oc | Monday 24th February

We all waited with bated breath … AND

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 , our 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 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 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 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, : Richard Earle; 0 bidders: Bought After $2,730,000

Biggest Pass In: 8 Blackfriars Close, Toorak: Justin Long of : 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 : 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 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

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