Well, here we are in early August – and anything that has been written about the market in the last few months has been to fill some space. Because nothing has been happening. Nothing good and nothing bad – just plain ‘ol nothing.

There’s a saying in our business that the really good agents should take the J months off: January, June and July. That certainly happened this year: most good agents have spent a fair proportion of the last eight weeks re-connecting with family, friends or their inner self. Yes, we do have all of the above, (well most of us do).

Sure, there’s been plenty of talk about tough times from the punters and press; plenty of conjecture about where prices are going from anyone who knows anything,  and from plenty who know absolutely nothing about high end Melbourne real estate. Like that other great weekend game there have been some personnel changes – and the odd betting, sorry ‘quoting’, scandal and a few boys who didn’t pass the dope test.

All in all we seemed primed for an interesting four months between Footy Finals and Santa time.

This next four months is traditionally two markets:  the early Spring market – which runs from just before Elimination Final day to Grand Final – and the late spring market which starts the week after Grand Final and runs at a frenetic pace until the Melbourne Cup break and then for another month before winding down into Christmas.

We’re likely to see some ‘Super Saturdays’ at the end of August, on preliminary final day and the weekend before the Cup. And then, depending on the early Spring market, perhaps also the last week in November and the first fortnight of December.

The almost guaranteed Super Saturday will be the last week before the Melbourne Cup – although with the Grand Final running a week later this year sellers will need to start their four week campaign on that holiest of days, the Grand Final, to get in before the horses leap from the stalls at Flemington.

So what should home hunters be looking for? A good start is to look at the thickness of their Weekly Review over the next few weeks. Seriously. If the Review is like a phone book prior to Grand Final, then we’ll have some choice and prices may not run away on the good quality homes. But if it is as thin as a dry cleaning brochure, buyers are going to have to compete hard on the limited quality stock presented.

Which is what has been happening since May. There has been so little on offer that is quality. Which means any quality, well-priced home has attracted considerably more interest than you’d expect reading the gloom and doom headlines. That’s because this market is not a weak market caused by lack of demand – any weakness or negativity is due to a severe quality contraction of supply of well priced quality homes.

Our company went to 28 auctions the weekend before last and a third had 3 bidders or more – with three $1 million plus auctions attracting 5, 7 and 9 bidders That included a 5 bidder auction at 3 Irymple Ave, Glen Iris (Iain Carmichael and $3,000,000 Bought); a 7 bidder at 42 Guildford Rd, Surrey Hills (Antony Woodley and $1,381,000 Bought) and a 9 bidder, at 28 Montclair Ave, Brighton (Peter Kennett and $1,820,000 Bought).

So it’s all about the sellers. The late spring market post Grand Final will be in part determined by the headlines in marketnews.com.au and the newspapers over the next two months. If August and September is all negative headlines and low clearance rates and talk of falling prices then anyone who doesn’t have to sell will again be reluctant to market their homes – and that will again  impact on buyers.

So what are buyers hoping for in this new home hunting season? Choice. Firstly they want some thick property mags in August or September; they want to see some positive headlines in the papers in the lead up to Grand Final; and then they want more thick magazines between Grand Final and Melbourne Cup. If that happens the world should be a wonderful place for Melbourne homebuyers. If not well ….. let’s wait and see.

Published each week in The Weekly Review – Melbourne’s million-plus property magazine.

8/27 Hill Street, Hawthorn

Let’s take a look at a property which sold recently with Danielle Henry of Hocking Stuart:  8/27 Hill Street, Hawthorn. It was a beautifully renovated first floor unit in a nice quiet pocket of Hawthorn.

On  the surface it had all the right investment grade attributes: it was a secure first floor unit, with a workable floor plan, onsite parking, outdoor space (albeit quite small) an abundance of natural light and very appealing neighbourhood views to top it off.

So why didn’t we buy it….?

It was on a Company Title.

What is a Company Title? Simply, it’s where you purchase shares in a company that provides you with the exclusive rights to a defined area. This is very common in Melbourne – especially in older style unit blocks. Company Title has been has been replaced by strata title, which affords the owner a simpler and clearer form of ownership.

Two considerations when looking at purchasing company title from an investment perspective are Growth and Security.

Growth

Banks see a higher degree of risk when lending against company title as new share ownership needs to be approved by a board of directors. This may restrict your market on re-sale and can drag out settlement.  Additionally tenants require approval and, while in most cases this is merely a formality, there is greater opportunity for issues and complications.

As a result banks (in most cases) require a lower loan to value ratio (LVR). Essentially what this means is that people looking to purchase company title need a greater deposit. This can be seen as a positive for cashed up investors as they can generally purchase the property slightly cheaper than an equivalent strata title unit. But if one of your key goals is growth, your market will be limited on re-sale and there are more suitable investment properties in the market place.

Security

One of the key elements to a good investment is its ability to hold its value during tough times.  As most downturns in the property market coincide with a tightening in lending criteria, the ability for this form of investment to hold its value becomes more and more difficult. Selling this type of property in a downturn may be problematic – as such it’s very difficult to recommend this form of ownership as a viable investment vehicle.

In summary: there is a greater degree of risk when investing in Company Title property and if you are thinking of purchasing such a property, it is wise to conduct additional due diligence prior to purchase and to familiarise yourself with the various regulations and limitations.

Invest Well

Cheer Up - 25 Cosham Street, Brighton

It’s 5.00 pm Saturday and the auction clearance rates are very, very average for Million Dollar Melbourne.

But let’s leave the analysts and doomsayers to themselves; let’s remember we own or are buying quality property and that has not dropped like a Nikkei or a Dow or an All Ords and unless people stop coming to live in Melbourne then it won’t. Please no more calls about should I sell, should I panic, should I move my family to a lesser home. Take it easy – yes watch your debt, yes we are in for some tough times, but hold your bottle. If you own or are about to buy quality property (not a cheap price)then things recover. If you have sold out then you will have nothing to recover with.

So – Something to cheer us all up! Go and have a look at 25 Cosham St Brighton. Sure it’s going to probably cost you over $5m if you believe the agent’s quote but it simply is a stunning home. It will make you feel better by just being there.

It will give you ideas even if you don’t have that much.

Our rating will be over 900 out of 1000 – one of the highest ratings we can give (check it out at using our search function – will be up on Monday).

Why so good? Well Cosham is a great street and it’s on a large 11,000 sq ft north facing rear block. So good start.

But it’s the home that will really do it for you. Built by McKimm’s – builders/developers who really know their business. It is a home of beautiful proportions; of incredible light and equally important it’s a home of thought.

The floorplan and flow – from inside to out; from down to upstairs from bedroom to bathroom and from eating to living really works and without exception the buyers that will live here will in fact be happier, healthier and more balanced a year after moving in.

I haven’t mentioned the pool, the yard, the air flow from the bi-fold doors when open. I haven’t mentioned the quality of the timbers, the exquisite yet not overpowering wall paper and the garage the size of men’s dreams – because if I do you will think I have the rose coloured glasses on. You’ll think I’m over the top.

No, this is not a paid ad and no I really don’t have any ulterior motive for saying these things other than the world would be a happier place if everybody lived in a home of this thought and space and quality.

So even if you can’t afford it; go dreaming and turn up to a 25 Cosham St Brighton open for inspection and ponder what might be.

Yes the world can be a positive place.

We purchased four homes this last week or so – Hampton, Glen Iris, Blackburn and Richmond. Some part of the world is still alive and moving upwards.

Mal

SUNDAY FOOTNOTE: A number of million dollar homes have sold after or overnight lifting our reported clearance rate to over 50%. The REIV clearance rate which covers a larger number of auctions but weighted towards under $1m auctions is still over 60%. Properties are still selling. We will not really know the effect of recent financial turbulence for some time.

Don’t want to sound too much of a lecturer but my personal phone has been running hot with panicky home buyers and sellers. We survived 1987, we survived 9/11, we are still surviving greenhouse gases.

Share market players and analysts are a breed unto themselves; they see their profits and good times as theirs only and their bad times as everybody else’s worry. They involve as many people as they can to share their pain. On the surface it seems wrong to bail them out in America; it seems wrong if we go overboard here – but I am not an expert and we have to accept the actions of those we have elected. Improved regulation of the markets, not hand outs seems the long term answer. People do need to take responsibility and accept the consequences for their own decisions and investment risks. I’m not sure this is a good time to ask some advisors for a detailed analysis of why shares is always so much better than property or why you must always have an investment portfolio weighted towards shares and not property however ……

Having indulged myself and I apologise for that; it cannot be said that property is in for a bump free ride – the big ones over $1m have in many cases already dropped considerably this year (5%-25%) and banks may drop their lending ratios making money tighter (thus resulting in further drops); however the current situation is not time to abandon all logic and/or your homes because you are carrying some debt or because the share market is in free fall.

If you have a solid income, reasonable debt levels (and rates look like dropping not increasing), are prepared to stay a course then now could be a good time to invest or trade up, the gap between rich and poor is a lot lower than last year.

Properties may drop even further but they will improve in the longer term as more people move from shares to property; more people move to Melbourne and because investing in property is not like investing in shares.

Property is a simple investment – prices go up long term for homes that are in demand and have a restricted supply as people will always need to live somewhere. Good properties generally don’t go into freefall because there is always going to be an underpinning from other families wanting to live there. This is why well positioned residential homes are such a solid and safe investment.

1200 people per week are coming to live here (Census), we have a well regulated financial system, we have already seen a significant correction in real estate prices and Melbourne is the best place in the world.

An extraordinary week. Next week our normal market news returns and no lectures, but please stop ringing me in a panicked state – it makes no sense.

Stay cool, monitor your situation and make careful, logical, long term decisions even if you have a bit of short term pain.