oc | Wednesday 22nd January

Market back on the boil – for now

Bidders and spectators were back out in force this weekend: 2 Boyanda Road, Glen Iris, John Bongiorno (), after auction, undisclosed above $2,700,000, 2 bidders

At 6.00 pm Saturday, the James Clearance Rate for Melbourne’s $M+ was 76% on the 34 auctions we covered. The Bidderman, our bidders per auction measurement, was at 2.2. Both measurements are solidly up.

Overall Summary of Melbourne’s Million Dollar Plus Auctions:

  • Ducks ($M+ auctions with no bidders) 16%
  • Lone Rangers ($M+ auctions with one bidder) 13%
  • Norms ($M+ auctions with 2 or 3 bidders) 48%
  • Volcanoes ($M+ auctions with 4 or more bidders at auction) 23%

Was that a bid? Yes Johnny it was, and there were quite a few more. John Morrisby (Jellis Craig Bennison Mackinnon) sells 20 Warley Road, Malvern East, under hammer, $1,825,000, 4 bidders. It was the first of two auctions in Warley Road on Saturday, with number 13 also selling under hammer (Marshall White), $1,925,000, also with 4 bidders

Market Summary:

We said May was a month of change and boy has it been. Sure, the market changes, but there have been some very dramatic mood swings since Easter.

We can tell just by tracking the activity on our Negotiation Council. Before Easter the Offer Board was full. We had 12 Active Negotiations in the week before Easter in fact. After Easter the Offer Board was nearly empty – in fact it had an average of two on it for the first fortnight.

Then last Friday suddenly the Offer Board was full again. We now have 11 active negotiations to discuss.  That reflects how the market mood is swinging right now at the Top End. Its fluid, it’s dynamic and it’s a little unclear.

Although looking at this weekend’s results, you wouldn’t think there was anything unclear.

You won’t always see the impact of these mood swings in price changes at the lower end. Because the A grader at $1.3 million which has 6 bidders before Easter will still have 3 bidders when the market dips and so most observers won’t see any change.

But at the Top End, as well as on B and C graders at the lower end, a mood change can cut what would once have been a 3 bidder auction to just 1 bidder – and if that 1 bidder is you, then are you simply competing against yourself.

Key issues at the Top End of the Market are

  • Agent Quoting
  • Chinese Nationals buying
  • Market Vagaries in May

We feel it is important for buyers to understand and face these issues rather than just worrying and complaining about them.

The consumate professional at work, Mr John Clarkson: 50 Warleigh Grove, Brighton, after auction, $1,275,000, 3 bidders

Agent Quoting

We have received a couple of responses from readers regarding some of our more recent comments on Agent Quoting in Market Insight and The Weekly Review.

We seem to have given some people the impression that we support Underquoting.

Let’s be clear we don’t support Underquoting – for the simple reason that markets function better when they are ethically run. In better functioning markets we earn a more meaningful living. So we are not a supporter of Agent Underquoting.

In our attempt to help the markets function better we tried to explain what an Agent Quote is and what it isn’t.

We pointed out that an Agent Quote is nothing more than an attempt by the agent to get as many buyers as possible to see the home.

Yes, you the buyer want the Agent Quote to be more than that, i.e. the reserve or indicative sell price. Consumer Affairs Victoria says it should be this and that – but it is not.

In fact there is a big difference between what an Agent Quote is and what you might think it should be.

Agent Quotes are like marriages; we all want them to be good but about half aren’t and so we can stay unhappy or we can do something about it.

And, frustrating as big differences between the agent quote and the actual sell price may be, getting emotional about that can be counterproductive to helping you buy the home you want.

So getting emotional is not what we think you should do. Understand and take alternative action  is what we think you should do.

If you can understand Agent Quoting for what it really is, not what you want, then you will buy a lot better.

We also pointed out previously the unhelpfulness of CAV’s assumption that just because they have received few complaints about underquoting, that means there is no problem.

Cheerio from us publicly on this subject for a while.

Chinese Nationals

Some people have also expressed concerns about the number of properties being bought by Chinese Nationals. There is perhaps a fear that it has become impossible to compete against a group of people who seem to have very deep pockets.

We even get complaints that we raise this as a subject.

As buyers you need to know who your competitors are and how to maximise your chances of dealing with their strengths and weaknesses in this market. As with underquoting though, there is no point being caught up in fear and frustration at such competition.

The law allows Chinese Nationals to buy homes in Victoria, and if you want to buy a home in Melbourne’s Inner East and increasingly in Bayside you are going to have to compete against this group of people.

If you are a buyer then you need strategies. We act for Chinese Nationals in buying homes in Australia.  We have also competed against Chinese Nationals at auctions and in other negotiations.

So over the years we have learnt through experience to feel comfortable negotiating both for and against Chinese Nationals.

Biggest sale of the day: 46 Kooyongkoot Road, Maurice DiMarzio (Hocking Stuart), under hammer, $3,800,000, 4 bidders

27 Dean St Kew:  Agent Quoting and Chinese Nationals

This weekend, we had to deal with both issues on a property we bid on.

The property at 27 Dean Street, Kew (Anthony Panayi & Chris Ewart of Christopher Russell) was a basic brick home on a big block – it was a sale. The initial quote on the home at was $1,500,000, but was raised to $1,800,000 during the campaign. We turned up half an hour before the auction and there was a steady stream of Chinese Nationals and Chinese Australians flowing into the property.

Our research indicated that the property was worth a lot more than $1.8 million, and we opened the bidding at $2,200,000. At that point it was announced on the market, and from then on our two main competitors were either Chinese Nationals or New Australians (both had interpreters to assist).

We bid in a certain manner to win us the home, and in this instance our clients won.

Was this a case of poor Agent Quoting? Well, the agent’s original quote was $1.5m, which he then raised to $1.8m. The auctioneer got a lot of people to the auction and then put it on the market with our first bid. So in this instance a big tick to the agent – he did his job for his client (the seller).

If you as a buyer were thinking it was not going to go anywhere near that number, then is that the fault of the selling agent (who is not working for you)? Did you do your due diligence to understand what it realistically should go for?

We paid a price that to us seemed strong but not mind boggling. There have been a number of sales of new builds in the area at $4m for blocks this size. If you work your way backwards, and the build cost of new home at $1.2m, then the price we offered stacks up.

On advice received we formed and gave an opinion that it could go above $2.6m at a strong auction.

You might think we opened too strongly. Well other bidders didn’t think so. It would have been a volcano if bidding started low. Our bidding patterns were designed very specifically to compete against the Chinese Nationals or Chinese New Australians we knew would be there.

Summary

The points above are that if you don’t understand how Agent Quoting works, you will not give yourself the best chance to buy.

And, if you don’t accept and have a strategy for competing against Chinese Nationals bidding, you will not give yourself the best chance to buy either.

Finally, if you don’t understand and take affirmative action in this May market then you will either bring too many people into a bidding war against you or you may pay too much.

If we can help you buy please contact us at our or Brighton Office.

Camberwell: Richard James (with Greg Toogood) sells 17 Gowar Avenue after auction, $2,150,000, 3 bidders

Biggest Auctions:

  • Toorak, 22 Cole Court (Justin Long, Marshall White), after auction, $3,955,000, 3 bidders
    A relaxed crowd of about 35 spread around the top of the court to see this well loved family home sell as a land opportunity…(See More in Auction Reports)
  • Hawthorn, 46 Kooyongkoot Road (Maurice DiMarzio, Hocking Stuart), under hammer, $3,800,000, 4 bidders
    With the whole team present, it was obvious this was going to be a good auction as the crowd for 100 gathered…(See More in Auction Reports)
  • Toorak, 7 Springfield Street (John Bongiorno, Marshall White), under hammer, $3,530,000, 3 bidders
    John Bongiorno stepped out onto Springfield Avenue and advised those whom had gathered that the auction would be held in the rear of the home…(See More in Auction Reports)
  • South Yarra, 2/125 Domain Road (Warwick Anderson, RT Edgar), after auction, undisclosed above $3,000,000, 1 bidder
    Warwick Anderson took advantage of the unseasonable sunshine and decided to hold the auction of this apartment in the park…(See More in Auction Reports)

Bidderbuzz:

  • Kew, 9 Florence Avenue (James Tostevin, Marshall White), under hammer, $2,602,000, 4 bidders
    WOW! What an auction! No shortage of action here. James Tostevin welcomed the crowd of 70…(See More in Auction Reports)
  • Hawthorn East, 7 Lawson Street (Hamish Tostevin, Marshall White), under hammer, undisclosed, 4 bidders
    I and around 50 others stand on the street and footpaths which are covered with a blanket of rust coloured fallen pinoak leaves…(See More in Auction Reports)
  • Kew, 4a Redmond Street (Steven Abbott, Jellis Craig), under hammer, $2,345,000, 4 bidders
    Steve Abbott and team were keen to get things started as a crowd of 50 formed in the lane way…(See More in Auction Reports)

Biggest Pass Ins:

  • Albert Park, 173 Mills Street, passed in, $3,600,000, no bidders
    Our auctioneer put forward a vendor bid of $3,600,000 in the hope that it would encourage someone in the crowd…(See More in Auction Reports)
  • Kew, 23 Stoke Avenue, passed in, $2,500,000, no bidders
    Auctioneer Tim Fletcher and his team of family members, Rob and Nick, fronted the crowd of about 20…(See More in Auction Reports)
  • Albert Park, 56 Victoria Avenue, passed in, $2,005,000, 2 bidders
    Three and half years ago this Victorian terrace sold for around $1,350,000.  Today, transformed and given a new identity as a four bedroom, three bathroom home, auctioneer Michael Paproth tells the huge crowd…(See More in Auction Reports)

“Where is pricing at the moment – is it easing, level or rising?”

Maurice DiMarzio (Hocking Stuart, /Hawthorn): “Whilst we have seen significant gains over the past 8-9 months (approx. 20 -25% growth), we feel, and indications are, that since the Easter weekend things seem to have leveled off slightly. Numbers attending inspections are down on what we were seeing prior to the long weekend and with increased levels of listings, vendors need to be mindful of the factors that drive our market and as always, if they are wanting to sell, they should be aware of their direct competition. Having said that, good quality, well located real estate is always sought after and we continue to see strong for properties that are perceived to be land value.”

John Bongiorno (Marshall White, ): “In regard to pricing I believe the market is fairly level across the board at the moment – there will always be examples of results that look bullish & on the surface might make one think the market is rising but reverse can said for weak results . Overall the market is well balanced for both buyers & sellers .”

( & Associates, North): “It’s an interesting question and it almost feels as though one could answer as ” all of the above ” as the market seems to be performing in patches. At the top end , over $2,000,000 , there seems to be many buyers but most are very select. Unless the properties are particularly unique , buyers seem pretty cool to walk away and wait if the vendors aren’t ” on the money ” , in what they are prepared to sell for. ( even though there is not such a volume at this end ). I think prices have leveled in this sector. Similarly which were running ” red hot ” earlier in the year , seem to have taken a breather with many buyers having been swallowed up in the generous offerings of the early part of the year, and into the many developments that are approaching completion. Where there seems to be a rising in prices is in houses (up to) $1,400,000. There is an almost insatiable demand for these , based on recent sales , where we have seen intense competition resulting in many properties selling for far beyond reserve prices. Whether this trend continues and the shift appears elsewhere will remain to be seen. The slowing down of offerings through winter will be interesting…perhaps the vendors will have the upper hand as there is still overall strong buyer inquiry in general.”

 

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