oc | Monday 24th February

2010 is going to be your year of the good decision

Kay and Burton's Gerald Delany in full swing with 1 Yarradale Road Toorak bought for $2.81m with 6 bidders and 14 Scotsburn Toorak bought for $7m with 4 bidders

's Gerald Delany in full swing with 1 Yarradale Road bought for $2.81m with 6 bidders and 14 Scotsburn bought for $7m with 4 bidders

It’s 6pm and the James million-dollar-plus clearance rate is 83% on the 30 auctions we attended. Bidderman was 3.0 per auction with only 4 from 30 auctions attracting no Bidderman and 7 from 30 auctions attracting Bidderman 6 or more.

whatdoes2010holdforbuyersThe highlight of today’s auctions was a $7 million sale at 14 Scotsburn Grove Toorak selling under the hammer with Bidderman 4. Kay and Burton’s Gerald Delany presiding. Early last year this sort of upper strength was not there however by late 2009 it was and those buyers hoping for a change of mood in 2010 would not have been filled with enthusiasm on this one result alone – the rest of the day’s results even less so. The hot market of last year is continuing for now.

Welcome to our first Market News of 2010 and our new James Market News website. We hope you like it and a big thank you to our IT team, led by Michael Sier, particularly for the hard work they’ve done over the past three months. Tell us what you think – both the good stuff and any tweaking you think we may need to do (we know we need to do a bit and it will get better each week over the next month).

About a month ago in mid January, I sat down to ponder just how inaccurate I was going to be in 2010 with my market predictions. I needed to do this, not because I ever get it right – I never do – but because everybody asks me and I’m meant to look knowledgeable and full of wisdom. As far as market predictions go, my track record – and, for that matter, my esteemed selling agent colleagues’ track record – is full of something but it ain’t wisdom. Like last year when I knew what was going to happen and it didn’t; like the year before, in January 2008, when I knew what was going to happen and it didn’t, so this year I know what is going to happen and it probably won’t.

What we are good at is telling you what is really happening right now. We actually go to auctions, OFI’s and witness first hand many results and negotiations (about 30 each per week and for the company over 100 each week). We talk to agents, buyers and sellers. So what’s happening right now? The market is hot and almost all within the industry think it will continue to rise in the foreseeable future (meaning till Easter at least). 2010 has started very strongly …….. (for sellers)

In 2010 what we also know for sure, is that there will be buyers out there who make good decisions and there will be buyers out there who make some shocking decisions. There will be opportunities (missed and taken) and there will be mistakes. 2010, like any year, is shaping up as an important one if you are about to buy a million-dollar-plus home – and I wish you well. Go with clarity on the emotional and financial outcomes you are trying to achieve now and for the next, say, 10 years; assess well with regards to suitability and value; and, finally, negotiate smartly – not to humiliate or with intrepidation, but with smarts. CAN – Clarity, Assess, Negotiate – our first 2010 plug at good decisions – and following a proven process.

So what’s happening in 2010? 2009 started full of apprehension, both in the wider market, and in the million-dollar-plus market that is our focus. However, kicked off by a substantial influx of Chinese money with the Foreign Investment Review Board rules changes in April 2009, the market increased strongly in both number of homes bought and prices paid, until December 2009, where the market closed the year with all guns blazing. This market was, in all cases, substantially up on  its 2008 low point and, in many cases, past even the previous peak of December 2007. 2010 shows no signs of any immediate abatement of this enthusiasm for homebuying at this million-dollar-plus level.

There were some variances at year end, with the $1m to $4m Boroondara market of , and being the strongest, and the Bayside market (, Hampton and ) sans the Chinese money only just really starting to build major price momentum. This ($1m to $4m) price market was, for us, the strongest market, with 68 homes being bought by our clients during year 2009 in this price range.

Elsewhere late last year we were seeing the re-emergence of what we call the fringe $1 million-plus markets. These are the suburbs that, when the overall market  deteriorates, historically have even greater drops than in Melbourne’s four jewels or “key indicator” suburbs of Toorak, Brighton, Hawthorn and Albert Park. Likewise, in a rising market, after the initial burst from these 4 jewel suburbs, the fringe suburbs begin to fly (you know they are the hot spots in all the short-term median price indicators the papers publish for a headline). Some of these fringe suburbs even had fringes on their fringes and those fringes on the fringes were forging back into the $1 million-plus market (late 2009). We refer to the Jewel and main Bayside influence of Brighton with its traditional fringes of suburbs such as Bentleigh. Well, after Melbourne Cup 2009, Bentleigh, which was rising solidly from the ashes of the 2008 GFC price wreck, was seeing its own fringes of East Bentleigh, Hughesdale and Oakleigh etc smashing through that million-dollar mark. It’s still as clear as yesterday to me when we witnessed two late November results around the Jasper Road/ Centre Road sporting complexes that saw blocks of with bulldozer homes on them sail past $1 million with multiple bidders. The fringe market  was hot and it looks like it will be again this year.

Inner Bayside, or the Port Phillip council area (Port Melbourne to St Kilda), in late 2009 was the scene for a re-birth of the upper-end market that had all but disappeared in the latter parts of 2008 and almost all of 2009. Remember our mid-2009 best wishes and thoughts and prayers for our agent friends in that area who were no longer updating their Lamborghinis and Mercs as nobody seemed to be selling anything of note – until – until post-Geelong’s Grand Final in September 2009, when that market roared back with such a burst of intensity that even the untalented selling agents were dreaming of holidays in the Maldives and ringing Wesley to book their kids in.

What happened today in Bayside? Each week Kristen Hatt from our Brighton office – you may see her at auctions, bidding for clients in her infamous red dress, reports on what’s happening in our Bayside Wraps. Read her articles to see what happened today.

Stonnington (Toorak, Malvern, Malvern East, ) began to rock mid-year after the lead from Canterbury and Kew and the overflow of Chinese and other unsuccessful  buyers from Boroondara suburbs. But the overall market was not as hot as Boroondara until near the very end of the year, being hamstrung by low stock levels, which, as Adam Smith pontificated in the 1700s, pushes prices up because of lack of supply. But, until the last quarter of calendar 2009, this lack of quality supply only meant a quiet market, as the $1 million-plus market has discerning buyers to some degree and buyers and sellers chose to wait until the waves of quality stock returned. Remember how unpredictable the Gasgoine Estate was for a while (it’s all about quality)? Those waves of quality stock did return, quite late, not only in the $1m to $4m market (look at ’s Median – WOW!)  but also in the previously dormant (some had pronounced it clinically dead) $5 million-plus market.

The five pillars at agency Kay and Burton (Jason, Gerald, Mike, Peter and Ross) would have refurbished their professional and personal lives on those two well publicised $18 million-plus sales in and around Melbourne’s  river precinct but there were many more $5 million-plus sales that didn’t get a mention because they weren’t deemed significant. You know the market’s back when a $7 million public sale doesn’t get a line of press. Speaking with “Foxy” from (please, Jeremy initiated this name, not us), he confirmed the market in this segment had returned very strongly right at the death in calendar 2009 and is continuing in 2010. It was/is not all foreign money. In late 2009 and early 2010, we are seeing  the return of the ex-pat – not physically, just in terms of buying homes. We, too, in our business have noticed a substantial pick-up and change in attitude from ex-pats in England and the US and Asia. Last year, they could just not comprehend that the European and  US markets were in the toilet and our property market was, in their words, defying gravity (the underlying inference being that it couldn’t do it for much longer).

It wasn’t defying gravity; it was actually following the natural law of supply and demand.  As long as Melbourne has these huge increases in population from both natural births and immigration, we will continue to have solid property capital growth; of course, as long as we also continue as a smart and prosperous tribe. Why not read each week in our Stonnington Wrap with Ralph Doubell (yes, the Ralph Doubell) and find out what is happening in this market – his first edition is today.

Hawthorn, Canterbury, Kew and surrounds was, as we know, strong for most of 2009 (particularly land in Canterbury and Kew). By the way, 6 Alfred St Kew, off market (unadvertised) sold through Arthur Ruess over the Christmas break for north of $4 million. The home was OK at best – so we are talking $3000 per sq metre. I had to price it in June 2009 and I thought mid-$3 million. In fact, when I first gave it serious thought in very early 2009, I was still in 2008 mode and I wasn’t convinced $3 million was a certainty. Not bad when your little house block goes up a million dollars in one year. Well done to Arthur Ruess, a bit of an old codger like me. He has no mobile and doesn’t put addresses on his homes but consistently his company has achieved good results – just goes to show there is more than one way to skin a cat.

Architect and Licensed Buyer Agent Adam Woledge serves up some interesting architectural and money observations each week in his Boroondara Wrap. I don’t think there is a person in Melbourne who visits and reports on as many houses for his clients – last week he went to more than 30.

Lets go north you say and why not? Selling agents from – David, Craig, Liz and Anthony – have recalibrated (to use the new “in” expression) the Ivanhoe, Eaglemont, Fairfield and Northcote $1 million-plus market, so much so that Miles, who once had it all to themselves, are rethinking their strategies and fighting back. But I digress – the northern Melbourne market is alive here at this level and it’s almost no longer fringe. In fairness, Eaglemont has never been fringe Kew or Hawthorn because it has its own personality and its own followers but it now also has “new” money – new money from Rosanna and Donvale that can’t afford Hawthorn, new money from Kew that can’t afford Kew and new money from Carlton from expanding families that would have gone to Malvern for bigger land but can’t afford it. Many $M+ buyers are now tinkering and buying in Ivanhoe and surrounds to put their roots down. Buyer Advocate David McMillan today starts reporting on this area in his northern wrap – he’s around 30, has a valuer’s qualification, likes golf and girls, and is a great acquisition as our new Northern Million-Dollar-Plus James Buyer Advocate. It shows our belief that this is one of the new Melbourne million-dollar-plus corridors and our commitment that we can no longer service this from our Hawthorn office without a specialist. Read his reports and ratings each week and see if he makes any sense in his Northern Wrap.

We are off in the 2010 home stakes and, as much as I love my wife and kids after a five-week break, it’s good to be back in harness. Back fighting the good fight. Aaaah; I love the smell of an auction on Saturday morning.

Good Luck and Buy Well in 2010.

Mal

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