Week 4 August 27 2011: Not a lot happened at auction in this market this weekend at $3M+, with the exception of 25 Kent Avenue – the action was all last week and it was away from the auctions.

Biggest Sale: 25 Kent Ave, Brighton, Leigh Hallamore (Buxton); After auction, $6,400,000, 4 bidders
Crowd numbers were high to witness the auction of this rare absolute beachfront property.   Auctioneer Leigh Hallamore cleverly positioned himself along the back fence in front of the beach to maximise the emotional impact of the uninterrupted beach views of the (as it turned out) 4 bidders.  With at least three beachfront properties selling recently at $6m, $7m then resold for $8m and an undisclosed price, 25 Kent  was – as expected – strong.  An opening bid of $4m was a ‘dream price’.  A second bidder quickly upped the price to $5.9m and the bidding was on, stopping at $6.35m where the property was passed in to see if there was a bit more.  And there was: a final sale price of $6,400,000 or not too far off $10,000 per sqm if you saw no value in the home. (Kristen Hatt)

Marcus Chiminello of Marshall White: “We are currently seeing great activity in the upper end of  from both buyers and sellers emerging from the depths of winter and that are now prepared to participate in the market as opposed to the past weeks and months when many were prepared to just sit and watch the market. Most of the recent high end market sales have not been an overnight success, most requiring months of dialogue between agent, buyer & vendor. As demonstrated in recent weeks, I believe the trend of discreet off market transactions will continue to grow moving forward as vendors and purchasers alike at the higher end of the market seek privacy with their real estate transactions.”

$3M+ Market Summary: Activity in this $3M+ segment has been building most of this month of August but there has been little to show for it until this past week, which has been a stellar performance by any measure. Bidderman was over 2 on the $3M+ homes purchased.

Agents are reporting that buyers have started to change their attitudes – and for once we don’t think this is spin. The interest is at least partly because the market has been starved of interesting offerings like the property at 4 Mernda Rd, Kooyong (Ross Savas and Michael Armstrong), which was a beauty and had at least 3 bidders over $6million (and would possibly have had a few more if circumstances hadn’t pushed for an early finish to the Expressions of Interest campaign).

Last week’s powerhouse result for Paul Keane and Peter Batrouney at 9 Salisbury Balwyn, where 4 bidders produced another result over $6 million, indicates that some buyers have waited long enough and are saying: “OK if it’s good, it’s priced right and it meets my needs then I’m interested.” There was another one of these on Saturday over $6 million at 25 Kent Ave, Brighton (see full auction report below).

But before you think we’ve been sent a case of Moet by our new found friends on the other side – it’s all about the price and quality of specific properties.  The market is definitely not in an upward phase in terms of price. In fact unless your property is an A grader, and “correctly priced”, it’s likely the price is falling every day you ponder over the signed offer on the table (if you can get one). Smart sellers realise this.

Just to get some balance on what’s happening in terms of price:

• The Mont Albert property sold by Michael Ebeling that we report on below, was a good result. But it sold last year for basically the same price.
• The selling price of St Georges Road, Toorak property represented a greater than 10% discount on the initial asking price. It was a great result in that sub $9million range, but it had no takers for 6 months at $10million.

So what’s to account for this past week’s activity? Partly it’s because buyers can see less choice coming on the near future, due to the Grand Final being on later this year (thus preventing a normal 4 week auction campaign between Grand Final and Melbourne Cup). Partly it’s due to some good $3M+ homes on offer right now. And partly it’s due to underlying demand that has been there for some time. A lot though is because of correct price matching.

No doubt the next few months will see an increased number of stales (long term unsolds) – repackaged, rebadged and remarketed. If they are also repriced then who knows, maybe we will be off again and back to a more normal balanced market (which is what most buyers also want).

Of course, it could all  just be a dream and we will all wake up again soon.

There were some good Private Sales through the week and we saw a return to off market transactions, as well as two successful Expressions of Interest:

• Ross Savas and Michael Armstrong of Kay and Burton held a Boardroom Auction last Thursday for 4 Mernda Rd, Kooyong. (This had brought forward the original Expressions of Interest deadline for Tuesday of next week.) Its “on the market”  price was around $6,000,000, and it sold for between $6,000,000 and $6,500,000 with 3 bidders. See our ratings below.
• Michael Ebeling of RT Edgar got 12 Stanhope St, Mont Albert away for towards $3million – off market. This was around what it reportedly sold for last year. Not all bad news in that.
• Rob Vickers Willis and Tim Derham of Abercromby’s sold 10 William St, South Yarra under the hammer for over $5,000,000 at a Wednesday private auction. See our ratings and report below.
• Michael Cooney of Hodges sold 50 Ebden Ave, Black Rock (a two hatter with a 700+ rating) for over $3,400,000. This modern home was a goodie, but it’s been rare to see homes sold for more than $2 million in this area since 2009. So this was a good result and the best sale in Bayside we can report for the week.
• Expressions of Interest – 333 Glenferrie Rd, Malvern with Gerald Delany and Nicole Gleeson – sold for over $3,500,000.
• Post Last Week Auction Pass In 24 Hawthorn Grove, Hawthorn – Paul Keane – sold for an undisclosed amount above $3,000,000
• Off Market:4 Mathoura Rd, Toorak – Peter Bennison of Marshall White. This went to auction last year (or maybe earlier), and has now been traded for more than  $3,000,000
• Off Market:10 St Georges Rd, Toorak – Marcus Chiminello – This home has been through a few agents and while it did not achieve what we thought was an incredible asking price of $10,000,000 earlier in the year, it did actually get close to $9,000,000 in the last week or so – still an incredible price. See our home rating
• Off Market: 3 Murray St, Armadale also Marcus Chiminello. It also sold for just shy of $4,000,000 recently.

These sales represent the best or close to best numbers in this Top End $ segment this year.

Agent Survey: Why is this week’s $3M+ improved performance happening?

Paul Keane: With the stock-market on what appears a roller-coaster ride over the past month or so, people are retreating from it and investing that money in the good old “bricks and mortar”. I have spoken to several people over the past week and they believe the real estate market is off by about 10% from last year (some claim more) so if you are looking to upgrade your real estate portfolio there is so much upside….why not buy a $6m home that may have been worth $7m this time last year…..nothing much has really changed… only people’s mindsets are different.

Michael Armstrong: Some buyers are no longer getting burnt by the share market (they’re out). Some buyers have got sick of waiting. Some buyer attitudes have changed.  (Second tier homes though are continuing to drop in price.)

Mike Gibson: Definitely gained some traction in the last few weeks

9 Salisbury St, Balwyn - Peter Batrouney and Paul Keane. Competition by 4 bidders resulted in a very strong price under the hammer of $6,620,000

And now for a brief excursion back through the market of August 2011.

Week Three August 20, 2011: Whilst there was little, actually no doubt that prices were dropping across the general market and the $3M+ segment was well down on activity compared to this time last year there continued to be a tantalizing number of goings on to let those involved at this level think we may just be having something to do come Spring. Furthermore whilst we had been saying that activity off market was more talk than substance in the last week or so we were involved in and had seen a couple of deals that again confirmed that if the stock was actually for sale (meaning at market buy price not a seller dream price) then a deal could be done – as long as the buying  and selling agent were reasonable at their job and both the vendor and buyer had some patience. Boughts and solds this week

At Auction:

• 9 Salisbury St, Balwyn – Peter Batrouney and Paul Keane. 4 bidders resulting in a very strong price under the hammer of $6,620,000 ( See our auction report)
• 30 Mangarra Canterbury – James Tostevin. 4 bidders and a strong $3,210,000 under the hammer
• 24 Hawthorn Grove Hawthorn – Paul Keane – Post Auction for an undisclosed amount above $3,000,000

Kew, 49 Sackville St - James Tostevin - 4 bidders - Under the hammer $4,310,000

Week Two August 13, 2011: There was life at the Top End (even if the heartbeat was faint) as evidenced by some good Top End $3M+ results.

• South Yarra 83 Walsh – Justin Long and Peter Bennison – Bought After $4,842,950 – $5,327,750
• Kew 49 Sackville – James Tostevin – Under the hammer – 4 bidders – $4,310,000
• Camberwell 87 Broadway – Richard Winneke – Bought After – 1 bidder – $3,795,250
• Hawthorn 4 Glan Avon – James Tostevin – Under the hammer – 3 bidders – $2,815,000
• While mid week 8 Myoora Toorak (Over $10,000,000) did not sell at a Thursday auction (it’s a home that requires a very specific buyer and could be hard to sell even in a stronger market) -  8 Blackfriars Close Toorak (Justin Long) our biggest pass-in last week-end at $3,000,000 (0 bidders) did sell for $3,250,000 on Monday.
• Peninsula – in one of “the” streets – Spindrift in Flinders – we saw Marketnews favourite and nice lady Prue McLaughlin of Kay and Burton sell a home for an undisclosed amount well over $4,500,000. As well Andrew Hines got 57 Tubbarubba Merricks North (over 60 acres) away for around $3,500,000
• 19 Lovell St Hawthorn East -Modern home saw the Expressions of Interest campaign brought forward by Sam Wilkinson and Scott Patterson and a sold sticker in the mid $3m’s

Not quite $3m - which is the story of the $3M+ Market this 2011 winter - 18 Knutsford St, Balwyn, Richard Earle, Bought After for $2,730,000 on a vendor pass-in of $2,300,000.

Week One August 6, 2011: We had a few comments that we hadn’t put up a $3M+ market report since May. That was for a good reason – it would have been an almost blank sheet. However there were some sputters  of life from deep within – a sign that the top end engine could be starting to turn over again. From our own company’s point of view we were involved in 3 dealings after having been bereft of activity for most of winter at this level.

• A sale in Boroondara this last month at just over $6M – completely off market
• 24 Boxshall St, Brighton (David Hart), which has been on the market for a long time, has finally changed hands for just under $3M
• 4 Sussex St Brighton (Regina Schmidt and Brian Devlin) sold for a hard-to-believe $3,775,000. We attended that auction and the result was … well brilliant.
• and while down in Bayside, 2 Tennyson St, Brighton with Jonathan Dixon, after passing in at auction a month or so ago, just sold for around that pass-in figure and well over $3,000,000
• 12a Harrison Crescent, Hawthorn, which had a rating too low to put up on our site, was sold by Sam Wilkinson of Kay and Burton for over $3,000,000
• Along with 3 Irymple Ave, Glen Iris (Iain Carmichael); 5 Story St, Parkville (Tom Roberts) and 80 South Road, Brighton (Barb Gregory) in the last week, the Top End over $3M is trying to work its way back into some form.

Back to the Future – What’s up Ahead?

With a couple of big homes due for auction next weekend – including 49 Sackville St, Kew (James Tostevin); 7 Foote St, Brighton (Phillip French of RT Edgar) and 83 Walsh St, South Yarra (Peter Bennison and Justin Long)  - we will begin to see if there is some air at the higher altitudes as we limp into the footy finals – traditionally a key indicator for activity in the early and late Spring markets at the $3M+ level.

Roll Up, Roll Up and see if today is a horror movie or not? 40 Fordham Camberwell: David Gillham: Bought After $1,650,000+. 1 bidder

Yes it was a bit of a dog of a day for the market this weekend, but it was not an absolute shocker.  And really, what else could you have expected!

At 6pm on Saturday, the James Clearance Rate for $M+ was 52% on the 25 auctions we attended. We have seen worse.

The Weekly Review Bidderman, our demand indicator, was down at just 0.8 bidders per auction. The last time we saw that kind of number was back in 2008 – but hey did you expect a plethora of volcano auctions? Actually, there was not one volcano (4+ bidders) auction in the 25 we covered on Saturday.

We all knew buyers were not going to brave this weekend and who can blame them? This was confirmed by the fact that only 3 of the 25 auctions we covered sold under the hammer – that’s 12% or 1 in 8. Which again re-emphasises that if you do feel inclined to buy a home right now, you need to understand the processes and strategies involved in buying a home outside the auction hammer process.

The Market This Weekend

Who are the unluckiest sellers this year? I think we would all agree those who had their home on the market at 10.30 this Saturday morning. This weekend was always going to be a time of concern for the market, no matter which way you mentally packaged Friday’s stock market news.

And yes, there was some blood on the Colosseum floor. But before you move into a catatonic state about the health (or lack thereof) of Melbourne’s $M+ home market, let’s put this weekend into context.

Firstly, even without the doom and gloom we would have been most surprised to see a strong clearance rate this weekend. The choice of homes on offer was average at best, while good stock is hard to find.

Secondly, buyers, and there do seem to be a few around if you go by last week’s results, are now beginning to see some early Spring stock and some of that is more appealing than what was on offer this weekend.

Thirdly, after every ‘catastrophe’ there is a knee-jerk reaction where people, including buyers, simply find the air a little harder to breathe and things a little harder to do – especially make decisions and take even calculated sensible risks. But we do seem to all get back on the horse at some stage.

Fourthly, as we said last week, right now is pretty much a nothing market – and again this weekend, nothing much happened. But nothing much has happened for several months.

So we’re not apologising or talking it up or down – we’re just saying this weekend’s market was always going to be tough after yesterday’s financial news – and tough it was.

What will next week bring and the week after – who knows?

One thing we don’t know (for sure) is anything involving a short term time line. We can’t say if we are in for a GFC Mark II, something worse than a GFC or no real damage at all in the next six months.

On the flipside, yes it’s true that long term we have good job prospects, solid immigration and a healthy economy etc BUT……

….BUT, as buyers we all want to buy well and at the best time. We would have preferred to have bought a home at November 2008 prices instead of November 2007 prices or July 2011 prices instead of July 2010 prices. However taking that argument down another line, as buyers we would have preferred to buy homes in 2008 at market price rather than 2009 or 2010 at market price.

And you could feel that price was top of mind with almost every bidder or non-bidder this weekend. Is this the right time to buy? Can we get it cheaper? How cheap can we get it?

This almost overpowering mindfog was evident at almost all auctions this weekend and explains why the hammer rate was so poor, at 1 in 8.

So is it OK to buy now? Is this a window of opportunity or the start of the slippery slope?

It’s human nature as buyers to be wanting to get a great deal at any time. We as buyers want to make the best decisions on our needs and maximise our individual long-term emotional and financial outcomes for our family – just as sellers do. But there is wanting and there is making it happen.

Going forward, what will happen is that:

1. Some buyers will panic - We are all a bit circumspect and nervous, but if we become a panicked buyer we are a danger to our family.  The best way to avoid panic is to be clear on what it is that you, as the breadwinner or decision maker, are trying to achieve. What do you want for your family? A home with 4 bedrooms, a good backyard near schools and with a good floorplan in Boroondara or Bayside. Good – well stick to it. The condition of the Greek economy shouldn’t make you now think you want a 2 bedroom home in Epping with no backyard because that is somehow less risky than Hampton or Glen Iris.
2. Some buyers will not learn from history – Think what happened during and post the GFC, during the 90s drop, and during the 70s –  if you are as old as me. If you understand what is happening now you may be able to take advantage of it – even in little ways. It all adds up.
3. Some buyers will act – You can only take advantage of an opportunity if you act. Those that appear to be the wisest of men who pass on everything in life are not that. You can’t look after your family on inaction. Your spouse can’t sleep in your concern and your kids can’t play in your risk avoidance strategies.

Good things to think about when you realise you still need to do something:

Take your time as most sensible buyers have this year. If you see something you like then look at its characteristics: are they what you want and are they any good? If not move on – prices seem unlikely to be going north in a hurry.

Elevate your risk taking in negotiations and go harder on price. Especially if it’s been passed-in for longer than a few days. Providing you don’t have to have it at any cost, push a little harder. It’s not immoral to try for a good deal.

Aim higher – especially if you are above $2m. If you can stomach a bit more debt, then now may be the perfect time to look for something a bit better than what you could have afforded last year.

Marry a doctor or a somebody with equally good cash-flow because over the next few months some bargains may appear and cash flow kings will be able to take advantage of the debt bunnies.

We admit we have a complete bias towards property, so maybe our thoughts are not quite balanced. But maybe that’s why we feel some comfort right now. If the kitchen in stocks is a bit too hot maybe nervous investors could come over and try the relatively stable inner Melbourne housing market. Sure, it’s a bit rough around the edges, but it is solid inside.

The rest of this year is an opportunity for us all – and for some that opportunity will be a time for action, for others a time for reflection and for a few a time for panic.

Each of us is different. Good luck

$3M+ Market
We’ve had a few comments that we haven’t put up a $3M+ market report since May. That’s  been for a good reason – it would have been an almost blank sheet. However there have been some sputters of life from deep within and this could be a sign that the top-end engine is starting to turnover again. From our own company’s point of view we are now involved in 3 dealings after having been bereft of activity for most of winter at this level. Other recent notable sales at this level are:

• A sale in Boroondara this last month at just over $6M – completely off market
• 24 Boxshall St, Brighton (Sam Paynter of Hodges), which has been on the market for a long time and has finally changed hands just under $3M
• 4 Sussex St, Brighton (Regina Schmidt and Brian Devlin) sold for a hard to believe $3,775,000. We attended that auction and the result was … well brilliant.
• and while down in Bayside, 2 Tennyson St, Brighton with Jonathan Dixon, after passing in at auction a month or so ago, has just sold for around that pass-in figure and well over $3,000,000
• 12a Harrison Crescent, Hawthorn, which had a rating too low to put up on our site, was sold by Sam Wilkinson of Kay and Burton for over $3,000,000
• Along with 3 Irymple Ave, Glen Iris (Iain Carmichael); 5 Story St, Parkville (Tom Roberts) and 80 South Road, Brighton (Barb Gregory) in the last week, the Top End over $3M is trying to work its way back into some form.

With a couple of big homes due to go to auction next weekend – amongst them 49 Sackville St Kew (James Tostevin); 7 Foote St Brighton (Phillip French of RT Edgar) and 83 Walsh St South Yarra (Peter Bennison and Justin Long) – we will begin to see if there is some air at the higher altitudes as we limp into the footy finals, traditionally a key indicator for activity in the early and late Spring markets at the $3M+ level.

Not everybody was stressed about life. 8 Blackfriars Toorak: Justin Long: Passed In $3,000,000. 0 bidders

Biggest Sale: 80 South Road Brighton: 1 bidder: Bought Afterwards $3,000,000.
On the market just a couple of years ago, this classic, well built modern home was back on the block for auction today. The main road would be an issue but other than that, it is hard to fault. They wanted and got a big ticket last time, and they are wanting towards $3m again. So I’m wondering firstly if it will sell and secondly if there will have been any appreciable price movement since last time. Jack Bongiorno is our master of ceremonies auctioning for the newly created Brighton MW team with Barb Gregory and Kate Strickland. Hebegins in front of a solid crowd of almost 90 and all packed into the front yard. Proceedings are started with a $2,700,000 vendor bid and bidder one joins in at $2,750,000. Half-time break comes and goes and there is no further bidding and so it’s passed in. $3,000,000 Bought after – good result. Just shy of a 10% increase in 2 years. (Mal James)

• 1/23 Washington St, Toorak: Hugh Hardy of Benmac: 2 bidders: Bought for $2,870,000
• 18 Knutsford, Balwyn: Richard Earle; 0 bidders: Bought After $2,730,000

Biggest Pass In: 8 Blackfriars Close, Toorak: Justin Long of Marshall White: Passed in $3,000,000: 0 bidders
Auctioneer Justin Long had a commanding presence as he addressed the group of 45 in attendance.  In his preamble, Mr Long spoke passionately, describing it as a “wonderful, wonderful property” and explained its history.  Mr Long opened with a vendor bid of $3,000,000 and requested $50,000 rises.  Despite his best efforts to entice bidding, all those in attendance stood as spectators and the property was passed in at $3,000,000. (Kate Agnoleto)

Bidderbuzz Auction: 35 Nelson Road, Camberwell: Michael Hingston of Jellis Craig: Bought $1,665,000: 3 bidders.
This was always going to be an interesting auction, and I was looking forward to it. The property is quite a good one – north facing rear, on good land size within close proximity to Camberwell Junction. Fortunately the rained stayed away and Michael Hingston (backed up by Steven Abbott) did a good job directing traffic in front of around 70 people – and you could sense there were a buzz here. Opening on a vendor bid of $1,350,000 it did not take too long for the crowd to get involved and two bidders fought things out in $10,000 increments to see the property on the market at $1,460,000 – a good reserve I thought. Bidder 3 entered the fray and all of sudden this auction was off and running. At $1,600,000 the auction seemed like it was coming to end yet two bidders (one on the phone, that often looked out of the running a number of times and in the end finally ran out of patience and/or money – how often do we see that?) went tit-for-tat and the auction finished at $1,665,000. Good result for the vendor here and a professionally run campaign by Michael Hingston. (Adam Woledge)

Buyer Masterclass: What to look for to see if you are going to have choice. Also reprinted  in Melbourne’s Million Dollar magazine The Weekly Review.

We only buy (good) homes

Yes they still sell homes at $3,000,000. 80 South Road Brighton: Jack Bongiorno, Maddie Kennedy and Barb Gregory: Bought After $3,000,000. 1 bidder

Like many auctions this weekend, a lot of standing around, not doing much. MALVERN EAST, 9 Lewes Drive: Passed-in at $2,500,000 with two bidders. Anthony Grimwade (RT Edgar)

At 6pm on Saturday the James Clearance rate for $M+ was 57% on the 30 auctions we attended. That was well down on last week’s cameo of excitement, but understandable giving the quality change between this week and last week at the Top End.

Bidderman, our demand indicator, was 1.5 bidders per auction. However the quality of the offerings was one of the lowest this year.

While there were a few volcanoes (4 or more bidders), what was more interesting was that 1 in 3 homes were ducks meaning they didn’t get a bid a all. We think that was a confirmation of the market reaction to this weekend’s lack of Top End quality.

In fact, only 1 in 5 of $M+ homes monitored this weekend sold under the hammer.  The rest sold before or soon after – or didn’t sell at all. That’s an Under the Hammer Clearance Rate of 20%.

What that means is that in this current market buyers need a lot more than just a ‘hand up in the air and hope’ strategy to buy homes well.

Market Summary:

There were plenty of auctions at the lower levels, e.g. at or around a million dollars, but many lacked any WOW factor.

A number of the key selling agents were off this weekend on holidays and, as with many buyers, they seem to have turned their attention to pursuits other than buying and selling.

It was hard to find a property over $2 million up for auction. The only $3 million plus auction we saw in Toorak was at 68 Hopetoun Road with Steve Abbott of Jellis Craig – an art deco that seems to get sold every 12 months (see report below).

The REIV median prices came out this week and rightly confirmed what the market has been saying for some time: Prices are weaker.

This year to date has been a positive one for buyers with reduced competition, more choice and lower prices. On the flip side the buying opportunities are only such if you take them (a Steve Abbott auction line).

Next week, there are almost no auctions and not too much the week after.

Post Easter, as we said last week, may or may not be a different story. But our feeling is that quality choice will dry up and the big issue will become finding a rose amongst the thorns, the pass-ins and the stales. If those roses are hard to find then prices for them will firm as new quality drops with discretionary vendors adopting a wait and see strategy.

What Sold Well – Volcanoes with 4 or more bidders

• Albert Park, 62 Barrett St – Peter Simmons – Nicely renovated Period Home – $1,575,000
• Hawthorn, 23 Falmouth St – Hamish Tostevin – Nicely renovated Period Home – $1,330,000
• Hawthorn, 11 College St – Richard Earle – Nicely renovated Period Home – $1,409,000
• Kew, 36 Maitland Ave – David Oster – Land site – $1,345,000
• Toorak, 80 Grange Rd – Rodney Morley – Nicely renovated Period Town Residence – $1,500,000

$3M+ market: Overall, the high end at $3 million+ appears as weak as it has been for 12 months. Although  a shortage of new quality stock post Easter has put some zing back into the market as some buyers are forced to act.  Growing kids, divorce, lifestyle, whatever cannot wait for everyone indefinitely. Go to our $3m+ report to see most of the last weeks’ 10+ sales.

Michael Armstrong, Kay & Burton, South Yarra: “I think we can expect a fairly normal market post Easter.  Market conditions are settled and stock levels looking forward to May/June are lighter than what we’ve experienced in the past couple of months.  Vendors have had to adjust their expectations in recent times and buyers with long term views have realised that the past few weeks have presented them with good opportunities. The better quality offerings will continue to attract competition and alternatively  buyers will continue to deal harshly with those vendors (and agents) who price properties incorrectly.”

ST KILDA, 2 Marine Pde: On a bit of a rollercoaster day, it was apt to have the Scenic Railway at Luna Park as the backdrop of this Claudio Perruzza (Biggin Scott) auction. Passed in, $1,850,000, no bidders

Biggest Sale we covered: 68 Hopetoun Rd, Toorak, Steve Abbott (Jellis Craig); after auction, $3,050,000, 3 bidders
“This art deco property with Heritage One (HO1) overlay was looking for a committed buyer to make it a home. A vendor bid of $2,800,000 got the proceedings underway and the first bidder entered the race with a bid of $2,850,000. A second vendor bid of $2,900,000 signalled that the bidding was still some way off from the desired sale price. Auctioneer Steven Abbott wouldn’t entertain an increment of $5,000, demanding at least $10,000 to stay in the race. Despite keen bidding, this property was passed in at $3,020,000 but this was just the start of the negotiations. Bought after for $3,050,000.” (Debbie McTaggart)

Biggest Pass In we covered: 12 Dudley Pde, Canterbury, Doug McLauchlan (Marshall White); passed in $2,000,000, no bidders
“Doug McLauchlan took centre stage in the very big, leafy backyard of this great property and looked ready for action. Assisted by his Marshall White team, Mr McLauchlan explained that the circa 1923 home had been in the same family for a massive 72 years. But even the sentimentalists amongst us in the crowd weren’t ready to put their hands in the air and bid. Mr McLauchlan opened and closed on a vendor bid of $2,000,000.” (Jen Milligan)

Auction Video: Architect Adam heads to sunny Hawthorn this week to witness a ripper auction at 23 Falmouth St, a Marshall White property with auctioneer Hamish Tostevin.  Click on the live action.

Big Issue and Weekend Reflections: Coming back after the Easter holidays.

Two Weeks Off: Marketnews will be on holiday for two weeks with our next Marketnews on the 7th of May. A number of agents are talking up the 21st and 28th of May as possible Super Saturdays (as buyers let’s hope so). For James Buyer Advocates it will be business as usual.

We Only Buy Homes and have a safe Easter break:

Job Advertisement:

KEW, 19 Stirling St: The crowd was there but the bidders weren't. Richard Earle (Jellis Craig), passed in $1,700,000, no bidders

To be frank I wasn’t that excited about running around to auctions today (which is very unusual for me). We videoed the 23 Falmouth St, Hawthorn auction with one of my favourite agents Hamish Tostevin and 4 bidders. But after that I cleaned up my paperwork and looked forward to a week off.

Although this has been the best buyers’ market for over two years with choice and falling prices, one thing that as buyers we should consider over the Easter break is the amount of stock that was bought at auction and privately in May and June of last year. Early winter last year there was a concerted agent mopping up campaign of stales and pass-ins. I remember looking at some stats on actual sales at that time and thinking “impressive, more than I thought”. If that happens this year and new stock tightens then, as with last year, late winter and early spring will not be as good a time to buy as you think. Anyway, despite many agents implying they are 24/7, I’m not. I’m away for a week and then I’ll be back on board full bore immediately after Easter. Have a good break with your family. Life’s short. Take care, Adam.

Week Ending 16th April:The $3m action this week was away from auctions.

The drought in the Balwyn Formula – big price, small land, new home – was broken again with Maurice Di Marzio getting 59 Hosken Street, Balwyn North away in the high $3 millions. That’s the third in a week on the back of the two biggies reported last weekend.

Canterbury, 11 Chaucer Close, with Boroondara doyen – Peter Mitchell of Marshall White got the same sort of high $3 millions price.

Hawthorn, Harcourt St, was a hot place to be this week with Nick Ptak getting 79a away for just under $3.4 million (we think) and one of the results of recent times. Peter Vigano of Jellis Craig  got $3.625 million for 42 (we did not see that price coming)

Richard Winneke, Jellis Craig, Hawthorn: “We expect a busy May. Buyers will notice a lot more property coming onto the market. In the meantime, over the next two  weeks, there will be very little to choose from except passed in properties from March and February. “

Buying a home is a business interaction – and business interactions involve dealing with different business cultures. So just as business people need to find the most appropriate way to interact with people of different cultures, so too do home buyers have to find the right way to deal with selling agents.

There is an overall culture among selling agents and there are many sub-cultures within different agencies, just as there are within cities, football clubs, even families. Understanding, and working with, these sub-cultures usually yields better results than fighting against them.

A first step to gaining an insight into agent culture is to consider the overall big picture: that agents represent sellers first and foremost (and, despite the bad press agents sometimes get, most of the good agents do really do this).

Taking this one step further, some selling agents have a culture of win-loss: the seller can only win if the buyer loses.

The next helpful hint is to understand that you are on their turf. In footy terms, when you begin negotiations you are playing an away game. Be mindful therefore that the wind may blow in a direction that the agent knew but wasn’t obvious to you.

In inner Melbourne, one of the first agent “cultures” that new buyers have to learn quickly is the concept of “quote  ’em low and watch  ’em go.” It’s endemic and not likely to change in a hurry because unfortunately it often works against the inexperienced. But this is not an article about that.

Once you have done twenty or so deals with a particular agency you will start to get a handle on the overall agent culture(s), and you will also start to develop insights into individual agency “clan” cultures.

To reiterate: better negotiations generally come from better understandings. And while you may not agree with the way the game is played, you can often achieve a better result if you understand the players and the game you are in.

For example, here are some of the sub-cultures we see in some of the Melbourne real estate agencies we deal with regularly:

Jellis Craig: Under the leadership of Scott Patterson, Richard Earle and Richard James, Jellis Craig’s sub-culture has changed in recent times to a more professional consultative culture.

RT Edgar: Led by Jeremy Fox in the toughest game in town – vs Kay and Burton. The sub-culture of this company is one of approaching every day with the view of ”what deal can be done?”

Kay and Burton: The five pillars, as we call them  – Ross Savas, Peter Kudelka, Jason Scillio, Mike Gibson and Gerald Delany  – have a sub-culture based around considered planning, preparation and professional presentation. A deal can’t be rushed.

Marshall White: Led by James Connell and John Bongiorno, this company is also highly structured. They have a competitive and very professional sub-culture.

Biggin and Scott : Local flavour is very much part of their sub-culture.

Noel Jones, Benmac, Buxton, Hodges, Barry Plant, Nelson Alexander and so on all have very different sub-cultures.

I’m sure you have run into agents who treat you like dirt (although this is a lot less widespread than ten years ago). And you may find that you visit home after home where these agents are from the same company. It’s all about culture and leadership from the top. If the company’s leadership has tight commissions, poor training and low ethical standards which encourage a “dog eat dog” attitude among its sales staff, that can manifest itself in poor interactions between buyers and agents. But rather than reject that and rule out a number of homes because of the agent, you can recognise the culture, understand why it is happening, not take it personally and then use it to your advantage in structuring an offer. In many cases, agents with a chip on their shoulder can be a smart buyer’s friend.

Of course, the reverse is also true and in any one of the above companies you will find the majority (if not all) agents operating in a professional culture where you will be treated in a manner that may lead to a result that made you feel good during the process but …

Understanding culture is very different from understanding buying or selling techniques. For example, if your pre-auction offer is shown to everyone else for 24 hours before it is accepted or rejected, that is a procedure. To be told by an agent that there is another offer even if there isn’t, is a technique or a strategy, not cultural. But to think that all buyers are liars – that is a culture.

There are problems when buyers want to, or become focused on, changing agents’ culture. I would like to see some changes to make private sales a more open process and legislation to make post-auction negotiations a more level playing field. However, while that is a wish, it is not my primary aim when involved in deals day to day. My primary aim is to get the right deal for my client. Any of my cultural change agendas are best served through REIV committee work, agent lunches and other forums. But when the deal light is flashing, I, for one, am not thinking about cultural change.

Besides that, changing cultures in countries, in clubs and within real estate agencies, is not an easy or instantaneous thing.

And, of course, it won’t have slipped past quality selling agents that our company individually, and we as buyer agents collectively, also have cultures – and a number of quality selling agents understand that and deal with us accordingly.

Overall, you may have noticed, in general, that buyer agents’ culture with regards to selling agents is moving from animosity towards understanding, and vice versa.

Selling agents, agencies and auctioneers are all different. There are cultures you may not like, but, in the context of a six-month search and buy, you need to ask yourself whether your priority is to resist or fight to try and change a culture, or whether you should simply ignore homes whose agent culture you don’t care for. You may find that your needs are best served by understanding and finding ways to operate within an agent’s clan culture.

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

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

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

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

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

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

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

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

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

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

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

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

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

Highlights and Lowlights

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

BidderBuzz Auction of the Day

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

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

Are Special Conditions costing sellers BIG MONEY?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We Only Buy Homes

Mal

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

Hmmm - things are changing and right now it's not for the better. One of Hawthorn's top selling agents Richard P. Winneke fails to get a bid at 90 Walpole St Kew. Passed In $2,100,000

Today was a watershed day for the Boroondara market – a day when the market could no longer gorge the incredible amount it has been gorging (for the last six months). Today was a real (excuse me, while I burp) I just can’t fit in anymore kind of day. Today the Boroondara market which has been the strongest of the four big $m+ markets (Stonnington, Bayside and Port Phillip) showed the white flag and said I’m no different to the rest of you. At 52% it was literally a flip of the coin to see if the home sold on the day.

Going forward what will happen? That is all a matter of supply – there is simply too much stock on the market for this level of demand and therefore price cannot remain stagnant, let alone rise.

Price has fallen and will continue to do so until the market rebalances again – which may only be a matter of a month or so or it may take a fair while longer if demand shifts downwards during this transition period.

For buyers this is good news providing you understand the new rules and the tougher playing conditions the selling agents will require you to play under. While there are fewer buyers, those that are around at this level and who want to buy good homes, will face a more rigorous test than put your hand up and take it at a low price – the vendors simply won’t allow that.

However if prices adjust quickly the market may kick along again sooner rather than later. There is still a lot of hidden demand – waiting… waiting…..

The standout auction of the day was Paul Keane’s 50 Hawthorn Grove, Hawthorn, which was on the market at $3,300,000 and fell under the hammer at $3,510,000. 4 bidders.

Some words from the two dominant companies.

Marshall White – James Tostevin

‘” A real mixed bag today for the company – clearance rate around the 63% mark. Good homes as popular as ever, yet some vendor are not in line with market sentiment.”

Jellis Craig – Richard Earle

” 59% clearance rate for the company. A damp day weather–wise and a damp auction vibe overall for the market. Telling factors – upcoming election, rising interest rates, unsettlement in Europe and of  course  generous stock levels affecting the buyer’s psyche’.

Land is Gold! Gold! and Still Gold!

In a day of transition we took a look a Balwyn (and surrounds) Land – four key indicator auctions. This time last year (2009) these blocks were starting to fly with the onset of the FIRB rule changes – we revist exaclty one year on and find nothing, absolutely nothing has changed. Land is still Gold.

54 Stroud St Balwyn (Michael Nolan of Noel Jones) It was a cold, foggy start for auctioneer Michael Nolan today. In front of a small crowd of 30 – including the neighbours who watched from their premier balcony box seats – Mr Nolan kicked off with a vendor bid of $1,000,000. The bidding started slowly in $2,000 rises, but as the fog lifted so did the speed of proceedings. The emergence of 3 bidders helped push the property to be declared on market at $1,151,000. After a final knock out bid of $1,155,000 the property was bought to a round of applause from the audience.   Amy Wong reporting

5 Yongala St Balwyn (Michael Nolan of Noel Jones) Both sides knew what they wanted today and little time was wasted in getting to the end result. Auctioneer Michael Nolan was keen to start and opened the auction with a vendor bid of $1,300,000. So efficient was the first bidder that he did not even bother to leave the car, calling his bids from the front window. Four other bidders drove the price upwards and the property was declared on market at $1,425,000. The property was bought for $1,510,000. Good auction with confident bidding.  Amy Wong reporting

27 Regent St Camberwell (Michael Hingston of Jellis Craig) The cold, drizzly weather encouraged a brisk, fast paced auction. The auction started with a genuine bid of $1,100,000 which was followed by a vendor bid by auctioneer Michael Hingston. This helped move proceedings along and the emergence of another two bidders saw the property declared on market at $1,220,000 and bought for $1,270,000. Amy Wong reporting

7 Almond St Balwyn North (Scott Patterson of Jellis Craig) Hi Mal, 4 bidders, on the market at 1.25m and sold for $1.37m. A strong result. It had potential views and a 75ft frontage. Land seems to be selling well in Boroondara depending on orientation and location. Supply has increased but demand is still quite good.  Cheers,   Scott

Design Smart

Booroondara Auctions – 46 monitored – 24 bought – 52% clearance rate (last week 70% )

THE NEW BOROONDARA POST AUCTION RITUAL?

11.05 am

11.10am

11.15 am

Camberwell 26 Alma Road: Bought $1,615,000. Bang! 5 bidders. Richard Jellis. Good to see the 'ol tiger back prowling around.

In contrast to last week, we saw all 9 properties we covered over $1,000,000 today, sell.   Three sold before auction, 3 sold under the hammer and 3 were bought after.  That’s a 100% clearance rate and Bidderman was back up to two.

Five of the nine properties had two or more bidders.  Richard Jellis of Jellis Craig had 5 bidders at 26 Alma Road Camberwell.  3 Bristol Street Surrey Hills (Antony Woodley Marshall White) also had good bidding strength, with three bidders taking the price to tick over $2,000,000.  Steve Burke of Jellis Craig sold  71 Broadway in Camberwell with a strong result just over $3,700,000.  Sure it needed a bit of work, but had very good land content.  12 Lorne Grove  Camberwell (Peter Batrouney and Campbell Ward) next weekend will be interesting.

24 Kingsley Camberwell with Jellis Craig’s  Richard Winneke passed in for  $2,100,000 but sold afterwards for $2,150,000 (resold from late last year when purchased for $2,000,000)..

27 Harcourt Hawthorn East with Rob and Tim Fletcher of Fletchers was bought for $2,300,000 after passing in at $2,125,000.  Both were good blocks about the same land size (700-800 sqm) with a home that needed some work but was livable .  Tim went onto say he thought this market pause was all about the huge stock levels available and claimed his company had sold 13 from 14 today. He did state he felt the market dynamics had changed in 3 weeks.

40 Kinkora Road Hawthorn (Richard Earle Jellis Craig)  was bought after auction for $2,650,000.  This was  similar to number 28 which sold last week but needed work.   The price reflected this.

Marshall White & Jellis Craig both had a good weekend.  Marshall White’s Justin Long said they had 38 auctions and about 80% clearance rate, and Richard Jellis of Jellis Craig advised they had 48 auctions with around 80% as well.

Boroondara Auction Results – 46 monitored – 32 bought – 70% clearance rate

Design Smart

Surrey Hills: 3 Bristol Street: An auction of the year contender for Antony Woodley of Marshall White: 3 bidders and bought for $2,050,000.

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

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

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

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

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

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

No real surprises in the key auctions we attended -

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

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

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

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

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

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

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

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

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

Design Smart

Richard Earle (Jellis Craig) tries to coax a reaction from the crowd at Murdoch Street Camberwell

Although the sun was not really out, the bidders certainly were, with most properties over $1m selling in Boroondara today. Bidderman was strong at many auctions and there was no shortage of them.

Talking to Richard Winneke from Jellis Craig this afternoon, the market, he believes, has gone up at least 10% since the end of last year (and we may well agree with this). One property Richard sold today was 98 Pakington Street in Kew. This sold under the hammer for a strong $1.851m  – interestingly it last sold (property condition basically unchanged) in the heat of the market 2007 for $1.445m.  30% in about 2.5 years – that is good capital growth in any language.

Richard also mentioned that Jellis Craig had sold 43 out of their 46 auctions. This stacks up closely with the other Boroondara heavyweight agency Marshall White which too had a similar clearance rate for a similar number of auctions. Hamish Tostevin of the firm continued his successful run with a result of 7 sales from 7 properties this week.

Another strong result in Hawthorn (remember York Street last week) was 7 Lyall Road Hawthorn. Hocking Stuart sold this at a strong price of $1.95m – around $300K over reserve. Bidderman was 8 here, and this auction went for almost an hour. Well done to auctioneer Glen Coutinho for hanging in there.

Some other auctions we covered where Bidderman was strong was  87 Sackville Street Kew (sold for $3.305m, Bidderman 3), 18 St.Andries Street Camberwell (sold for $1.62m, Bidderman 3), 9 Leslie Street Hawthorn (sold for $1.435m, Bidderman 3) and 7 Fakenham Road in Ashburton (sold for $1.325m, Bidderman 4). On the subject of Ashburton, is this gaining some sort of parity with Glen Iris? 22 Boyle Street and 13 Ward Street also sold today for $1.310m and $1.429m respectively – all three of these auctions were strongly attended and fought for.

An interesting ‘land’ sale was 35 Essex Road in Surrey Hills – land size here was 1080m2. Had a period home which needed work (refer last week’s architecture article) or could have been bulldozed. This sold for $2.007m or $1860/m2.  Compare this to a similar property in the next street – 8 Middlesex Road – approx. 180m2 less land but a very-well renovated period home sold for $2.005m. Another land sale was 100 Winmalee Road Balwyn – 953m2 -  sold for $1.635m or $1734m2. An interesting ‘architect home’  sale was 10 Bluff Street Hawthorn – the style of this  polarised opinion, yet did sell under the hammer for $1.98m. The style may not have been for everybody but room sizes and flow were very good.

Not everything was bought however. At the higher-higher end 24 Coppin Grove Hawthorn passed in.

As things cool off a bit for auctions next weekend due to the Labour Day long weekend, buyers can take a breather – big auctions coming up after this though (flag March 27) and the strength in the market looks like it will continue up to Easter at least.

Design Smart

Adam

The Boss is Back: Richard Jellis co-founder of Jellis Craig overseeing auctioneer Richard Earle and proceedings at 11 Rae St Hawthorn which was bought for $2.275m. 5 bidders.

• Bidderman at 3.3 that is 3.3 bidders per auction
• 43 – yes 43 over a $million and 10 passed in for a clearance rate of 77%. Rock Solid and rising market.
• Crowd numbers were huge and on the auctions below they were averaging over 100. In Bayside there are some 100 strong turn outs but 40 to 60 was more the norm.

This man sells: 20 Callantina Road: 5 bidders: $6,125,000: 166 Mont Albert: 7 bidders: $4,010,000. His name is James Tostevin.

We are often accused of being “agent lovers” and we plead guilty in some cases as their profession is much underrated. So ignoring the risk of getting the email avalanche we felt we should make mention of James Tostevin. We attended four of his auctions yesterday and witnessed the following:

20 Callantina Road Hawthorn – Bought – $6.125m – 5 bidders
About 130 people saw this auction open with a genuine bid of $4.9 million. There were five bidders and the property was on the market at $5.65 million. The eventual buyer was a determined bidder who stayed strong throughout the auction process and bought the property for $6.125 million.

166 Mont Albert Road Canterbury – Bought – $4,010,000 – 7 bidders
James Tostevin started slowly taking a $2.95m opening bid in front of a big crowd of around 80 all nicely spaced out around the tennis court. Seven bidders later in what seemed like an eternity on the last few bids saw the hammer come down a bit gingerly at $10,000 over $4m.

46 Haines St Hawthorn – Bought  - 2 bidders
One of the first auctions of the day, with a clear, sunny day setting a lovely scene. About 75 people watched proceedings, which opened with a genuine bid of $1.2 million. Two bidders fought this out, to see the property on the market at $1.3 million and it sold for a figure just over $1.45 million.

85 Victoria Road Hawthorn East – Bought Afterwards – 1 bidder
A large crowd of 125 people at this auction, which opened with a vendor bid of $1.7 million. One party bid $1.72 and the property was passed in at this price.

Other Boroondara Sales we covered

76 Cityview Balwyn North – Bought – 3 bidders
Three bidders from the crowd of 90 were interested in this property. Proceedings opened with a genuine bid of $820,000 and the property was on the market for just over $1 million. It was sold under-the-hammer for $1.15 million.

4 Deanlea Hawthorn East – Passed In – one bidder
The front garden of the house, situated in a quiet court, was the setting for this auction. About 60 people saw auctioneer John Bongiorno open with a vendor bid of $1.7 million. One party bid $1.725 million and the property was passed in at this price.

15 Bowen St Hawthorn – Bought – 2 bidders
A beautiful sunny afternoon showed this property at its best. This was one of the last auctions of the day, and, on the back of a strong auction day in Hawthorn, a lot of the 100 or so people in the audience were ready to see another strong auction here. Opening with a genuine bid of $1.3 million, two bidders fought this property out with quick-fire bidding. On the market at $1.55 million (but this could have been earlier, as auctioneer Oliver Bruce did not have much of a chance to declare otherwise earlier), the property sold under the hammer for a very strong price of $1.76 million. Good campaign by Oliver Bruce and Damien O’Sullivan from the Ben Mac team.

60 Illawarra Hawthorn – Bought Before

19 Rubens Canterbury – Bought – 4 bidders
More than 100 people at this auction, which started slowly and then heated up. Auctioneer Richard James opened with a vendor bid of $2.85 million and followed that with a second vendor bid of $2.9 million. Four bidders then joined in and the property sold under the hammer for $3.301 million.

11 Rae St Hawthorn – Bought – 5 bidders
Slow start form the crowd of 80 saw Richard Earle putting in some vendor bids. On the market around $2.1m and sold for $2.275m. 5 bidders

17 Mont Iris Glen Iris – Bought – 3 bidders
Smaller crowd of around 50 saw Peter Bennison take a strong opening bid of $1.4m. A few minutes later after a break and 2 more bidders it was on the market at $1.46m and sold for $1.47m

Design Smart

Camberwell: 21 Christowel: Alastair Craig knocks it down to the best of 4 bidders for $1,530,000.

We looked at 27 campaigns over a million in Boroondara this week – 27 and of those 22 sold. When talking with James Connell of Marshall White he said of his company’s weekend results in Boroondara and Stonnington, 8 sold before hand; 20 sold at auction and 3 passed in. That is 28 out of 31. Makes our Market Insight argument that buyers are turning away from “non quoted auctions” look untrue and to be fair they have a point this weekend.

Glen Iris: 7 Yeovil: The expressive Paul Williamson: Bought $1,740,000. 2 bidders

Three big sales to report on over $3m. 7 Henty Court Kew with Nick Elmore and Tom Aylward of Jellis Craig which was a quality building on an irregular block – we were obviously harsh with our James Control Price – well so the agent and sole bidder thought.

Secondly 17 Deepdene in Balwyn with Nick Franzmann of Marshall White. We like Nick – he is low profile but he gets the job done – $3,806,000. Almost $4m. Home was $1m tops; even though it was big. So that puts land around $2500 per sq metre. No drop off there even if there appears to be a lessening of Chinese interest.  Very solid result particularly given this last sold for $2.95 million back in April 2007

Thirdly Heather Elder of Marshall White, another highly respected agent, managed several buyers into a boardroom auction on Monday and got 4 Hollingsworth Hawthorn away north of the magical 3m.

45 The Boulevard Hawthorn – Tom Ryan and Nick Smith of Jellis Craig
James Home Rating: 650 out 1000. While the floor plan for this house presents some issues, property has great potential. North facing rear and adjoining to  Scullin Park are the major pluses here.  Ths is a good interim home for a young family but could also work for an older couple. You need to see beyond the kitsch.
James Control Price: Dirt $1,249,500 + House $250,000 = $1.499,500
James Auction Report: Opening bid $1.250m On the market $1.410m last bid and bought for $1.540m. Crowd 60 people with 3 bidders. Auction vibe slow start. Bid came by a new bidder as the paper hit the hand, Too late!!!
James Post Auction Examination: As expected

7 Henty Court Kew:  Nick Elmore and Tom Aylward of Jellis Craig
James Home Rating: 522 out 1000. This home has been built for this block and while well built and well thought out will not appeal to all buyers. Land content, backyard size, the block itself and flow of home are not the norm and while this does not make that a fault means that this home is a specific buyer home and future mass appeal (demand) is hard to judge. Really do like the separate wing for home office, older member or teenager. Garage size is excellent, light comes into the right area and rooms sizes are good. If you really like it, then why not – but understand what you are buying – this is an emotional home!
James Control Price: Dirt $1,393,200 + House $1,200,000 = $2,593,200
James Auction Report: Small crowd of 40 witnessed Richard Earle of Jellis Craig pass it into the lone bidder on his one and only bid of $2.85m. Sold afterwards
James Post Auction Examination: Nick and Tom are good at their job

Some random sample auction reports

BALWYN, 17 Deepdene Road – 2+ Bidders
Reported in by agent Mark Dayman – thanks Mark. Opened at $3.1 million, on the market at $3.68 million and ultimately sold for $3,806 million.
CAMBERWELL, 23 Radnor Street – 2 bidders
James Tostevin of Marshall White entertained a substantial crowd of 90 while two bidders took this home to on the market at $1.38million and sold at $1.46 million.
CAMBERWELL, 21 Christowel Street – 4 bidders
Auctioneer Alastair Craig, Jellis Craig. Opening bid $1.2 Actual. On the market $1.310m. Last bid and sold $1.530m. Crowd 90 people 4 bidders. Fast and furious auction in the end between 2 bidders with the successful bidder having made the original opening bid.
CANTERBURY, 38 Parlington Street – 0 bidders
Crowd of about 80 here – Richard Earle opened proceedings with a vendor bid of $1.7 million, then after no response from the crowd 2 furthewr vendor bids of $1.72 and $1.74 million. Passed in and remains unsold at time of writing.
GLEN IRIS, 7 Yeovil Road – 2 bidders
Paul Williamson got off to a slow start in front of 60 people opening with a vendor bid of $1.5M. Finally got a real bid after returning from the mid break of $1.51 and a second bidder came in with a large jump to $1.65 and it’s on the market, settling at $1.74M. The successful bidder flying in from Sydney this morning, viewing the property and buying it. Apparently the home an exact replica of his place in Sydney.
HAWTHORN, 45 The Boulevard – 3 bidders plus a LATE BIDDER
Opening bid $1.250m On the market $1.410m last bid and bought for $1.540m. Crowd 60 people with 3 bidders. Auction vibe slow start. Bid came by a new bidder as the paper hit the hand, Too late!!!
HAWTHORN EAST, 33 Harold Street – 6 bidders
Auctioneer Andrew Macmillan managed and entertained 6 bidders in a smallish crowd of 60 at one of the longest auctions of the day where bids dropped to a $1,000 and stayed that way for for a long time. On the market $1,200,000. Bought $1,393,000.
KEW, 7 Henty Court – 1 bidder
Small crowd of 40 witnessed Richard Earle of Jellis Craig pass it into the lone bidder on his one and only bid of $2.85m. Sold afterwards.

Design Smart

Peppin Street sits up nicely on the hill, a stone throw or two from Camberwell Junction. No. 3 is currently on the market, an honest double-fronted timber Victorian in dire need of some work.

This property has many future options – bulldoze and build again (no heritage overlay helps with this), or work with the charm of the original house and renovate. With an east facing rear, potential city views from a second storey, a cul-de-sac street location with a park close-by, this should well suit a family. Unfortunately the house is not ideally sited, with minimal setback to the northern side meaning that access to natural daylight is a little compromised, yet car access to the south is quite good.

At over 600m2 the land size is OK here and that is essentially what you are buying. There have been many sales in this precinct and the maths should not be too hard to calculate. With fine Camberwell streets such as Waterloo and Fermanagh close-by, Peppin Street is in very good company.

If choosing the renovation/extension option, rather than just extruding through the house floor plan in simple form back to the rear yard, a better option may be to offset the rear extension to the south a little which would afford some primacy back to the northern side. This area could then feature a sun-drenched pool, deck or alfresco area, which would also provide generous opportunity for good amounts of north-facing glass to informal open-plan living areas.

3 Peppin Street Camberwell is scheduled for auction Saturday, the 24^th of October at 3.00pm and is listed by Seamus O’Brien and Richard Earle of Jellis Craig.

Design well.

Adam

Hawthorn, 10 Hawthorn Grove: Auctioneer Jeremy Fox in action probably claiming he was not here for his looks, so why not bid? Opened with a vendor bid of $2.1 million but was unable to entice any interest from the crowd and the property was passed in at t

Camberwell, 17 Doonkuna: David Gilham conducted this auction in front of around 80 people (inside). Opened at $1.3 million, on the market at $1.5 million and sold above this amount for an undisclosed price. Five bidders.

312 and 314 Cotham Kew: a big parcel of land sold through Walter Dodich of Marshall White for $3.42 million or $1800 per sq metre on just over 1900 sq metres, which does appear to show that, in this case, on Cotham Road you get a significant discount per sq metre for land on a main road. Marshall White also sold 61-63 Alfred St Kew (just behind and 2,256 sq metres) back in May at $2174 a sq metre. The discount argument works if we assume the buyers placed no value in the period home on 61-63 Alfred St Kew then and we think that was close to the mark (even though it had a beautiful façade, you could bulldoze it) as $2200 to $2500 was/is the going land value for the Sackville Road Kew precinct.

This, initially, in our mind emphasised the very strong result last week at 103 Mont Albert Road Canterbury with Peter Smith of Jellis Craig, which seemed to be at $2400 per sq metre. Why? We think that part of Canterbury and Balwyn is regarded by the market as similar to the Sackville Road precinct. However, with further examination, this means two things: Mont Albert Road, which borders the Reid Estate and is maybe 2km away, is leafy green but still carries a lot of traffic, is regarded as a far less offensive main road than Cotham Road Kew; also that we may have underrated the value of the 103 Mont Albert Road home at say $400,000. If we say the home value of 103 Mont Albert Road was worth $800,000 last week, then that brings land on Mont Albert Road back to say $2100 per sq metre, which makes a bit more sense, as good land seems to be worth up to $2500 per sq metre in the area, except, for say, Golden Mile streets (not main road) such as Monomeath and, therefore, Mont Albert Road land is at a discount.

But before you say “You idiots, of course the house at 103 Mont Albert was worth more and land less”, then technically we could say then that 61-63 Alfred St Kew had a home worth say $1 million. In the past, there has been more inherent value in period (61-63 Alfred) than dated recent homes (103 Mont Albert). If that was the case, then back in May, 61-63 Alfred St Kew sold for $4.83 million, less $1 million for building, and that leaves the 2256 sq metres valued at $1700 per sq metre.

The market was really starting to move in May, so maybe the Cotham Road land sale of this week of 1900 sq metres was at just a 10 per cent discount to the Alfred St sale and maybe the 103 Mont Albert Road sale was at a slight discount to the area land values. Certainly, the land in Mont Albert Road is regarded as being significantly better than on Cotham Road. This is a relief, because we always thought that was a given, but now we are being forced to put more value onto basic buildings with a changing Boroondara market.

If you accept the argument that there was a lot of value in Alfred St’s building in May, then the land at 61-63 Alfred St Kew was incredibly cheap against other Sackville Precinct sales (eg Ross St Kew at $2500 per sqm); or was it at a discount because of its size – another historical trend – bigger the land, fewer bidders, lower prices. (Although there were six bidders at Alfred St.)

No, personally, I think the Alfred St land sold around $2000+ per sq metre then and that means the home value was $0 to $400,000 max (it needed a huge amount of work and I think the value was limited because of the scope of work needed rather than it had a lot of building value because it was beautiful). So Cotham Road with tram line did sell at a significant discount, which is what we have come to know over the years.

What we are reassessing are dated home building values and I don’t know if any of us have got it exactly right yet. Prior to this year, the market placed little value in these sorts of homes; although our company was always keen to buy them because the clients (eg young families) were getting an OK floorplan and a free home (buying at land value – 90%+ land to content value ratio).

Now things are different in Boroondara and this does make some sense, as the Boroondara market has substantially changed this year with money from mainland China, and Chinese buyers view land and buildings through different eyes and are forcing market changes to values of not only land but now possibly buildings.

If Chinese money is a long-term thing, then those in this market will need to look at values in a different light. You don’t have to like the offerings, it’s just you will need to understand what they are worth. It’s similar to a cassette being worth something in 1980 but now nothing, then a CD was all the rage and now its value has declined with MP3 coming in.

If Chinese money is short-term, you need to be careful you are not overpaying for something that may drop in value in a few years. Eg we had a lot of money come from Japan into Queensland in past decades which changed values, especially of, say, golf courses, dramatically.

Finally, on this matter, we are not just looking at these isolated sales above. We are using them as a highlight and they had multiple bidders. We really wanted to know why four people bid so strongly on Mont Albert Road last week and other similar homes (this has been going for a little while), as it is our job to try and interpret the market nuances so as our clients can plan better in their future dealings. If you read anything into the above words as saying we are moving away from the real value is in the land, you are incorrect. We are trying to show that pricing and values are living breathing things that change all the time and 1960s to 1980s building values may, just may, be on the rise. Your auntie may be right when she told you it’s not just the flares and orange tiles of the 1970s that would come back into favour.

106 Church St Hawthorn with Steve Burke and Richard Earle of Jellis Craig sold at auction for an undisclosed price believed to be in excess of $3.5 million. It was really a $5 million buy after reno but I love these sort of homes and the view from the tower was a highlight of my week last week. http://www.106churchsthawthorn.com/ Well done on pricing – I thought Steve Burke was spot on and didn’t seem scared to talk about what might happen and the difficulties in maybe being spot on with price. This was a pleasant change from the rubbish or non-talk that is going on in Boroondara with some agents seemingly incapable of rendering any sort of meaningful price estimate.

7 Bowley Bawlyn with Jellis Craig. Now this is an interesting one. We rated it more than 800 but some of my colleagues thought a mid-700s rating was more appropriate. I went back again and I can see their points but I followed the ratings book and still got more than 800. Anyway, to date, it went to auction and didn’t get a buyer bid at $2.4 million and I thought it was put back up for private sale around $2.6 million. I now see that it hasn’t sold, so they have put the price up to $2.8 million. That’s different, or did I miss something?

6 Carronshore St Balwyn didn’t sell and I think I know why but Peter Smith of Jellis Craig has proved me wrong many a time. Good home but it has no real street frontage and land size is deceptive with a fair bit of it in the driveway, which the market has not put much value on in the past. It will be interesting to see what numbers it does eventually add up to.

Bit of a Mont Albert Road Area focus this week.

Stock levels are up, so good hunting.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Buy Well

Mal

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Top 10 Sales Agents – including best younger sales agents;

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

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

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

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

Buy Well

Mal