oc | Saturday 18th January

The Double H Price Disease – History & Hope

Big crowds. Six auctions today with 100 plus. 19 Scott Grove, Glen Iris: Andrew Hayne (Marshall White), passed in $3,710,000, 3 bidders

At 6pm on Saturday, the James $M+ Clearance Rate was 55% across the 31 auctions we attended. The was 1.6 bidders per auction.

There are buyers out there waiting for the right home at the right price, but low stock levels, and vendors living in the past – or in hope – continue to hold back any overall positivity.  Sellers, that is no bull: there is a market if you want there to be.

Market Snapshot:

  • The ($3M+) is a lot weaker than the Bottom End ($1M+).
  • Boroondara (Camberwell, , Hawthorn and surrounds) is the strongest Inner market, we cover, particularly as you go lower in dollars. We’ve had the second week in a row with a 70+% clearance rate, although this is from small sample pools of between 20 and 30 auctions respectively, when 50+ auctions used to be the norm.
  • An increasing number of recycled stales are coming back on to the market – some at a lower price. However, changing the agent and lowering the price is not a guarantee for  selling a top end home if the market has already viewed and rejected it recently. The best prices are coming to those vendors that get the agent and asking price right, in the first place.

There are no guarantees in life, but for homes being resold within, say, a 5 year period here are a couple:

  • Guaranteed to struggle: Those properties bought for more than $2.5m within the last 5 years and now asking for more on resale.
  • Guaranteed to have a chance at a successful sale: a period home that was bought well 5 years ago, for between $1 million and $1.5 million, that is located near everything (a good possie), and that is on good land with a reasonable floorplan. The Price being asked and the Position are the key characteristics.

Some Stats:

  • Sold Befores – 6%
  • Ducks (0 bidders) – 29%
  • Lone Rangers (1 bidder) – 16%
  • Norms (2 & 3 bidders) – 35%
  • Volcanoes (4+ bidders) – 13%

The Hammer Rate (bought under the hammer) is now consistently a very low 20% or 1 in 5. Meaning right now, if you go to auction, you have a 1 in 2 chance to be the only bidder, but there is only a 1 in 5 chance you will own it just by sticking your hand up. Only 1 in 5. Which means you need pre and post auction negotiation strategies. However, look at the volcanoes – if the home is well priced and close to the median you will need an additional strategy to cover competitive bidding. Anecdotally, this weekend we bought two “norms” post auction (one after it was knocked down to somebody else) and missed out on one “volcano” yesterday.

Tip: It’s a good idea to stay in touch – this week we bought two homes that had earlier been sold to somebody else under the hammer and the sale not followed through with for various reasons. We bought them for less than the under the hammer figure, which shows that sometimes it’s worth sticking around even after the deal seems to have been done.

Bidderbuzz Auctions:

  • Glen Iris, 20 Hillcrest Rd – Daniel Wheeler (Marshall White), under hammer, $1,655,000, 5 bidders
    The slivers of sunlight brought minute relief from the cold as a crowd of 60 attended the auction of this family home built 15 years ago…(See More in Auction Reports)
  • Mont Albert, 12 Barloa Rd – Maurice Di Marzio (), under hammer, $1,237,000, 4 bidders
    Good crowd of around 70 here to witness this Maurice Di Marzio auction and after his usual happy and succinct start we are away with a $950,000 bid..(See More in Auction Reports)
  • Hawthorn, 67 Manningtree Rd – Alastair Craig (Jellis Craig), under hammer, $1,870,000, 4 bidders
    Interesting auction this one. In front of a crowd of around 70, a fired-up Alastair Craig was the auctioneer and Campbell Ward diligently took down the bids – and there were plenty of them…(See More in Auction Reports)

$3M+ Market:

Over Winter we have lamented the lack of auction action at the Top End, with only a trickle of deals happening since late May/early June. This weekend was of interest due to 9 auctions around $3 million scheduled in the Inner East and Bayside.

Sure, some were re-runs of previous campaigns, including Victoria Ave in Canterbury and Central Park Rd in the Gascoigne Estate, . And the market still had some vendors afflicted by the very painful DOUBLE H disease – history and hope. Nonetheless, this was the biggest top end auction day since early June and we were hoping (that word again) for some good news to encourage other vendors to bring their top end pearls to market later this Spring.

This is what the Top End market said this weekend:

  • Canterbury, 22 Victoria Ave – Alastair Craig (Jellis Craig), bought after auction, undisclosed $4,800,000+, 1 bidder
    The biggest auction of the day, with Alastair Craig at the helm…(See More in Auction Reports)
  • Hawthorn, 11a Elmie St – (Marshall White), under hammer, $3,300,000, 1 bidder
    It’s not every day you get an auction like this – one bidder was all it took to secure this magnificent Victorian house located in the sought after Urquhart estate…(See More in Auction Reports)
  • Toorak, 10 Myoora Rd – passed in, $4,300,000, no bidders
    Wow, wow, wow – this home certainly had plenty of impact, and a good sized crowd gathered to enjoy a little piece of the ‘celebrity’ lifestyle…(See More in Auction Reports)
  • Glen Iris, 19 Scott Grove – passed in, $3,710,000, 3 bidders
    A big crowd of 120 people watched as Andrew Hayne took centre stage…(See More in Auction Reports)
  • Kew, 30 Walpole St – passed in, $3,600,000, no bidders
    When auctioneer Richard James suggested that a good start to this auction would be near the quoted range of $3,500,000, …(See More in Auction Reports)
  • Malvern East, 66 Central Park Rd – passed in, $3,000,000, no bidders
    Biggest crowd on the day for me, with 140 attending. Growling Jack in charge…(See More in Auction Reports)
  • East Melbourne, 40 Jolimont Tce – passed in, $3,300,000, no bidders
    Gathered in the heart of Melbourne, the gathered group of 45 gazed at the MCG, which stood commandingly, only a stone’s throw away…(See More in Auction Reports)
  • Kew, 264 Cotham Rd – passed in, $2,700,000, no bidders
    This Georgian house built in the 1920s attracted a crowd of 50 and it would be interesting to see if there was going to be any interest in the property, located only a stone’s throw away from many of Kew’s amenities…(See More in Auction Reports)
  • Toorak, 1/9 Flintoft Ave – , bought before auction, over $3 million.

Overall we think that’s a below par weekend at the Top End and an accurate representation of what is happening across the Top End market now. The $3m Clearance Rate was around 30% and the $3m+ Bidderman was around 1. Those are not numbers that will give the Top End a lift any time soon.

Digging a little deeper, much of this malaise can be traced back to the Double H Price Disease (History and Hope).

  • 19 Scott Grove, Glen Iris – this is a good home, our James Home Rating was 797/1000 and it had 3 bidders this weekend (as it should). The only reason it hasn’t sold is price, not interest, and that price relates back to a higher one paid in 2010 when the market was a lot stronger.
  • 22 Victoria Avenue, Canterbury – a quirky home, and our James Home Rating was 664/1000. It sold this weekend with one bidder for just under $5m. A good result. A few months ago there was an unsuccessful campaign with a ‘hope’ price of $6m.
  • 66 Central Park Rd, Malvern East – a good home with a quirky kitchen, and in need of garaging – our James Home Rating was 794/1000. Earlier this year they wanted north of $4m – on Saturday there were no bids over the vendor bid of $3m.

Three Cheers for the Agent, the Buyer and the Seller: One bidder put his hand up and offered good money, so they sold it to him under the hammer on one bid. Well done to all three parties. Hawthorn 11a Elmie, Marcus Chiminello, $3,300,000, 1 bidder. No shame here in doing what all parties want. Well done Marcus!

$3M+ Private Sales

  • 61-63 Alfred St, Kew, Jin Shang from Jellis Craig, who has a strong relationship, with many Chinese buyers recently got this away– it was passed-in at a May auction. The buy price was $5,400,000, which was a good effort considering nothing had been done to it since it last sold at a strong 6 bidder auction in May 2009 for $4,850,000. Around a 10% increase.
  • 29 Jacka St, Balwyn North, William Chen from Jellis Craig sold this ultra-modern home on big land for just under $3,000,000.
  • Down Bayside way they are all very secretive, but both 18 Norwood St, (Kate Strickland) and 2 Were St, Brighton (Ian Jackson) have sold stickers on them.

High End+ :

  • 1/9 Flintoft Avenue, Toorak (Jeremy Fox) for over $3m.
  • 3/404 at Royal Domain (Nicole Gleeson) $3,250,000 and
  • $2,300,000 at Jolimont Road, East Melbourne, with Anton Wongtrakun of Dingle Partners.
  • One in Chastelton Ave, Toorak sold below its pass-in price of $2,700,000 (Jeremy Fox) and
  • Another in Lucient St Kilda Road (Tom Staughton) sold for $2,415,000

You could say that a ray of light has been let into the darkish tunnel of the 2012 high end apartment market.

$1M to $2M segment

Few would question we are in the weakest market since the GFC in most segments; however the segment that seems to be holding up the best is the $1 – $2 million family home market.

This is completely at odds with what happened in the GFC, when it was the weakest segment.

In 2008, buyers in this segment seemed to be either leveraged to the hilt in the stock market and getting calls, or they were simply too nervous to act as they had never seen a down market before.

In 2012, things are different – tricky times are the norm, not the exception and nobody really leverages big time in the stock market any more (do they?). Consequently this market has some legs right now and not all prices are falling when we examine resales within the last 5 years.

As well, the banks don’t seem to have bitten hard at this lower $M level. The banks aren’t ‘stress-testing’ the early $M market as much as they appear to be doing at the higher end (i.e. when the LVRs are getting out there).

Why is that? Well it’s simply about the risk. There is still market depth in the around $1 million family home market, with 2, 3 and 4 bidders not uncommon. As well, prices or price expectations are not falling as much as they are where the air is thinnest.

So while the $3m+ market has the handbrake firmly on, generally speaking at the $1m+ level buyers and sellers seem to be getting on with their lives.

Agent Question: How do prices compare across the board to your area this time last year?

Jenny Dwyer, Hocking Stuart (Sandringham): “Prices have adjusted in the vicinity of 5 to 10% across the spectrum of residential real estate in the Bayside. The correction across the board is particularly noticeable as we head north of $1.5M – there are still many buyers at this level and beyond but the property needs to be ‘just right’ and priced to sell in line with current market sentiments.”

Editor’s Note: That’s agent code for a slight dip in price.

Richard Winneke, Jellis Craig (Hawthorn): “Compared to this time last year, Hawthorn and Kew are approximately 5% off. Camberwell, Canterbury, Balwyn and Surrey Hills are around 10-15% off what they were last year.”

Damian O’Sullivan, Marshall White (Albert Park): “Comparing prices one year to the next is always difficult but we are certainly experiencing a shift in mindset from many buyers. In particular, buyers are prepared to bid and compete at auctions, which is in stark contrast to 2011 where auctions were somewhat lacklustre. That said, the one constant is that vendors with fair expectations are well rewarded with prices often exceeding their reserve price whilst those who are not aligned with the market often fall short of what they believe to be a fair price.”

Editors Note: That’s agent code for a slight dip in price

Hamish Tostevin, Marshall White (Hawthorn): “Well-located homes are still holding up extremely well and are on par with last year’s pricing. If not, they have had an increase of approximately 5% on last year’s results. However, there are still some properties that are dependent on the location, condition and presentation that have no doubt seen a slight decrease on values, some up to 10%”

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