oc | Thursday 23rd January

Back in the Red Zone!

Loud and clear: Nick Renna (Hocking Stuart), sells 26 Thompson Street, Ormond, under the hammer, $1,618,000, 6 bidders and big crowd of around 140 people

At 6.00pm on Saturday the James Clearance Rate for Melbourne’s $M+ property was 79% on the 38 auctions we covered. The , our bidders per auction measurement, was at 2.2.

That’s a big rebound from last week. But the stock was very different and we saw a lot less properties above $3 million. It is also likely that a few of underbidders from previous weekends had one of those “It’s nearly Christmas and my wife is not happy” panic attacks. (Read our report of being caught up in this exact phenomenon below.)

Next weekend is another Super, Super Saturday and our last edition for the year (where did 2013 go!).

  • Ducks (no bidder auctions) – 20%
  • Lone Rangers (1 bidder auctions) – 15%
  • Norms (2-3 bidder auctions) – 43%
  • Volcanoes (4+ bidder auctions) –22%

A win to the Norms but the Volcanoes are still performing well.

Biggest Auctions:

  • Toorak, 5 Kenley Court, (Kay & Burton), bought before auction, undisclosed above $5,000,000
  • Kew, 17 Uvadale Grove, Alastair Craig (Jellis Craig), under hammer, $4,000,000, 4 bidders
    By the 1pm start time, auctioneer Alastair Craig was on a roll, with two exciting Kew auctions already notched up…(See More in Auction Reports)
  • Camberwell, 62 Glyndon Road, John Bongiorno (), under hammer, $3,730,000, 2 bidders
    If I might, I’d like take some artistic license here and coin a term ‘Enduro-auction’. I think that this best describes how auctioneer John Bongiorno felt…(See More in Auction Reports)
  • , 5 Lorac Avenue, Leigh Hallamore (Buxton), after auction, $3,150,000, 3 bidders
    Mid-afternoon a large crowd of some 60 people gathers to see the auction of this prestigious five-bedroom architect designed home, located a stone’s throw…(See More in Auction Reports)


  • Ormond, 26 Thompson Street, Nick Renna (Hocking Stuart), under hammer, $1,616,000, 6 bidders
    Best auction of the year! A crowd of 140 people gathered around 26 Thompson Street to witness the most frantic, ballistic auction in the history of the world…(See More in Auction Reports)
  • Kew, 5 Hansen Street, Alastair Craig (Jellis Craig), under hammer, $2,826,000, 5 bidders
    It was feeling pretty hot in Kew this morning and it was nothing to do with the weather…(See More in Auction Reports)
  • Camberwell, 55 Fairmont Avenue, Paul Richards (Bekdon Richards), under hammer, $1,575,000, 5 bidders
    A sunny lunchtime sees auctioneer Paul Richards in front of a large crowd of 90, inviting us to appreciate this renovated Californian bungalow, with its three bedrooms plus study…(See More in Auction Reports)

Biggest Pass Ins:

  • Balwyn, 15 Chatfield Avenue, passed in, $2,400,000, 1 bidder
    The rain stayed away for this auction and with a nice burst of sunshine the stage was clearly set for auctioneer…(See More in Auction Reports)
  • Malvern, 50 Dixon Street, passed in, $2,080,000, 2 bidders
    Our auctioneer started the auction by kindly introducing his team to the crowd of 50 in the picturesque “tree lined street” today…(See More in Auction Reports)
  • St Kilda, 8 Robertson Avenue, passed in, $1,700,000, no bidders
    Your correspondent’s point and shoot was a little bit outshone by a heavyweight camera crew, filming for a real estate TV show…(See More in Auction Reports)

The winning number: Greg Toogood (Jellis Craig) keeps track of bids at 1 Barry Street, Kew (auctioneer, Richard Earle). Bought after auction, $2,825,000, 2 bidders


What a difference a week can make – different stock, different prices and different results. The last two weeks have in our opinion seen a fracturing of the market, with some homes getting heaps of attention and others none. But you wouldn’t have thought that out there today looking at the results.

was back at 2.2, with more homes getting attention than not.

And there is another interesting phenomenon occurring – the ‘wounded underbidder ‘.

That wounded underbidder, determined not to miss out this time, can end up pushing  prices past reasonable market value.

We experienced that exact phenomenon at two auctions this weekend – one private and one public.

Malvern East private auction at 9.30am in Oak Grove – Cameron Edgoose, Marshall White (James Rating 699/1000). This was scheduled for auction in a few weeks time but it was kicked into life mid-week after we made an acceptable offer of $1.65m. Five parties showed up and three bidders moved it from $1.65m to $1.85m in a matter of minutes. Then bidder two dropped out, and the price moved to $1.92m where bidder three  finished us off. Wow, that was $270,000 over the reserve (which we felt was not that low in the first place, having bought a few within a hundred or so metres in recent weeks). Plus this one still needed a serious reno. The issue was not that bidder three overpaid – he didn’t. He needed to beat us at $1.9m and he really wanted it – fair enough.

The issue was that he gave us the feeling that he was a previously wounded underbidder. He was strong and decisive and he wasn’t going to stop anytime soon because he wasn’t going home without the bacon. That’s a good bidding technique but it is easier said than done. You also need to know when for you it is time to stop and then run away to live and fight another day.

We recommended a stop to our client at this price as there are properties at this price level and quality in the area and we believe they will get another chance soon.

Beware of the wounded underbidder – he can really hurt you in many ways!

The next bit of action was at Webster St, Camberwell (Jeremy Desmier). This was a great home, brand new and very well built. (James Rating 699/1000). We were acting for a Chinese family and we were up against two other Chinese families. It was bought under the hammer for a little over $2,300,000 after being on the market at just under $2,200,000 from a quote at under $2,000,000. Here our best advice was that this was a home that was indeed worth around $2,300,000 because of its quality and replacement cost. In this case we pushed past the rest because when the really good new ones come up you are invariably going to have strong local and overseas interest so you have to be prepared to pay more than you want and more than the last time. So in this case my advice was different from the earlier auction. This was a strong but reasonable price and next time would likely be the same result, so why not buy now? It was a real market and it also didn’t appear we had a wounded underbidder against us.

So if the market continues to fracture (and on today’s results we may be right back to pre-Melbourne Cup action) – a smart buyer really needs to know two things:

  1. Know when to hold ‘em and when to keep going on some homes, especially if emotionally it is a rare find for you.
  2. Know when to fold ‘em on good homes when there are other alternatives and you are being pushed past reasonable a price.

You are not on the money if you are on a home that comes up regularly in the area and you are being forced to pay values that are well above what was paid for others.


Resale and Growth!

Remember that in 2007 there were some goodies bought in the hottest of hot markets. But not every one of those properties was a goodie. And not everybody has seen the same growth.

Growth is not a function of the price you pay, it is function of the intrinsic value of a property.

Agent Survey: Do you see a splintering of the market into ones with lots of interest and ones with none?

David Hart, Buxton (Brighton): “I don’t see a ‘splintering’ in the market any different to any other period. There is excellent through all ranges, as long as the properties are realistically priced. It doesn’t matter whether it is at the bottom end, or the most expensive property, if it is overpriced, chances are they won’t have interest. If they are priced within a justifiable range, there are plenty of buyers ready to commit.”

, Gary Peer ( North): “It seems that buyers are fighting very determinedly for properties that fit all their criteria and other properties are struggling, although they are still selling within a reasonable time period. Perhaps that is the difference between a strong market, which we are in, and a boom market, where everything is hotly contested.”

Tim Picken, Kay & Burton (): “I agree, the market has certainly shifted in the last 3 weeks. Numbers through inspections have dropped and certainly bidding at auctions are not running run as deep as it did prior to the Cup. The market is solid but has just had to absorb a lot of which will start to diminish in the last few weeks of the year. I expect with limited stock over summer, Feb/ March will be strong and we will see further growth in good quality properties.”

Damian O’Sullivan, Marshall White (): “Whilst the market generally appears to be quite buoyant at the moment, there are always (in any market) properties that attract significant interest and sell particularly well as opposed to those that struggle to attract any genuine buyer engagement. One may be forgiven for blaming this on a splintered market but dig a little deeper and you will usually find there are reasons for this. First and foremost, properties deserve to be adequately and appropriately marketed to ensure maximum exposure, and expectations need to be in line with relevant sales evidence. For a variety of reasons, this is not always the case. Some properties exude real ‘x’ factor which can often be attributed to exceptional presentation whereas others can sometimes be lacking in this regard. When transacting such a valuable asset, it is important to give it the best possible chance of success. If not, a perceived ‘splinter effect’ can appear evident”

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