As we come to the end of February most of the work we are involved in at this price level is off market or pre market – meaning not advertised or not yet advertised (and may not be). However two really good properties, currently beginning public selling campaigns (we have been through and rated), should provide a very good indication of where the market is at to the general public are:

• Hawthorn – 29 Kooyongkoot Road – asking $6m plus with Michael Armstrong of Kay and Burton. James Home Rating 842/1000
• Malvern East – 11 Bates Street – asking $6m plus with Jeff Gole and Tim Derham of Abercromby’s. James Home Rating 838/1000

If you have any interest in these properties we have far more detailed notes and pricing which is not up on our public Ratings site.

Click on picture go to rating

Click on picture go to rating

February 25th the day everything big passed-in

2 bidders to $3,900,000 at 2 Laurel Court Hawthorn East - but that still wasn’t enough!

Despite the rest of the market having some bounce it was very flat at the Top End with the Top 8 Sales all passing-in

• Hawthorn East – 2 Laurel Court – passed-in $3,900,000
• East Melbourne – 125 Gipps St – passed-in $3,850,000
• Williamstown – 27 The Strand – passed-in $3,000,000
• Toorak – 24 Heyington – passed-in $2,900,000
• Hawthorn – 54 Glen – passed-in $2,800,000
• Canterbury – 29 Hopetoun – passed-in $2,650,000
• Camberwell – 123 Wattle Valley – passed-in $2,650,000
• Malvern – 119 Stanhope – passed-in $2,600,000

A few biggies that were cleaned up this week (but at lower prices than initially offered):

• 3 Park St Brighton (Jason Gill) – Wrapped up this week at just under $3m after being on the market for a fair while.
• 47-49 Victoria St Sandringham (Julian Augustini) – Big parcel of land, on the market since late last year and sold in the mid $3ms.
• 324 Beaconsfield Parade St Kilda West (Shane Siemers) – Went to auction last year at over $5m and sold, we believe, in the sub $4m range this week.
• 51 Isabella Grove Hawthorn (Jeremy Fox) – been on the market a long time and sold at a second campaign for over $5,500,000. Initial ask was over $6m.

All smiles are David Wood and Michael Coen who get 2012's first $3m+ under the hammer property away. Albert Park, 148 Beaconsfield Parade and a strong 4 bidders

2011 was a year of falling prices with the exceptions of the months of May, September and December. Yes, we finished the year off OK – but it was more a case or arresting the fall rather than any lighting of price rockets.

Last year we saw large drops in market values of homes that started too high on price, with owners who then had to sell. This was particularly the case with properties that were of inferior quality and also those in poor positions. In many cases these drops were 20% and more off the Anzac Day 2010 high. A lot of that fall in value happened in the last quarter of 2011.

Demand being OK can be further supported by our Stale and Stalemate results.

As we went into Christmas we had four key $2m to $3m negotiations in Stalemate in that the Vendor was fixed at X and our buyer was fixed at Y. It was a stalemate as opposed to a momentum negotiation because the vendor felt no compulsion to lower their price and our buyer had no proof as to why they had to increase their bid.

10 weeks later, the results on those negotiations are:

1. Burke Road Malvern – Marshall White’s Maddie Kennedy got a surprising near $3m from another buyer. This was a really good home but in a difficult location and the auction only produced a vendor bid of $2.4m
2. Victoria St Brighton – Barb Gregory of Marshall White Brighton. Another buyer met the reserve of $3.5m. Not surprising – this was a good home and a fair price.
3. Moffat Brighton – Bought after some argy-bargy with Chris Bevan of JP Dixon. This was a brilliant design and build and had been on the market for over a year.
4. Camberwell -still in a stalemate negotiation and with other blocks nearby also unsold. It’s hard to tell when or even if something may happen on this.

Early 2012 Private Sales

• Brighton East, 181 Were St – Kate Strickland – Over $3m – Cutting edge home – Big price for East Brighton
• Brighton, 10 Victoria – Barb Gregory – Over $3.5m – Modern 7 yo family home near the water
• Brighton, 17 Huntingfield – Regina Schmidt and Brian Devlin – Over $3.3m – Big family home
• Brighton 2 Collins Brighton– Regina Schmidt and Brian Devlin – Over $3m – Townhouse, one of a pair
• Brighton 26 Moffat Brighton – Chris Bevan – Cutting edge family home
• Balwyn, 15 Boston – Mark Rathgeber – $3,300,000 – Big family home
• Hawthorn, 58 Kooyongkoot – Scott Patterson – Over $3m – Family home
• Prahran, 22 Murray – Tim Wilson – Over $3m – Big land
• Kew, 65 Stevenson – Paul Richards – Bekdon Richards – $3,000,000 – Big period home

PRAHRAN, 2 Westbourne St: Elliot Gill (BenMac) in action. Under the hammer, $1,080,000, 3 bidders

Key Points:

• Stock is now starting to dry up as Easter interrupts the market and with the vibe dropping since Labour Day we may well see limited stock in the discretionary upper end market coming on Post Easter.  19 Huntingfield Toorak (Justin Long) was a classic example of a limited offering that captured the markets’ attention – even allowing for building value at $2,000,000 (and that is generous) that would leave land value with a north orientation at around $5,000 per sq metre. That is not a lower than 2010 or giveaway price.
• Another good land pointer is 60 Repton Road – one of my fav areas just near Ardrie Park – a 700 sqm block sold for $1843 per sqm through Dean Gilbert of Marshall White
  

STOP PRESS: March, while not huge in numbers, did finish the month with 3 solid mid week $3M+ buys – including 4 bidders at $7 million or better at 2 of them.

• Toorak Ottawa Avenue : Jeremy Fox of RT Edgar – quiet sale off market in the mid $8m’s
• Toorak 19 Huntingfield: Justin Long and Peter Bennison of Marshall White – mid week auction, 3 bidders and on the market at $6,700,000. Bought under the hammer for $7,060,000. James Connell said afterwards that this market was not all bad news and Huntingfield supported that.
• South Yarra – The Caroline Coachhouse – they were looking for $3m ish for a very long time (eg in the years) and now Mike Gibson – Kay and Burton has got it away.

Justin Long, Marshall White, Armadale: “The way I see things at present, we are experiencing some mild upward pressure on prices but not enough to fill big gaps between market value and vendors’ expectations where those gaps have been created through over-optimism by either agent or vendor. Fairly priced properties in good locations are being competitively sought and those looking for ‘opportunities’ are, as is often the case, forced to compromise on location or suitability. Some are extremely lucky, but most in fact will ultimately pay what is required to buy the home they really like or sit on the sidelines and watch values eventually rise beyond them.”

New Subscriber System: Over the next few weeks we will  introduce a free subscription model giving you greater access to our council-specific wraps, which include auction results, news, opinion and analysis on a micro level. This subscription model helps us improve your browsing experience as clients or general subscribers by delivering more relevant content to you on the site and in your email newsletter. Sign up by clicking Subscribe at the top right of the website. If you experience any problems as we are testing and implementing this new improved system please let us know at enquiry@james.net.au

What are you talking about? - course the market's OK! St Kilda East 239 Alma Road: Phillip Kingston: Bought for $1,500,000: 3 bidders (Photo Kate Agnoleto)

At 6pm on Saturday, the James Clearance Rate on the 31 auctions we covered was 58%.

Bidderman, our demand indicator of average bidders per auction, had a small rise to 1.6 bidders per auction, in part due to four volcanoes (strong auctions) including one 7 bidder auction in 28 Barrington St Kew.

These figures indicate that the market has now cooled – not frozen or falling apart, just cooled. That means we have moved into a buyers’ market, perhaps until Easter and possibly until Spring.

Well-priced homes are still selling. And there have been some surprising above-expectation results, such as 28 Barrington Kew (Glen Coutinho) which sold for $2,230,000 and, last week,Victor Road Kew (James Tostevin) at $4.1 million. But if the market doesn’t agree with initial pricing then it’s a slow, torturous journey to get a result. See our special Pass-Ins and Stales Report below.

This week we also look at the returns of serve on The Economist’s article as the ‘Experts’ hit back against the “Overpriced” headlines of last week.

This Weekend’s Market Summary:

This weekend in most places, except Boroondara, there was limited $M+ stock on offer at auction. The individual council clearance rates we report on in our market wraps could be distorted due to a) lack of auctions and b) lack of overall quality in those auctions. But this is not to imply a lack of stock in general – there are high levels of $M+ stock available across the board and Boroondara in particular is almost awash with homes on the market.

Looking specifically for a moment at Boroondara (Kew, Hawthorn, Canterbury and Camberwell), while this market may be a little out of kilter with the rest of Melbourne in terms of auction numbers, in the past few years it is a market that has shown the strongest resilience against negativity. It was affected by the GST for the shortest time, and has had the biggest price increases since. This weekend too it seemed to have a little oomph and we expect the clearance rate for Boorondara $M+ homes to be in the high 50s to low 60s.

But it does have a fight on its hands right now, with the main demand drivers (overseas buyers) reducing greatly in activity and supply to the market continuing to arrive week after week. Which means that buyers who can look beyond the headlines will find opportunities, and with the right strategies you should be in a position to push back a little against the seemingly never ending sellers’ market.

The next few weeks will be better in terms of auction quality in the top of the Top End in Boroondara. As long as those properties sell and the clearance rates stay stable, and if new stock reduces post Easter, we could move back to a balanced market. But if stock continues to come on in big numbers then the market will almost certainly remain cool with a significant change in demand sentiment.

Most of the $M+ homes on offer that sold this weekend were in the early $1 million range.

Bayside, Port Phillip, Stonnington have been quiet, with only a handful of sales in the post auction wash up from March 19th  and likewise at auction this weekend. In Port Phillip this is understandable as the Grand Prix completely extinguishes the market for almost a month. Why auction numbers are down in Brighton, Toorak and Malvern is not completely obvious – well not to us anyway. April 9th is shaping up as a Super Saturday of some sorts with almost 120 auctions in Boroondara and Stonnington combined. $M+ auctions in Bayside are still light on at the top of the Top End with mainly $1 million to $2 million homes on offer for the next few weeks leading into Easter. Most of the top of the Top End in Bayside is not going to auction.

Agent thoughts: Has the market changed since before the Labour Day weekend?
Chris Barrett, Marshall White, Hawthorn:“There have been a lot of people in the media talking about a negative change in the market since Labour day weekend, I however have found this to be unsubstantiated. As long as vendors prices are realistic and the property is presented well vendors can expect solid interest in their home.”
John Clarkson, Hocking Stuart, Brighton:“Good properties near local attractions and amenities, schools, shopping and the beach are still attracting a high level of enquiry.  Since Labour Day weekend the message is clear: If you are realistically priced you have a very good chance of selling . If you are above market perception, enquiry is reduced to a trickle.”  * For John’s full comments please see the Bayside weekly wrap.

James Special Report: Pass-Ins and Stales – The Autumn overhang build up.

We went back and re-examined all the auctions we reported on this year in 2011 and we revisited all the pass-ins, using still advertised on the net to determine their still for sale status. Please note that the table below is only connected with PASS-INS, not the homes we reported as bought before, at or just after auction on the day.

The table does make for interesting reading on the fate of a home that the market does not consider to be priced correctly at auction.

The table below shows Adjusted Clearance Rates comparing”On the Day” Clearance Rates with “On the Day plus Bought since”. Back in February 19 and 26 Pass-ins were taken up fairly quickly. However the most interesting stat is the lack of take up on Passed-in homes over the last two weeks of auctions: only 3 in 26.

• 1 of the 13 unsolds from the March 5th pass-ins and
• 2 of the 13 from the March 19th pass-ins.

This we feel confirms the view that the $M+ market started the year as balanced, but around Labour Day took a cooling direction.

What's happening Nick? Bentleigh 7 Eddys: Bought $1,312,500: 3 bidders. (Photo: David James)

James Big Issue: Agents claiming there are 100% Clearance rates in this market are just as misleading as saying the market is in freefall – both are far from the truth. Klarity Kris and Architect Adam cover it in the James Big Issue Video. Here is a summary of what they say.

• Still some surprising results. Two in particular, both in Boroondara, that stand out are Victor Avenue in Kew with James Tostevin – which sold for a hard to believe $4,100,000. Nic Franzman, Mark Dayman and Nic Ptak also from Marshall White’s result at 22 Stawell St Kew for $3,300,000. That was also a most surprising result
• We are hearing from agents 100% clearance rates – mainly due to agents feeling they need to respond to the Negativity of The Economist’s article and the Earthquakes, which for the moment have contributed to dampening demand.
• An interesting stat is that only 3 of the 26 homes we reported as passed in after auction in the last two weeks of auctions have since sold.
• We could say that 3 from 26 is reflective of the market strength – a far cry from the 100% Clearance Rate stats, BUT 3 from 26 while true, is also misrepresenting the market just as is reporting 100% clearance rates
• The market was in a balanced state pre Labour Day and as expected it is now going into a cooling phase until Easter due to increased stock levels and drop in demand intensity.

The message for buyers

• You have choice in the $3m+ range but there are still a few surprisingly strong results
• You will still have to compete relatively strongly if the home is good and well priced in that $1m to $1.5m range
• And the middle range say circle $2m to $2.5m is a bit of moving beast – the trend is not crystal clear to us at this stage.

Click on the JAMES BIG ISSUE video with Architect Adam and Klarity Kris in the middle of the home page

Media Monitor: Are Melbourne homes overpriced?

The case for being overpriced arose from The Economist’s article – which we reported on last week.  And now this week the case against those seemingly extreme overpriced by 56% headlines.

Rob Brooker head of economics from the NAB

1. Current events such as floods and Japan are affecting Melbourne short term, but long term our fundamentals are very strong.
2. Not suggesting prices are going to increase rapidly as affordability is hard pressed right now but we do have a shortage of housing stock.

His comments can be found in the excellent Kay and Burton report – sure it’s a selling tool but we listen to the expert commentary each time it’s on It’s well produced, they have credible experts and it’s relevant to our high end Melbourne market. Check it out, at least the expert comment stuff. The home fluff afterwards is up to you: http://www.kayburton.com.au/kayburtonreport

Paul Bloxham – HSBC’s chief economist for Australia and New Zealand, and a former RBA economist savages The Economist’s article stating “it’s too naive to be useful”. His main points in the Business Spectator are

1. We have an undersupply in inner city areas (totally agree with this comment)
2. Our stock is very high quality and has improved considerably over the last 20 years contributing to the increases in price paid (totally agree with this comment)
3. Very strong and improving economy (beyond our level of expertise but sounds good)

For the full article http://www.businessspectator.com.au/bs.nsf/Article/Australian-property-prices-housing-bubble-pd20110317-F24WP?OpenDocument&src=sph This was supplied by Al Craig of Jellis Craig – thank you.

‘Round the Grounds Headlines:
Boroondara- Some solid results but the trend is down under weight of stock numbers.
Bayside- Little movement on a lot of the recent Auction pass-ins
Stonnington- Small numbers of $M+ auctions today – although plenty of Top End non auction stock available
Port Phillip-With the Grand Prix – only 4 key $M+ auctions – 3 sold
More detailed analysis on our Weekly Local Council Market Wraps

Biggest Sales we can report:

• Templestowe, 9 Edwin: On the market since October of last year with Jeremy Tyrell of Fletchers. Has been bought for in excess of $4,700,000
• Richmond 37 Docker: Ken Griffith of Jellis Craig. Bought at auction, $3,300,000 – $3,500,000
• Hawthorn 23 Lisson Grove: Michael Lui of Marshall White. Bought after auction $3,600,000 – $3,800,000
• Toorak 17 Lansell, Lisa Jarrett of Abercrombys. On the market since December of last year

Biggest Sale we covered after auction: 44 Mary St Hawthorn, Antony Woodley of Marshall White. Above $2,700,000 (Undisclosed): Bought after auction, 1 bidder

Biggest Sale we covered under the hammer: 28 Barrington Ave, Kew, Glen Coutinho (Hocking Stuart), Under the hammer $2,230,000, 7 bidders (WOW)
“This Kew property did attract a crowd of 80 people, with quite a few potential buyers in the mix. The auctioneer, Glen Countinho, had to field bids from a whopping seven different bidders! Despite the light rain, the flow of the auction was quite amazing and reached the final amount of $2,230,000 before the hammer came down.” (Sonia Matmati)

Biggest Pass In: 68 Studley Park Rd, Kew, Passed in, $3,700,000
“A very pretty setting for an auction. Standing on an elevated embankment, auctioneer Richard Earle literally oversaw proceedings. He began by highlighting the virtues of this property with energy and detail. No bids came forth, however, so it was passed in for $3,700,000.”

Auction Video: This week i’ts down to Brighton with Klarity Kris at 22 Oakwood Ave, a Hocking Stuart auction with Peter Kennett. Click on the live action.

Please Note: we always ask permission to film and we always show respect at each auction. We also never video at an auction we are bidding at. If you are at an auction and don’t wish to be videoed, there are designated no-video zones. See our co-workers or ask the auctioneer.

Buyer Master Class: Klarity Kris discusses what’s necessary when buying a home when there are kids in the picture. Is it double storey single fronted or single storey double fronted!

Copyright: Mouldy Bread Picture from ChemistryWorldBlog.

We Only Buy Homes

If you're looking for something that doesn’t need a thing done to it, you could have done a lot worse than the house at 109 Willis St, Hampton, which sold recently for $1.88 million

The inner suburbs of Bayside, such as Elwood, Albert Park and Port Melbourne, are great places to live when you are footloose and child-free. But what if you’ve got plans to have kids down the track?

Being able to walk to the local Turtle cafe in Elwood and take a short tram ride on No 79 through Richmond to St Kilda may be worth the sacrifice of a tiny backyard, or having to walk up three flights of stairs, or parking out in a busy street. But when you’ve got a tiny baby or toddlers to think about, that inner urban environment mightn’t seem quite so charming. And once those littlies turn into teenagers, your main desire might be to put as much room between them and you as you can.

Does that mean you have to move right out to the ‘burbs though? After all, you’ve established a life in your suburb, you’ve probably got friends there and maybe family nearby, as well as shops and other facilities you’re familiar with. And those inner suburbs are always going to be in demand, so a house there may well be a good investment.

Inner-city family living depends how much you’ve got to spend and what you’re prepared to trade off. Family homes on a decent-sized block come at a premium in places like Richardson St, Middle Park, Chomley St, Prahran and Addison St, Elwood precincts. So if you want to stay close in, you may need to make a compromise between land size or quality: between a house on a family-sized block that needs work to get to a liveable standard, or a better quality house on a smaller block.

Each option has its drawbacks – living through a renovation can be stressful, especially when children are in the picture; and what might seem cosy when the kids are small could become unbearably cramped when they grow into teenagers. Relocating is another option, but that can be expensive and unsettling too.

Then there’s the question of whether you’d be better off with double storey single-fronter or a single storey double-fronter. For young children, a single-level double-fronted probably works best – but once you’ve got hormonal teenagers, you might crave the bedroom separation of a double-storey home.

Even if it seems years ahead, you might also want to be thinking about schools. Living near your children’s schools has the benefit not just of reducing their travelling time to school, it also means they are going to be nearer their friends and after-school activities. As a parent, especially if you’re both working, the last thing you want to be doing is forever taxi-ing your kids halfway across the city. This is one of the reasons why suburbs like Brighton and Malvern and Camberwell are popular family suburbs – generous land sizes, pleasant quiet streets, good public transport and close to schools.

So let’s say you’ve got $2 million to spend and you want a family home – what are your options?

112 Ruskin Street ELWOOD | James Home Rating (718/1000)

If you definitely wanted to stay somewhere like Elwood, for under $2 million you’d be looking at a place like one we rated recently on James Home Ratings. 112 Ruskin Street was in a great position on one of Elwood’s premier canal streets, and on a good sized block for the area at 507sq metres. It came in at $1.75 million. The house needed a bit of tarting up, but after that it could work okay for a few years with a small family. If you wanted to expand, you’d probably need to go upstairs, unless you’re prepared to lose a lot of that backyard. But that could work well for dealing with the teenage years.

Then again if you were prepared to leave the buzz and lights of the inner city behind, say to Brighton or Hampton, you could see that $2 million go a lot further.

39 Regent Street BRIGHTON EAST | James Home Rating (749/1000)

Take a house like that at 39 Regent Street, Brighton East which sold for just on $2 million late last year. On a north-facing block of 900 square metres, and set on one of Brighton East’s premier streets, one house down from the park, this was a well-laid out family home with a huge backyard and pool. All the living areas looked out over the backyard, great for when you’ve got littlies, but the layout of the house – with the bedrooms up the front – means it will also be handy for when the kids get older and you need some separation. This place will work for some years, and, if you decide to do the big renovation, you’ve got a lot of space to work with.

If you’re looking for something that doesn’t need a thing done to it, you could have done a lot worse than the house at 109 Willis St, Hampton, which sold recently for $1.88 million.

109 Willis Street HAMPTON | James Home Rating (780/1000)

This was a beautifully renovated, family size period home, close to the action of Hampton Street, schools and transport. The backyard wasn’t huge, but the house was fantastic for kids – from littlies through to teenagers – with four big bedrooms, a good separate kids wing upstairs, complete with rumpus room.

So under $2 million does give you plenty of choices. Whether you stay in closer to town, or move out a suburb or two, the important thing is to understand the trade-offs, and what they may cost you and your family over the long term – in terms of money, time and happiness. Go in with your eyes open and you’ll make decisions you’re less likely to regret.

51 Murray Street, PRAHRAN: This original double-fronted Victorian home has been well renovated and extended to the rear and well suits modern living. Bought under the hammer at auction on 19th June 2010 for $3.74M with 4 bidders.

More than a hundred and twenty years since they were built, Victorian-style homes continue to rate highly among homebuyers in Melbourne. Why is that?

Let’s take the example of the double-fronted Victorian at 11 Primrose Street, Prahran, scheduled to go to auction on March 19. It has a lovely symmetrical facade and good building bones – a wide central hallway leading to a large open plan living area at the rear. The ceilings are high and, because of this, the house sits prominently up from the street.

And though it is beautifully renovated to the rear of the house, with a lovely light spacious living area opening onto the back garden, the renovation work cannot be seen from the front.

It is this ability to adapt Victorian-style houses to a modern lifestyle without compromising their original facade and character that makes them keep and grow their value so well, where many other home styles do not. It’s not just about complying with heritage requirements: a Victorian facade gives a house its all-important emotional appeal to buyers, and underpins its capital growth. The best and most sought-after streets in Melbourne are often the ones with original homes in uniform character.

One of the key features about Victorian homes is that they traditionally have big formal rooms at the front, with all the service areas, such as kitchen and laundry, at the back, well away from the living and entertaining areas. What that means today is that you can easily demolish the back of the home and put on a new living area. If the ceiling heights are retained throughout the renovation, the rear new spaces can often be very light and bright. And because only the front portion of the house is retained, updating the house for energy efficiency is relatively easy.

That flexibility translates into big dollars. Take 51 Murray Street, Prahran, a beautiful Victorian with a stunning ultra-modern two-storey rear renovation that would have cost several hundred thousand dollars. But this is the kind of house worth spending that kind of money on. James Home Ratings scored it at a whopping 926 out of 1000.

43 Motherwell Street, SOUTH YARRA

Going to auction last year, the property, which had been quoted at $2.9 million plus, sold for $3.74 million after furious bidding between four bidders, which is twice the Bidderman^TM we currently see in the $million plus auction market.

Unrenovated Victorians are just as highly sought after. A Victorian at 43 Motherwell Street, South Yarra that went to auction late last year had a beautiful ornate facade, but needed some serious work. On auction day, seven bidders battled it out to push the original quote price of $1.3 million to $1.86 million.

Compare that to houses of a more recent era, from the 1930s onwards. Even though this was a time where houses were beginning to incorporate mod cons such as electric kitchens and internal laundries, their layout doesn’t work that well for our modern lifestyle. We like to have living and entertaining areas opening onto the back garden – but, until the 1980s, houses tended to be designed with living areas and kitchens towards the front or middle of the house, which makes it difficult and expensive to make structural changes.

11 Olive Street, HAMPTON

The property at 13 Olive Street, Hampton is a good example. Built in the 1950s, the house is an average size but the block of land is generous. Like many homes of this era, the house has a tricky floorplan. It lacks a wide central hallway, and the flow through the house is indirect and a little confusing. The bedrooms are relatively small and ceiling heights are low – around 2.7m, compared to 3.3m for the Primrose Street house.

Added to this is the fact that the facade is basic and has no real redeeming features, which means there is little or no emotional attachment from a buyer’s perspective. That lack of an attractive facade also means that houses in streets from this era are often part of an ever-changing streetscape – there is generally a lot of building activity happening or about to happen, bringing the noise and annoyance of a constant construction site and the potential risks down the track in terms of privacy.

The house might be cheaper to buy in the first place but, unlike the classic Victorian in a street of other similarly gracious facades, it is unlikely to keep and grow its value over the years.

Armadale 5 Glassford: Justin Long of Marshall White: 3 bidders and bought under the hammer for $2,350,000.

Key Points

• Fall in Clearance Rate today
• Stock offering not as good as October 23rd
• Very little new stock in this week owing to Melbourne Cup in 4 weeks
• A lot of off market on offer
• $3m+ homes have come on in big numbers compared to winter

Biggest sale

5 Glassford St, Armadale, Justin Long, Marshall White, Under the Hammer $2,350,000
“Good solid crowd full of anticipation waited for Justin Long to start proceedings on this sun filled day. And bang straight out of the blocks with a hopeful $2million bid. Bang again 2nd bidder and we were off. This auction was a funny one – not funny ha ha – funny strange – nobody followed Justin’s bidding suggestions but things flew along anyway – especially when a third bidder joined in. This sight was a natural amphitheatre and there was a clear echo of everybody bids and Justin’s comments – sort of like a sound system out of sync. Anyway things were just warming up when the half-time break was called and to the surprise of many it was announced on the market and to everybody’s further surprise it was bought under the hammer for the same amount. The surprise was because this was a Marshall White auction and they tend to pass-in everything – however please this was the right thing to do – 3 active bidders and so market price was paid. A good fair auction.” (Mal James)

BidderBuzz auction of the day

Toorak 1/693 Toorak Road: Rodney Morley, TBM Woodards: 4 Bidders: Bought under the hammer: $1,460,000

Rocket Rodney was his usual bursting with energy self. He really does know how to make an auction zing and keep a crowd entertained . The occasional, as he puts it, politically incorrect joke combined with a couple of subtle digs to get the recalcitrant bidders moving and we more often than not have the makings of one of life’s little moments of enjoyment. 1/693 Toorak was no different – opened up at $1,200,000 and then strong bidding until it was on the market around $1,360,000 and bought for $1,460,000. 4 bidders and a good buy. Rodney is what you want in an auctioneer – flamboyant, fun and fair. Check out Rodney’s auctions – they are often better than Foxtel. (Mal James)

Agent Q & A:

October 23 is Super Saturday – What can we expect?

Gerald Delany, Kay & Burton, Toorak: “October 23 will see a big supply of property on offer. The confidence in the market will see the supply absorbed and we expect to enjoy a strong market through the spring. The economic confidence we are experiencing continues to carry through to property.”

John Bongiorno, Marshall White, Armadale: “Stock levels are a bit like a roller coaster – the following couple of weeks after Super Saturday see stock levels fall again so hence I believe it will be business as usual on the 23^rd.”

James Redfern, Marshall White, Armadale: “At this stage, compared to this time last year, we are seeing less property coming onto the Spring market….therefore I would suggest we should see good quality property still very much ‘in demand’ with buyers looking for quality homes in good locations. We might see however a late November / December rush of stock coming onto the market.”

Iain Carmichael, BenMac, Armadale:“I believe clearances should be good next weekend irrespective of the large number of properties on the market, attendance’s at open for inspections have all been good. What we will see after next weekend is a clearer picture as to where the market actual is at this point of time. Melbourne is the auction capital of the world and what an exciting weekend it will be.”

Forward Auction Bookings

Clearance Rates

Results

A day for the Dogs? A happy Jack Bongiorno, Marshall White, (a one-eyed Magpies fan!) with a canine friend at 22 Willis St, Prahran. Passed in at $1,305,000, two bidders.

Key Points:

• We covered 8 auctions across Stonnington on Saturday and all of them were bought.
• Armadale 28 Seymour, Joanna Nairn. Quote $3,500,000 plus. James Rating 682/1000. Bought After Auction, around $3,500,000. Bidderman 1
• South Yarra 38 Park, Warwick Anderson. Quote $3,500,000 plus. James Rating 725/1000. Bought After Auction, above $3,000,000. Bidderman 1
• Thursday Auction: Armadale 21 Adelaide. John Bongiorno auctioned this bulldozer or significant rebuild home at 4.30pm today. Bought for $3,130,000, or just over $4,000 per sqm. Bidderman 3. Heather Elder and Rae Tomlinson
• Finally Bought: Toorak 8 Macquarie, Jeremy Fox. Private Sale after an auction. $6,400,000.
• Off Market Action:
  Malvern Elizabeth, Marcus Chiminello. Off the plan $3,300,000
  Armadale 81 Rose, Tim Derham. Bought Over $3,300,000. A  terrace home that needed a fair bit of work but did have rear access and was north facing to rear. A solid result.

Agent Q & A: Premierships and Stock?

John Bongiorno, Marshall White, Armadale: “COLLINGWOOD !!!! Because I’m not one-eyed just a little biased towards the Pies. Collingwood will absolutely thrash whoever gets through to the Grand Final” John Manton, Marshall White, Armadale: following on “Unless, Jack, there are injuries which will restrict player rotations!”

Paul Keane, Jellis Craig, Glen Iris: “Stock levels seem to be increasing although slowly. We would expect normal market conditions will start to improve in the latter part of Spring.”

Alex Schiavo, Kay and Burton, South Yarra: “There is not a large amount of stock, especially compared to last year, but interest is starting to pick up. Some nice listings picked up in the last week or two but not the volume.

Bidderbuzz Auction of the Day: 10 Hillard St, Malvern East, John Morrisby, Marshall White, Under the Hammer, Undisclosed, 6 bidders.

“A slow auction to start with, but things really picked up when the property was declared on the market at $1,640,000. Auctioneer John Morrisby led the charge, with a massive six bidders battling it out until the end. The property was bought under the hammer for an undisclosed amount. Reasonable sized crowd of 65 and a strong vibe.” (Kristen Hatt)

Biggest Auction of the Day: 28 Seymour Ave, Armadale, John Bongiorno, Marshall White, Bought After for an undisclosed amount above $3,250,000, one bidder, crowd of 150 people.

“When I first arrived at 28 Seymour Avenue, Armadale I was pleased to see that John Bongiorno was going to be conducting the auction of this impressive Victorian double-fronted property in the heart of Armadale. John Bongiorno is both professional and entertaining and when he quoted “we only sell to nice people in Armadale” I wondered where he was heading. It didn’t take long before he followed up with a second quote “this is an outstanding property just like Collingwood was last night”. These quotes, whilst entertaining, didn’t have any affect on the large crowd of 150 as it was necessary for John Bongiorno to quickly come in with a vendor bid of $3,200,000. An eventual bidder raised the bid to $3,250,000 and subsequently secured the right to commence negotiations.” (Guy Angwin)

Clearance Rates & Monitor Table:

Forward Auction Stock:

We Only Buy Homes

A big crowd of 80 turned out for the auction of 2 Hume St, Armadale. Despite his best efforts, Anthony Grimwade (RT Edgar) was forced to pass the home in for $1,025,000. Two bidders. Bought Afterwards

Nick Renna Of Hocking Stuart in action on 14 The Highway Bentleigh. Bought $1,301,000. 4 Bidders.

The Melbourne $M+ market outside Inner East and Bayside performed pretty well today with 25 of the reported 30 $M+ auctions or 83% selling. This figure is a little generous, with a few unreporteds, but it nonetheless shows a strong “fringe” $M+ auction market.

Highlights

• 18 Carn Avenue, Ivanhoe with Sue Lacey of Miles selling for $2,040,000 after auction.
• 42 Barkly St, Fiztroy with Nathan Waterson of Benmac selling on auction day for an undisclosed amount believed to be in excess of $1,500,000

BidderBuzz Auction: 14 The Highway, Bentleigh: Calvin Reid of Hocking Stuart: 4 bidders
James Auction Report: Nick Renna usually entertains the crowd and he didn’t fail on this occasion. After a low opening bid of $1,000,000, Nick quickly topped this with a vendor bid of $1,100,000 which produced quick fire action from at least 3 other bidders. When the reserve price of $1,290,000 was announced, this fine property was quickly bought under the hammer for $1,301,000.

James Home Rating: a very impressive 792/1000: This part of Bentleigh is increasing in popularity all the time – we call it the sporting precinct owing to the brilliant sporting facilities on Jasper road – add to this walking distance to train, coffee (Centre Road) and Safeway and this area is becoming highly sought after. The Highway is one of the better streets in Bentleigh due to its consistency of offering – almost all are period homes and Calvin the agent states there is a council overlay restricting development to some extent. The home itself really does tick all the boxes – good garaging although tandem, two street frontages, good home flow. Being picky the upstairs could do with an extra 6 inches in ceiling height and as is the norm the front formal rooms are standard size for this period but in today’s market are regarded as borderline in size. The renovation is first rate out the back and built with some class and foresight and the window tinting and placement are nice touches. You could slip in a pool fairly easily or simply enjoy the backyard as is. Overall for a homebuyer with a budget in the the low to mid ones this warrants thought and if you are lucky it also warrants your signature. Rock solid family home. More Information and see our Full Rating: http://www.james.net.au/rating/14-The-Highway-BENTLEIGH

97 Locksley, Ivanhoe: Greg Taylor of Miles: 1 bidder: Bought Afterwards

James Auction Report: Auctioneer Greg Taylor was concise and to the point in front of a smallish crowd of around 25 people. Understandable as this was a nice property but it had a few issues. The auction opened with a vendor bid of $1,200,000 – followed quickly by a lone bidder at $1,225,000 and a pass in. Bought afterwards. Full Auction Report at http://www.marketnews.com.au/auction-reviews/8713/97-Locksley-Road-IVANHOE/

Greg’s Market Comments: The market is light on for $M+ homes compared to earlier in the year and this time last year. Most homes are going within the quote ranges except for those with a real WOW factor – eg family homes. Some of these are shooting past expectations.

Clearance Rates and Results:

Greg Taylor of Miles: 97 Locksley, Ivanhoe: Bought After: Undisclosed: 1 bidder: Passed In $1,225,000.

We only buy homes

Andrew Hayne (Marshall White) basks in the Spring sunshine - and the sale of 24 Netherlee St, Glen Iris. Bought under the hammer, $2,660,000, five bidders.

Key Points:

• We covered seven auctions in Stonnington on Saturday. Of those, four sold under the hammer and two after auction.
• Big crowds across the board, all auctions had in excess of 50 people.

Biggest Auction of the Day: 24 Somers Ave, Malvern, Jeremy Fox, RT Edgar, Under the Hammer, $6,160,000.
“The sunfilled courtyard seemed a perfect setting for the Somers Avenue auction, with the lovely weather attracting a generous crowd of interested parties and onlookers alike. No initial bids when asked.  Auctioneer Jeremy Fox went inside to check with his vendors on two occasions. There was a feeling of anticipation amongst the crowd, until the property was declared ‘on the market’ at $5,650,000.  A real buzz.  Fast and furious bidding between two bidders to the end.  The look of relief was evident on the face of the successful bidder! An exciting end.  A truly impressive auction result!” (Nikki Hills)

Bidderbuzz Auction of the Day: 24 Netherlee St, Glen Iris, Andrew Hayne, Marshall White, Bought Under the Hammer, $2,660,000, 5 bidders
“With the sun poking through on this mild Saturday morning, auctioneer Andrew Hayne kicked off proceedings with a vendor bid of $1,800,000. Within seconds, two bidders began battling for the property and they were joined by several more moments later. There was a jovial atmosphere in the crowd of around 100 people as Mr. Hayne poked fun at the bidders. The bidding came down to two parties who went back and forth, and who alone raised the price by $400,000. There were 5 bidding parties, but only two at the end. The Property was sold for $2,660,000 under hammer, which appeared to be above expectations. The gentleman with the final bid received rousing applause from the crowd and congratulations from his main rival.” (Daniel Ehrenreich)

Agent Q & A: What are your views on pricing?

Andrew Hayne, Marshall White, Armadale:“My view is that across the board all homes have to be competitively priced in order to gain maximum interest from as many buyers as possible. The more buyers that are interested in the property, the greater the opportunity of getting a better price.”

John Bongiorno, Marshall White:“Good family homes always sell well – floor plans can be fixed. It provides exciting opportunities. Always boils down to the position of the property, orientation and workability. People nowadays have a lot of imagination. A lot of houses get rid of the small rooms and now have extended living areas, such as kitchens and family rooms. People aren’t afraid to do the renovations. So long as location is good, people are willing to buy and are happy to renovate if necessary.”

James Connell, Marshall White : “Still good demand for quality positions. If the property has a poor plan and poor location, the market judges it harshly.”

Clearance Rates & Monitor Table:

Forward Auction Bookings:

We only buy homes

70 people turned up to 31 Lambeth Avenue Armadale - did nothing and went home again. A typical Stonnington auction.

Key Points: We covered 7 auctions across Stonnington today. Four had 3 bidders or more and 3 had none. This is a true reflection of Stonnington now: good stuff gets support but there is precious little of it on offer.

Analysis: Our view is that demand is there – and this is supported by our buyer agent enquiry stats covering the $2 million to $6 million price range. The clearance rates and auction action or lack thereof is, in our opinion, a direct reflection of nervous sellers who are not putting quality homes onto the market. The market data in Stonnington is not reflective of an underlying, unsatisfied, stronger-than-indicated $M+ market. We refer to our key auction photo above - plenty of people but no action. If you look at our James Home Rating of the home in question you’ll notice it has a 501/1000 rating, i.e. borderline quality. If it was a goodie it would be attracting bids.

Bidderbuzz Auction: 31 Hawksburn South Yarra – Tom McCarthy – 5 bidders – Bought $1,957,000
Are there signs that the winter hibernation is over? That might well be the case judging by this auction where five bidders fought hammer and tongs to secure this two storey Victorian Terrace with the unusual luxury of rear off-street parking. Auctioneer Tom McCarthy managed the bidders with skill, keeping them all in the game. But alas there was only one winner with the eventual purchase price of $1,957,000.

A personal observation: The only reason we tend to focus on the big agencies is because they have the most homes on offer (ok, plus we like them). However, there is a niche double act making some noise at the moment: Tom McCarthy and his partner Philip Moore both of Biggin and Scott are producing very consistent multiple bidder auctions. I like their style and I think right now they are giving both buyers and sellers a fair shake. Well done. Between $1m and $2m in the Prahran to South Yarra precinct they are one of the hotter games in town, if you want a fair dinkum result.

Agent Comments:

Andrew McCann, Benmac, Armadale : “Not much juicy stock (although) we are seeing more mid-range than high-end. Big homes are affected by footy finals and holidays.  I don’t think the election is a factor.  Any volumes look like being in October rather than the next six weeks.”

Jeremy Fox, RT Edgar, Toorak: “There is a little bit of indecision at the moment because of the election. There are a lot of people out there who are frustrated as they are all ready to buy, but there are not a lot of good, quality properties out there. Hopefully the uncertainty about the election will soon pass and stock levels will change.” Jeremy we 100% agree with you – there’s a first!

Clearance Rates & Monitor Table:

We Only Buy Homes

Rainy day but good result for Iain Carmichael (BenMac) at 12 Albert St, Malvern East. Bought under the hammer, with four bidders and crowd of 60.

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

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

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

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

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

Agent Comments – Michael Gibson of Kay and Burton

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

Elliot Gill of Bennison Mackinnon

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

The properties we monitored

We only buy homes

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

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

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

Today’s Highlights

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

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

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

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

Agent Quotes

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

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

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

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

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

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

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

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

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

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

Some reasons prices may be plateuaing are:

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

Demand in Relation to Price

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

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

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

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

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

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

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

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

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

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

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

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

It’s good to be back

We Only Buy Homes

Mal

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

I'm not having a good day am I? I've passed the property in despite there being 3 bidders and now some galoot is taking my photo. 65 Charles St Prahran - George Metax - 3 bidders. Passed In for $1,400,000

This week we have combined the council wraps. There is little to report within specific council areas, and for those who normally just read one wrap we hope you will benefit from looking at some data graphs across the council areas that confirm what we have been saying so far this year.

Hopefully, this will help you as buyers to see what you need to do to buy the right home in the next six months.

Please note: Data comes from REIV, Valuer General (Government) and our own records. There is a time lag in some of the official data.

Confirmed: This year has been a bumper year in terms of $M+ transactions.

Confirmed: It has also been abnormally high stock wise.

We have used Boroondara as an example, but the stats show the same trends across the board in Port Phillip, Stonnington and Bayside.

Confirmed: It is part of a longer term trend of increasing $M+ sales.

Only the GFC got in the way in 2008/2009, as the above graph shows. Most of us froze and stock dried up. But that stock shortage, combined with the FIRB changes and the Chinese community kick-starting the Melbourne high end market in March 2009, meant that prices didn’t stay down for long.

Ignoring for a moment the Toorak chart, which shows a flat trend (we don’t understand the Toorak chart), prices across $M+ Melbourne went up in 2007, then down in 2008, then up late 2009 and then back down again in May 2010. In our opinion the charts of Kew, Brighton etc show what is really happening. And these charts confirm our James Price Wormie (which estimates price movements in the $M+ market).

The latest statement released by the REIV show a significant market price drop in the June quarter. That again confirms our Wormie.

So what’s happening right now?

A LOT LESS THAN A MONTH AGO – look at the auction numbers below. You may have read our analysis in this weekend’s Market Insight showing that only 1 in 4 homes for private sale in our market sold during the 6 week period June 7 – July 18. With fewer auctions coming up, it’s probably good for overall market health and may allow the overhang to be mopped up.

There is a choice – it’s just hidden.

Overhang: A hundred more properties went in to the Boroondara $M+ market than went out (sold) in April to June 2010. That’s a lot. It’s similar in Bayside and less dramatic in Stonnington and Port Phillip councils (they are both smaller in size).

How that overhang is mopped up could well determine the price trend in Spring!

The next graph below confirms that you currently have a 1 in 5 chance of  buying a home at auction. This is eerily close to our stats of last year where we bought 80 homes in the $1m to $5m range and only 15 were under auction conditions within 20% of the agent’s price. Over the last few weeks things have been changing a bit – but it is an interesting stat for those that think buying a home is always just about putting your hand up at auction. You need a number of different negotiation skills and techniques – as this graph below proves.

Overall what do these lovely pictorials tell us buyers?

1. There are homes for sale out there – but you need to look
2. There may well be a reduced amount of stock coming onto the market in the next few months, so you may need to look beyond the auction alerts to find your best option.
3. Prices at auctions may improve slightly, which could lead to claims of big improvements in the market by sellers over the next few months. But that may not necessarily be the case. We acknowledge that at times perception does become reality and that the market may well improve on the back of some highlighted results. But the fact is that there is still an overhang of unsolds out there. That means that, across the board, price hikes seem unlikely when Spring comes. If we had to bet it would be on flat to falling prices for some time – although our get-out clause is that if the overhangs are mopped more quickly than anticipated then Spring could see price improvements, as long as current demand is not affected by outside influences.

Buyers: you have choice and opportunities now –  if you know where to look and how to assess and negotiate.

We only buy homes

6 bidders for Justin Long at 7 Monomeath Toorak. Bought under the hammer for $2,005,000.

Shortest day of the year today – June 21 is the winter solstice, which means the shortest amount of daylight hours.

In Melbourne this also means one of the coldest days as well.

When assessing property, one of the most important criteria I believe is rear orientation. Due to the tilt of the Earth’s axis, in Australia we prize a north –facing rear orientation. Why is this? There are multiple reasons……..

1. Light from the sun is direct and powerful into rear open plan living areas and backyards - this is where we live and entertain
2. Warmth from the sun helps tremendously with passive solar gain – how often do we as humans sit by a table near a window on a cold day that is bathed in light?
3. Shadows are minimised in the rear yard, gardens grow better and pools are not in shadow
4. Due to building regulations assessing energy efficiency, houses with north facing windows score much better (and are cheaper to build) than those with south facing windows.

Now some people (particularly skilled real estate agents) will defend houses with south facing rear orientations, claiming that that the light is good in the rear living areas – while this may be partially true, what about the warmth and also the shadows?

Against the trend of the market, I attended two auctions on the weekend (51 Murray Street Prahran and 77 Page Street Albert Park) and they both flew, selling well over reserve. Three common factors with these properties –

1. Pretty, original facade (one was Victorian, the other Edwardian);
2. Great location;
3. North facing rear orientation – the back areas even on cold day were light filled and uplifting – areas that you subconsciously gravitated to.

The rear orientation of a property is really important – our James Rating system gives additional points for properties with north facing rear aspects and rightly so.

Design Smart

Adam

 

 

 

 

77 Page Street Albert Park (Michael Coen, Hocking Stuart)

 

 

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

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

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

Our Highlights

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

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

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

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

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

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

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

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

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

Have Those Demand Parameters Changed?

We don’t really know for sure!

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

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

Price Drop – How Big?

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

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

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

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

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

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

Price Drop – Why?

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

Opportunity

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

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

GFC

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

Stock Quality May Diminish

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

Longer Term Thoughts

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

Alternative Opinions

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

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

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

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

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

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

We only buy homes

Mal

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

Malvern 61 Wheatland: Andrew Hayne and Maddie Kennedy of Marshall White - spruiking the spruik on a crisp but gorgeous winter's day: Bought Afterwards in the very early $2ms: No bidders

Talking with James Connell of Marshall White as he scoots off for a bit of a break, he tells me the market is sound with no real price drops. When you get the figure of 140 sales in May for Marshall White, it’s hard to argue with that.

It’s also hard to argue when Kay and Burton’s Gerald Delany (also off on a break soon) backs up everything James Connell says.  (You can see Gerald voicing his thoughts on our new monthly buyers’ video called G-E-R-A-L-D on our marketnews home page.) In May 2010 K & B handled 80 properties and nearly $250million in sales.

In fact, with more than 25 sales at over a million dollars in Stonnington since our last report (June 6), it’s hard to argue the market is floundering. It seems more accurate to say that the market is finding its equilibrium – even if in our mind it seems as if prices, in many cases, have fallen substantially.

Our evidence

We went to 10 auctions today -  two were bought under the hammer and two more were bought quickly afterwards, leaving 6 unsold without a bid. On that evidence  it doesn’t appear that the market has reached its equilibrium.

Let’s look at Kay and Burton’s three auctions we attended:

1 ELDENE COURT, TOORAK Gerald Delany Passed In $2,400,000 – No bidders
With the wind picking up and the temperature dropping, the cold winter’s afternoon seemed to have a distinct effect on the 40 or so people in the crowd. Auctioneer Gerald Delany attempted to raise some interest in the Toorak property, but no bids were forthcoming. He announced a vendor bid of $2,400,000, which did little to change the mood of the crowd and failed to extract an opening bid. The property was passed in at $2,400,000.

6 AVOCA STREET, SOUTH YARRA Gerald Delany Passed In $4,000,000 – No bidders
This was certainly the biggest auction I have reported on. Close to 180 people were watching on in anticipation. Auctioneer Gerald Delany’s projected voice could be heard from either end of Toorak Road as he endeavoured to extract a bid from the enormous crowd. With no bids forthcoming, Delany put in a vendor bid of $4,000,000. This had little effect on the lively mob of onlookers. After consulting with the vendors, Delany returned to give the crowd one more opportunity to make a bid for this unique and beautiful South Yarra home. However, there were no parties interested in bidding at the auction. With no bids offered, the property was passed in.

23 MAYFIELD AVENUE, MALVERN Jason Scillio Passed In - No bidders
With a very small crowd of less than 40, auctioneer Jason Scillio attempted to raise some interest in this beautiful home in Malvern. Having received no assistance from the crowd, he opened the auction with a vendor bid of $3,000,000. No further bids were forthcoming and the property was subsequently passed in. This was a very lacklustre auction, which was surprising considering the property’s stunning design and stature.

So what to make of it?

Price and Strategy: You need to know both if you are to buy well at this time. There are certainly bargains to be had as long as you, the buyer, have the bottle and the vendor has the need.

What Are Your Needs?

South Yarra v Prahran – a difference of $1.2 million, and the cheaper one was in South Yarra.

• 49 Fitzgerald St, South Yarra (Hugh Hardy Benmac) James Home Rating 806/1000, sold for $2,520,000 post auction. Great home. See our auction report and full rating in this week’s auction reports
• 51 Murray St Prahran (Justin Long and Adam Jack Marshall White) James Home Rating 926/1000, sold for $3,740,000. See our auction report and full rating in this week’s auction reports

Glen Iris – 9 from 10 at auction today – Very Solid

Gasgoine
The market was not exactly full of excitement for us on Saturday in terms of quality.  Malvern’s Gasgoine and nearby had three auctions of less than spectacular homes – all three passed in and one sold post auction at the lower end of the range.

Expressions of Interest – Closed 17^th June – 3 Avalon Road Armadale – Ross Savas of Kay and Burton

James Home Rating 922/1000: “This is the Hampden Road precinct and for big homes in Armadale this is the place to be, as you are in amongst some truly great homes in size and architectural quality and this street is one of the best of those. The look from the street in my opinion does not do this home justice in terms of what is inside. I’m not going to do the salesman job any more than to say the only person who wouldn’t like this home is the bathroom cleaner – there are a lot. For me the highlight is the back garden – the space between indoor living and outdoor garden and then back to an indoor but completely open gymnasium with 1/2 full sized basketball court is a very powerful one. The children who grow up here will remember this for the rest of their lives. The garage, with its entrance from Barnato, seems to defy gravity. But it is separate, unobtrusive and works for me. I think this home is hard to quantify in numbers – the land is north of the 3 and a half million and the house is ……..  Faults – well I’ve got the rose coloured glasses on with this one and I couldn’t find one.”

We will be interested to see this result from a price and a method of sale point of view.

Clearance Rates

45 monitored – 26 bought – 58% clearance rate (last week 65/ week before 69)

Buy happy

Prahran 51 Murray: We loved - we tried - we failed to get. Great home - James Home Rating 926/1000. Bought under the hammer for $3,740,000. 4 bidders. John Bongiorno Marshall White