oc | Thursday 23rd January

The Banks are starting to pull the market strings!

Everyone is looking at everybody else. This week the Top End started to feel a pinch. , 38 Cromwell Road, Jeremy Fox, passed-in, $5,000,000, no bidders, crowd 120

At 6pm on Saturday, the James $M+ Clearance Rate was 50% across the 32 auctions we attended. The Weekly Review Bidderman was 1.5 bidders per auction.  Half the auctions today were lone rangers (one bidder) or ducks (no bidders). On a very positive note, however, which again reaffirms our views on quality stock, there were 4 volcanoes (4+ bidders) from the auctions we covered.

Another significant point is that the Inner East appears to be more lively than by the Bay.

Biggest Sales:

  • , 31 Coppin Grove, James Tostevin (), under hammer, $3,230,000, 3 bidders
    James Tostevin was at the helm of this Hawthorn auction…(See More in Auction Reports)
  • East, 1 Clive St, Paul Sutherland (Sutherland Farrelly with Hodges), under hammer, $2,665,000, 3 bidders
    The auction of this grand home, complete with 3 storey tower, attracted a huge crowd of more than 150 people who filled the large dining and living areas at the rear of the house, and spilled into the kitchen and down the hall way…(See More in Auction Reports)
  • , 24 Alexandra Ave, Mark Dayman (Marshall White), after auction, above $2,500,000, 2 bidders
    Auctioneer Mark Dayman told the gathering that premiums were paid for properties in this neck of the woods, and proceeded to warm up the crowd with an entertaining preamble…(See More in Auction Reports)

Bidderbuzz Auctions:

  • Brighton East, 28 Ferguson St, Halli Moore (Buxton), under hammer, $1,280,000, 4 bidders
    With a break in the wet weather, Halli Moore decided to brave the winter chill and hold the auction outside..(See More in Auction Reports)
  • Hawthorn, 27 Henrietta St, (Marshall White), under hammer, $1,410,000, 4 bidders
    The street was full of cars, drivers were desperately searching for a spot to park and the crowd was raring to go…(See More in Auction Reports)
  • Middle Park, 73 Mills St, Damian O’Sullivan (Marshall White), under hammer, $1,502,000, 4 bidders
    Auctioneer Damien O’Sullivan must have had an inkling that this clever renovation was going to generate interest as the Marshall White army were there in large numbers – well positioned throughout the crowd…(See More in Auction Reports)

Biggest Pass Ins:

  • South Yarra, 38 Cromwell Rd, passed in, $5,000,000, no bidders
    A massive crowd turned out in the chilly, wet Melbourne weather to see what would happen at the auction of this South Yarra …(See More in Auction Reports)
  • Toorak, 1097 Rd, passed in, $2,800,000, no bidders
    A typically chirpy Rob Vickers-Willis did his utmost to brighten the mood on this gloomy day…(See More in Auction Reports)
  • , 16 Banool Ave, passed in, $2,550,000, no bidders
    Auctioneer Alastair Craig was looking nice and sharp in his blue pinstripe suit which complemented this beautifully presented property well…(See More in Auction Reports)

Dear Mum, I'm here behind Mr Tostevin recording his auction. And it's pouring. All my love, Matt. James Tostevin (Marshall White) in action at 32 Christowel St, Camberwell, under hammer, $1,910,000, 4 bidders

Market Summary:

We are still on small samples of auction numbers with less than 60 $1m plus auctions in Bayside and Inner East scheduled this week, and less than 60 for next week also.

BUT. Having said that, some themes are starting to emerge

  1. The Inner East is a lot stronger than Bayside
  2. Prices are looking like they will continue to fall for the moment. That stability we felt at the start of the year seems to be faltering. This is evidenced by resales of homes that have been bought and sold in the last 5 years.
  3. Banks are more conservative and more negative than they were 6 months ago

There is a negative word that keeps coming up in dispatches right now and that word is ‘banks’.

Are the banks leading this market or is it the generally falling market that is forcing the banks to act?

Possibly a bit of both, but at the moment, as you get to the price points where the air is thin ($3m+), you will find that behind every potential deal that involves a significant mortgage is a more conservative and inflexible banker than six months ago.

Banks are tightening their grip and you can feel it in the marketplace.

Their letters of offer are not as forthcoming and there are clear use-by dates with no guarantees of renewing older bank offers.

This nervousness is filtering through to valuers, who are responding with lower valuations on bricks and mortar securities. And, in something of a vicious circle, their new lower valuations are ultimately re-feeding the bankers nervousness. The bankers’ concerns are then passed on to their clients – you the buyers; not always by loan refusals, more by lowering your LVRs (Loan to Value ratios). This in turn is being reflected in more conservative bidding at auctions and private sales.

This in turn means there is less money overall in the market – and so you can feel the tightening collars as the money tap is slowly being turned off.

With poor stock levels, falling home prices or price expectations (particularly by the Bay) and continuing buyer and seller nervousness, we appear to have a combination that does not bode well for an exciting Spring. Our only rider is it that it is still early days.

Buyers’ Tip: If you are borrowing, before you sign the contract of sale, you should re-check that your bank manager loves you as much as they did six months ago.

Its not our normal style to write the above piece – but that is what we have seen this week on 3 separate occasions. Banks are the real news of the week as we see it.

However, life still goes on even in this market. We’ve bought four homes on behalf of clients in the last 9 days, and we believe our clients bought them utilising facts and informed opinion.

And there were some very solid sales, as seen above, and our $3m report due out on Monday has some more details on two quieter ones.

Agent Question: How have you found the market since the school holidays?

James Tostevin, Marshall White (Hawthorn): “The current real estate market in Boroondara and Whitehorse is performing better than the recent media coverage would indicate. Certainly some properties are proving to be challenging if the vendor’s price expectations are inflated. The number of properties listed for auction has definitely increased noticeably since the school holidays, so the remaining August auctions and September listings will be an excellent test of the current market”.

Jeremy Desmier, Fletchers (Balwyn North): “New listings have been strong in July and August and, whilst less was advertised during the school holiday break, new listing enquiry remained active and many August/September (pre AFL Grand Final) auction campaigns were being planned and prepared during this time. Thus far, buyer demand and confidence appears to be matching the increased stock levels, which is a pleasing trend that we hope to see continue through the spring market. September is looking like quite a busy month ahead, and a sure measure of this, with many September campaigns just starting, is the weight of The Weekly Review, which is over 180 pages this week, significantly larger than a few weeks ago.”

David Lack, Biggin & Scott (Port Melbourne): “Stock levels over the past month have been way down when compared to the corresponding periods in 2010 & 2011. The market is holding well for the few A grade listings but lesser quality properties in average locations are very price sensitive”

Buyer Masterclass: The importance of information – is it a fact, is it an opinion or is it fluff? Specifically we look at the Balwyn REIV June median “facts”.


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