oc | Monday 24th February

2009 $Million Market 1st Big Test – What is Happening? Big Numbers at Auctions

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

at Vista Avenue Kew, in full flight for his vendor and

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 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.

raw_main pic finchBig 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 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 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 is a sign of a healthy market.

Just down the road in Maitland St 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 .

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 , 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 (). So there is still 6 that remain from last weekend. 2 of those that remain unsold in Hillcrest (Glen Iris) and Cowper () 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 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.

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