact to all Mums – we love you all!

BRIGHTON EAST, 6 Northern Ave: Leigh Hallamore (Buxton) gets the ball rolling and finds two bidders in the crowd. Bought under the hammer for $1,290,000

Quiet day for us all this weekend at the million dollar level. Has been a great year for buyers so far, long may it continue. Have a safe and happy Easter and enjoy the time with your family – Kristen.

John Clarkson, Hocking Stuart, Brighton: “Certainly buyers will not feel as dominant post Easter due to stock levels decreasing to a normal level. There has been a fair bit of choice in the first quarter for the market post Christmas. That rush or backlog has disappeared as a result of being sold or withdrawn from the market. There will be a fair balance post Easter. For all the dooms-dayers who are waiting for the market to fall in a hole, they will be disappointed. Bayside sellers can have confidence that as long as schools, Church St shopping, transport and the beach don’t disappear, there will always be demand. For local buyers waiting for a good time to buy competition will continue to come from the leafy suburbs of Albert Park, Middle Park and Elwood. The infrastructure, amenities and family lifestyle will continue to keep demand at a very healthy level for Bayside. Whilst I don’t see a huge spike in prices if buyers see a property that is 7 out of 10, they should consider it very closely. If they are waiting for the market to implode they may regret sitting on their hands!”

“Oh Yeah Sure Buddy - you are joking, aren't you?” Sold for an undisclosed amount, $500,000 over reserve. 4 bidders. Ivanhoe East 32 Warncliffe. David Oster.

At 6pm on Saturday the James Clearance rate for $M+ was 71% on the 34 auctions we attended. WOW – 71%, a big change from last month.

Bidderman, our demand indicator of bidders per auction, was at 1.8. So on our biggest $M+ auction weekend so far this year, when you would expect buyers to thin out and Bidderman to drop, it actually went up on the trend of the last few weeks.

It may be just one day but it was strong out there this weekend. For the first time since late February our advocates reported feeling feeling genuine price pressures whilst bidding.

Market Summary: The big question is whether this is a statistical blip or whether we are a seeing the trend return towards a balanced market. If so, why?

1. Buyers feel a little better than they did last month and confidence came back into the market as a result. Our enquiry rates are certainly up.
2. The overall quality of homes on offer was up on previous weeks and they were plentiful in number. We saw lots of 700+ James Home Rating (quality) homes go to auction this weekend.
3. Last week as buyers looked into the future they saw that the cupboard of  post Easter offerings was bare – and so they adjusted their game plan accordingly.

Whether this is a blip or a trend change will largely be determined by what discretionary sellers do in May. If they are encouraged by this weekend’s results to put their properties onto the market, then prices may stay softer than last year. If those sellers stay out and demand continues as is, then the overhang of stales will begin to be mopped up and the good buying conditions of the last months (price and choice) will dissipate.

This weekend, again, we saw the overall power of the Melbourne market and the power of demand and supply. There is an underlying strength in Melbourne homebuying (based in immigration and lack of homes), that has slackened off in recent times as buyers become more circumspect with concerns about overseas events, jobs, and who knows what exactly. As well there has been plenty of choice. BUT as soon as there is a hint of a quality stock shortage the market responds, particularly with regards to well-located quality family homes, on land and of a period flavour. And it responds strongly.

More insights

• It wasn’t just the consistent $1m to $1.5m range holding up its end in isolation, this was also the strongest single week this year for $3m+ buys.
• It was the second strongest clearance rate of the year, despite an almost Super Saturday (140 $M+ Auctions – Inner East and Bayside)
• We saw consistent bidding across the board, with over 75% of monitored auctions having at least one bidder.
• The big question going forward after our Easter market break is whether nervous sellers will re-enter the market on one week’s good showing.
• Prices are generally down on this time last year (there are exceptions), so good homes are attractive right now. And while new choice may become limited,  some existing choice (overhang) still remains.
• Top End rentals are getting considerably more rent than expected as supply in relation to demand is tightening. This observation from two agents needs more examination at a later date. We’re interested in how widespread this may be, why it is happening and what effects it may have on the buying market. (Are borderline investors perhaps re-entering the Top End?).

Wild and Wooly - the weather that is, not Rob Vickers-Willis. Toorak 3 Denham. Passed In $2,010,000. 2 bidders.

The $3m+ Market’s strongest 2011 week so far (some examples):

South Yarra 43 Marne St: Nicole Gleeson of Kay and Burton: Bought well over the $12,000,000 quote range, putting Domain Precinct land values at $8,000 per sqm for the bigger blocks.

Hawthorn 51 Berkeley St with Tim Blackett also of Kay and Burton: Over $7,000,000 on Scotch Hill for a good home with tennis court that needs some floor plan reworking.

While still in Hawthorn, Mr Nice Guy and the Very Effective Tim Picken of Jellis Craig got away the quinella with 25 Mary St (modern home in Grace Park) being bought for a credible $4,300,000 and 1 Hilda (period home in Grace Park) for $2,800,000. Both prices were a little down on ambitious asks but they were nonetheless solid prices for what they were.

Kew – Was it us who cried out the death of the Balwyn formula – i.e. new build, small block and overpriced? Well technically we are still credible, because these were in neighbouring Kew: with 21 Macartney (Walter Dodich of Marshall White) and 5 Mawson (Peter Dixon of Jellis Craig) both selling at auction today for $4 million-ish, the death of this market may be a little exaggerated. It was only two sales, but they were biggies.

Malvern and Canterbury -  50 Wattle Valley, Canterbury (Duane Wolowiec and James Tostevin) sold under the hammer for a strong $3,465,000; 54 Stanhope Malvern with Rae Tomlinson also under the hammer for $3,170,000 and 13 Rubens Grove Canterbury with Fletcher’s Jeremy Desmier bought before for over $3,000,000.

Bayside has recorded a few $3M+ sales as well, with 29 Bay Street, Brighton (Bert Stewart of Buxton) selling post auction over $3,550,000. The final result put north-facing Golden Mile land (no view) at more than $3,200 per sq metre. That is a “steady as she goes price” similar to last year’s Golden mile (no view) buys. Another $3m+ sale with a strange twist (all non bidders asked to leave auction) was at 40 Drake Brighton (Ian Jackson of Kay and Burton).

Toorak While on land sales, 1073 Malvern Road (Justin Long) passed in at $3,225,000 and a reserve was offered which was not taken up by the pass-in bidder. Two new bidders appeared and a second auction took place resulting in a sale well over the pass-in figure.

For full details each week of what is happening in the Top End $M+ market see our regular $3-Million-Plus Market Reports.

Round the Grounds – Price this year v last year and a word on Post Easter stock levels.

Malvern John Bongiorno, Marshall White: “Price is a little softer on certain homes but on high quality homes they are still rocking, granted buyers are more discerning. Stock levels are not as strong as last year. Rentals at the top end are exploding in the middle and top end market. Big news is rents have increased, possibly making investments more attractive at the higher end. There is such a shortage of homes to rent.”

Caulfield Rodney Morley, Woodards: “I think the negativity means less stock is coming on in May and Winter. Everybody wants records that are not coming at the moment. The market is definitely softer than this time last year in price. Buyers (then) were buying anything. Right now, buyers do not feel that urgency. No question that the market is softer.”

Brighton Bert Stewart, Buxton: “I think the market is around 10% down on some top end homes. Stock levels and therefore buyer choice after Easter are not looking good.”

Camberwell Geoff Hall, Noel Jones: ”Prices are down around 10% on this time last year, with some exceptions for quality homes, and stock post Easter is just not coming on like it did last year.”

Hawthorn Richard Winneke, Jellis Craig: “Big drop in new buyer enquiry this week. Probably due to the holiday factor but it was a noticeable drop. Rentals are definitely getting more than I expected price-wise and this may stimulate investment into Top End homes. East of Burke Road (Camberwell and Canterbury) has not performed as well as Hawthorn and Kew this year to date. I think prices are still relatively solid around that early million dollar mark but softer higher up.”

Carlton Tom Roberts, Nelson Alexander:  ”Stock levels Post Easter are tightening with only the sellers that need to sell going to market. Good homes still going exceptionally well but those results are in amongst the not so good going not quiet so well as last year. Prices are down a smidgen.”

Playing for Keeps here. Big 150 plus crowd. 29 McKinnon, Carlton. 3 bidders. Bought for a whopping $1,417,000 (462 sqm). We thought it was justified, but it was still big. Nick Renna, Peter Sinclair and Melissa Ryan of Hocking Stuart

Biggest Sale we covered: 21 Macartney Ave, Kew; Walter Dodich (Marshall White): After auction, undisclosed around $4,000,000
“Being in the coveted Sackville area this auction attracted a large crowd of about 100. The crowd were well spread out and even blocked the road in front of the property as they heard auctioneer Walter Dodich open proceedings. The auction began in Mr Dodich’s own words with a ‘traditional’ vendor bid at $3,700,000 as no one was willing to start things off. However this was the trigger that allowed two bidders to start the battle off for the property. Initially there were meant to be three bidders however the third bidder couldn’t get his bid in as he always cut off by the other two. When he finally got one in there was applause from the crowd and a cry of joy from the bidder. As the auction went on, the climax built and the crowd held their breath as the price rose and rose yet there was still no indication from Mr Dodich about whether the property was on the market or not. At $4,000,000 Mr Dodich passed the property in and after lengthy negotiations the property was bought after for an undisclosed amount.” (Josh Bong)

Biggest Pass in we covered: 72 Kerferd St, Malvern East, John Bongiorno (Marshall White); Passed in, $2,800,000, no bidders
“With 300 people having viewed this property and 100 or so crowded into the garden of this Gascoigne Estate home, auctioneer John Bongiorno was confident of a sale. But it was not to be with a vendor bid of $2,800,000 the only one of the day and the property passed in. However, with one interested party heading inside, it may not be long before this stunning property is sporting a ‘sold’ sign.” (Debbie McTaggart)

The Big Issue: Architect Adam and Klarity Kris discuss whether they believe buying conditions will be as good post-Easter as they are now.

Auction Video: This week Jen Milligan, our Market News Co-ordinator, fills in for our advocates who were busy with other auction commitments. 15 Epping St, Malvern East, a BenMac auction with Iain Carmichael. Click on the live action auction video.

Buyer Masterclass: Conditions are great for homebuyers – so where are they?

We Only Buy Homes

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