Price: Give or Take?
Meditating or sleeping while waiting for guests to arrive at Grossi’s Friday Night?
Are your Solid Foundations the Rocks in your Head?
Another full-on week out and about – the Pep continues, especially on the homes we would consider potential A-Graders.
Our comments are about open numbers, not results – however, you can’t get widespread up-market results without first having good OFI numbers.
It’s seemingly about Supply – this is currently a supply-driven market – that’s unusual – normally Inner Melbourne is a demand-driven market – at the Top End it still partially is.
Out there today, we really noticed again the sustained increase in Australians/Non-Australians of Asian Heritage – is the money local or coming from OS – interest rates aren’t really an issue then are they? The Age is reporting student numbers are slowly returning.
Some more major knock-ons outside migration.
The rental market is tight and getting tighter as AIRBnB’s expand and the wealthy local land-bankers continue to buy for fun, for family and for money.
Port Fairy is a more obvious example if you have been going there for years. It’s a real pointer to what is happening below the surface, in say Prahran!
In Port Fairy greater demand by the wealthy is leading to fewer homes for rent, leading to fewer local staff affording to live there, leading to reduced trading, leading to a weaker economy? But what is happening in Port Fairy is also happening in Prahran (but workers can train it in, from cheaper rental Southbank apartments, which disguises the problem).
Anyway, back to Prahran, (could be Highett or Kew East or Coburg) – prices are going up on Prahran rentals and….. this will mean more apartments and….. this means even fewer homes on land….. AND it already means families in Toorak have to buy more “lower rung $2m homes” in Toorak for their children, as no rentals and fewer homes in Prahran.
It also means that nurses have fewer places to live (sorry if sounding blasé about this building catastrophe – we gave $50K to Launch Housing in June for local working homeless, not an answer, just a drop in the ocean – but we digress) ….. AND new surgeons (a lot of JAMES BUY SELL is for medical people) who can’t find the $2/3m single-fronters anymore, are now buying bigger $4m homes on a diminishing supply base, and this means PRICE goes up or stays strong for $2m, for $3m, for $4m and for $5m homes.
The $500 pw rental market is influencing the $5m market!
Yep, even in a down market!
These subtle changes combining with OS buying (FIRB) are a few of many things that continue to decimate the supply of Inner Melbourne family housing and for 3 decades, since Keating/Hawke economy internationalization and increased tourism and travel, Melbourne has never had enough family homes compared to migration demand anyway.
But wait there’s more……on top of this and for a while, the renovation market is now completely f….. and so those families with means, who have bought or are thinking about reno’s……..now want to buy ready-to-move-in family homes on land in Toorak or Brighton or Hawthorn and ditch the reno home (the reno market is genuinely weak).
Saving $1-2 million on overpriced, overcapitalizing reno’s gives more auction heat – like the power of wounded underbidders.
Ready to move-in homes are going up in a down market!
Micro v Macro markets – read last week’s Marketnews article – but we digress!
If your strategy is waiting….. and you are thinking (or not)…… that you will be able to buy a home for you and/or your children, in the future, at a better deal……. if you are taking your homebuying advice from economists and stock pickers….. well, you may be right……. but all things being equal…….…. we think the only solid foundations you will be on going forward, are the rocks in your head.
Get on with it!
'Round the Grounds Paparazzi with Call Gina
8 great homes to choose from below, some homes we are looking to buy if you can help us, an article on getting price right – buying or selling! Referrers you can help Melbourne Homeless and Children needing Surgeries (below). See you in 2 weeks for the 100 Auction Test and read our current reports in MARKETS. Spring may have come early!
Munro Auction (Sam Inman). Passed In above quote range. Sold After 2 Bidders. Above $3.33m. Crowd was 65
14 Christowel with Scottie – beautifully renovated home – 60 groups through already – huge – SOI $5.5m to $6m
Brilliant night out & into Saturday morning with clients Chris & Cindy: referrer Tyler & Sarah: agent Kaine & Jackie. Thank you
The “Guy” experience always world class
G with Fiona and John at Summerhill Rd Malvern East. 3rd house to hit the market @ this end of the street this year. We bought the first – great little family area.
22 Terry St, Deepdene
Auctioneer: Hamish Tostevin
On the Market: $ 3,650,000
Under the Hammer: $3,680,000
Bidderrers (Bidderman is gone): 2
18 Grosvenor St, Brighton
Auctioneer: Gowan Stubbings
Opening Bid: $4,300,000 Vendor Bid
Passed in: $4,300,000
Bidderrers (Bidderman is gone): 0
Price: are you a Giver or a Taker?
Quote ‘em low watch ‘em go
Quote ‘em high watch ‘em die
And our verse for this market
Quote ‘em well and watch for a tell!
Are you a giver or a taker?
Do you give an offer or take an offer?
Do you give a price or take a price?
Do you say what you want or take what you can get?
As a buyer do you pay the price and everybody is “happy” or do you make an offer unrelated to the quote and manage the angst?
As a seller do you quote ‘em low and watch ‘em go or quote ‘em high and watch ‘em die or what we believe quote ‘em well and watch for a tell?
In a strong market the margin for error on asking price is often large – with many buyers you have a large safety net, if you get it wrong (as a seller) – there is “next week and more buyers.”
In a weak market, where we are now, there is often only one buyer – so therefore the lazy ways of low quoting really can hurt the sellers.
Similarly for buyers, this market is no longer a case of the inevitable – that the asking price will be achieved or the quote exceeded.
As a buyer and a seller a good question is. Are you a giver or a taker on Price? – because in this market the answer can represent a lot of money (lost) – a lot more than you may think.
Why do agents like low quotes (besides the obvious of easier to sell)?
It’s the hero factor. Many agents would rather ask $8m and get $8.5m than ask $10m and get $9m on the same home. At $8m to $8.5m expectations, some agents can make the claim of exceeding expectations (they did because they were so successful in lowering them initially). At $10m to $9m they felt unsuccessful, yet they got more. Go Figure!
We all want to be heroes! But who is the real hero? The agent who climbs Everest at some risk of failure and gets $9million or the agent that drives up Kosciusko drinking champagne at $8.5m.
We are only interested in Everests buying or selling and that is where Multi-list allows the reach for Everest – good climbers get there on some summits and know when to turn back on others. But if your agent (and a lot of it is up to you) is only telling you the Kosciusko option then perhaps you need a new climbing partner. Perhaps Multi-list?
In the video we explore in Price with Loner (single bidder, lone ranger) – quoting a price and reeling in a solitary buyer versus Volcano who set low price expectations, hoping to build a groundswell of interest with hopefully a buyer exploding through the top as the winner. YouTube Audio Only
Market Price Predictions
Eco Joe below, is not primarily about bagging economists – Eco Joe is about highlighting that reported predictions seldom match reality with regards to A-grade family homes.!
Joe is an economist and our guest of honour in our Spring – Market-in-a-Minute Video.
Joe, or is it Dr Joe, works for a bank and he’s been getting a lot of media coverage about predictions lately.
This is the same Joe, that in 2020 said the market would drop by 25%.
It actually went up by 25%. Unlucky Joe, they call him!
Unluckier were those that listened to him – that’s a $2million error on a $4million home.
Joe has a long record of predictions – check out the video?
Joe thinks that inflation and interest rates are the reasons why the property market will perform poorly over the next few years.
Joe I’m confused!
Joe, inflation is a property owners’ friend in many ways. If the world is inflating give me good A-grade property any day!
Joe, I have seen interest rates well over 6%, many times in my 60 years, and the property market was still going up, on many of those occasions.
But Joe, markets do fall and in fact we are in a falling market now, especially in the $2m to $6m segment. Demand is less than supply and we’ve dropped 10% since Cup Day 2021.
Well done Joe,……whoops you didn’t predict that…..
Anyway Joe, will the Inner Melbourne falling market continue?
I acknowledge I’m not as scholastic as you – the only thing I understand is demand and supply.
The times I’ve seen markets seriously implode for a sustained period, was all about oversupply, such as apartments since 2000. Guess what Joe – the apartment markets tanked and are still tanking! We have never bought an investment apartment though!
However, for homes with land in Inner Melbourne: A-Graders? Will there be a long-term oversupply?
- How long will the borders stay shut to skilled migration, look at Europe (war) and USA (guns) and China (mmmm) and Africa and Brazil and look how we live. Then look at our sovereign debt?
- How many councils do you think will vote for more streamlined home building (ha) and Joe who is going to build the homes if they do and maaaate have you seen the cost of timber and materials – give me an A-grade existing home any day!
- Joe really, do you think renting is better than homeowning (good one Joe).
Joe the market has dropped 10% already and I love ya persistence buddy – if you keep betting on black, then eventually you’ll have to nail it Joe….and you may well be right……but I’m not so sure that’s a way I want my family to live or a gamble I want to take!
Clendon Learnings – is about clients we met in 2012 looking at a $4m Hawthorn home and who the media reported as having just completed a $50m plus buy sell transaction and interstate move.
Along our journey together things have doubled – all whilst the Toorak market has gone up and down and up and down. Thank you for an incredible ride and some wonderful learnings. more….
Timeless Advice Matters – One couple we met and transacted with prior to the GFC – the value was in the $1m’s and the other we sold at $2m’s and bought at $5m’s in a 2014 buy sell.
Last year in a once-a-century pandemic we sold both the bought homes and bought new ones for a combined $37m in Brighton. All in the medical field of sorts and great company at a memorable dinner! more…