oc | Thursday 23rd January

Volcanoes are changing the landscape – as they do!

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$1 million dollars more: So what do you do when across the road – same land size and same house sells late in 2014 for $1,900,000 – why you pay $1 million dollars more when Asian buyers duke it out to $2,950,000.

Ringmaster Michael Hingston, one of the best of the new younger breed of auctioneers, directs Advocates and Asian Buyers with aplomb to $3,000 per sq metre at 9 Kalang, Camberwell. Volcano – 6 bidders.

Click here Volcanic Kalang James Auction Report

Market Indicators

James $M+ Market Summary:

  • 6.00 pm Saturday May 16
  • $M+ Clearance Rate 81% (31)
  •   3.1 (bidders per auction)
  • Ducks 7%
  • Lone Rangers 20%
  • Norms 26%
  • Volcanoes 47%

1) Overall market hasn’t eased, we deliberately covered an even wider range of auctions, choosing quirky and not the same ol’ same ol’.

2) Bidderman was still 3 and Clearance Rates were still incredibly strong.

3) Some very thin cracks at the top with a couple of pass-ins.

James $M+ Market Analysis:

An Auction trend has now maintained itself for all of May so far – Volcanoes (4 or more bidders). Around half the Inner Melbourne home auctions in May have been volcanoes.

An incredible stat.

In fact think about what the Volcano stat means.

What it means is that in May 2015 in Inner Melbourne, the market size of unsatisfied buyers is STILL INCREASING EVERY WEEK.

Demand Still Building Every Week

In fact, since Bidderman started to hit the heady heights of 3 bidders per auction late last year, the market of unsatisfied buyers has been increasing at a faster rate than the solid amount of auction property we have all seen offered.

When Bidderman is 3 across the board, that means one buyer and two wounded underbidders.

Multiply that by 120 Inner Melbourne $M+ auctions and that means roughly 120 buyers and 240 wounded underbidders who missed. If last week and last month and in fact last year was the same; then unless it’s always the same bidders each week (trust me, its not), then the market of unsatisfied, more determined underbidders/buyers is STILL BUILDING every week in 2015.

How can that be?

In one word. Immigration.

Or three words. Overseas Asian Buyers.

Do the maths – we couldn’t be making baby homebuyers this quickly 30 years ago.


What does widespread Melbourne Inner Melbourne Volcanic activity mean?

Initially it means rapid and significant price increases within the areas that are covered by the Volcanic eruptions.

Consistent volcanic eruptions shake underbidders to their core. Underbidders can live with an occasional close defeat – that is life. But they change in the face of a massive barrage of them.

How do underbidders change and in turn how does this change the Inner Melbourne $M market?

When human beings are disappointed some give up; but more redouble their efforts, so as they are not disappointed next time. Eg – if a buyer is beaten twice at a dollar amount – they either lower expectations or they get more dollars. Many get more dollars. Price Up.

When you throw in immigration from countries where the Australian exchange rate and their own countries improving wealth makes Australian property look as good and as cheap to them as Asian food looks to Australian travellers, then you have the recipe, the heady mix we have now.

Accelerator down, in high gear with more gears being added and no brakes.

Key Market Driver

More and more wealthier and wealthier people from around the globe are buying Inner Melbourne $M property for schools, pollution, political stability, lifestyle, value etc. etc. etc.

This is what is currently driving this market. Increasing, sustainable demand is a property fundamental – not a fad, like orange tiles.

The Question: Is the current overseas involvement with Inner Melbourne $M+ property sustainable?

Answer: It appears Yes, until/unless a significant change in circumstances for overseas buyers such as government intervention, dollar changes, internal foreign country issues. In our opinion the interest rate issue in Inner Melbourne property is a distant secondary price driver.

Photograph by J.D. Griggs in 1984.

Photo: J.D. Griggs

What does widespread Volcanic activity eventually mean?

The landscape changes and even areas away from the eruptions are effected by the run off. This can also be called the ripple effect. And this is what I was talking about when having a lovely chat with Emily Power from The Age mid week in an interview for her article.

Her question:

Why in Altona North and other never reported property markets are you suddenly seeing record prices?

My Answer:

It’s because of what is happening in neighbouring Newport now, because of what happened in last year……… because of what occurred in and Kew in 2009. The ripple effect – time and nearby geography and overseas buyers and immigration and wounded underbidders.

Read Emily’s article in The Age, she seems a very nice young lady. But I digress.

Hence our heading today. Volcanoes are changing the landscape forever – as they do!

In other words it’s just not the same anymore. The past, as we once remember it,  ain’t coming back!

Lateral or Deep Pockets

If you want to be the buyer of a good home in this market then you need to think laterally; that or you need deep pockets.

On some homes you need both – the game has changed.

You need to play the game differently unless you want to get walloped every week.

Quite possibly you need to consider changing your game sooner rather than later; because in that $2m – $6m sweet spot where we operate every week, we can’t see any signs of immediate relenting in a number of market segments.

That is not to say that things will never go off the boil – of course they will. But the current market is driven by fundamentals – overseas demand – not fads.

And when it does stop, we see the future image more as a dormant volcano waiting to re-explode, rather than a scorched earth without signs of life.

Photo: Reuters

Photo: Reuters

What do you mean Mal, it’s not the same anymore, the past isn’t coming back?

  • Show me a good land auction that stacks up after you put a home on it (when you compare to buying same land with a period home on it next door)
  • Show me a spreadsheet that gives you a logical outcome when you compare certain market segments with other market segments vs last year’s prices.
  • Show me a private sale with an advertised price or a private sale with an agent that can tell you the price within 3 minutes of being asked the direct price question.
  • Show me an auction without Chinese Buyer involvement or the “agent threat of”. Show me an auction without Indian people watching. Show me a credible real estate selling agency without a Mandarin speaker.
  • Show me an auction quote with a range where the sale price actually falls within 20% of it.
  • Finally show me a local buyer who is not these days seeking professional advice and assistance. Those local buyers without assistance are not called buyers they are called underbidders. Possibly a cheap shot or a gratuitous plug for professional, qualified, experienced buyer advocates with proven results – apologies.

Volcanoes have changed the market and you will have to change as well. Can you?


Market Solutions: here’s what happened to us in the last 24 hours:

  • Stonnington Off Market (Joanna Nairn). Period home in need of renovation above $3m. Client Bought after two weeks of negotiation. Friday Night
  • Stonnington Off Market (Jock Langley). Land to build on, over $3m. Client Bought after 2 hours of negotiation but a week in deliberation. Saturday Morning
  • Boroondara Auction (Michael Hingston). Land – but brilliant land almost $3m. Stratosphere and then some – we were walloped. Saturday Afternoon
  • Bayside Bought Before Auction (Rob Strickland). Family home over $2m. Overseas Buyer offered this morning. Pest and building, visits, legals, measure up, values, rating and strategy meeting completed by us, before darkness and our client bought at 6.00pm in an informed manner. Thank you to the 7 people from James involved. Saturday Evening
  • Thank you Joanna, Jock, Rob and Michael for your professional dealings.
James McCormack working the crowd at 83 Leopold St South Yarra. After Auction above $2,270,000. 2 bidders

James McCormack working the crowd at 83 Leopold Street, . After Auction above $2,270,000. 2 bidders

Bigger Auctions:

  • South Yarra, 76 Tivoli Road (, RT Edgar), after auction, price undisclosed above $4,350,000, 2 bidders
    A beautiful Victorian home was up for sale in a tightly held pocket which brought out plenty of and neighbours … (See more in Auction Reports)
  • East, 4 Constance Street (, Kay & Burton), under hammer, $3,390,000, 4 bidders
    Scott Patterson took a strong approach to this auction when he opened with a $2,500,000 vendor bid … (See more in Auction Reports)
  • Balwyn, 6 Wills Street (Toby Parker, ), under hammer, $3,160,000, 4 bidders
    A big crowd spilled out of the driveway into the street to watch auctioneer Toby Parker put this home through the paces … (See more in Auction Reports)


  • McKinnon, 9 Prince Edward (Chris Hassall, Buxton, Bentleigh), under hammer, $1,795,000, 8 bidders
    Another mobile coffee van is doing great trade and getting the crowd warmed up … (See more in Auction Reports)
  • Mont Albert, 9 Whyte Grove (Scott Patterson, Kay & Burton), under hammer, $1,989,000, 7 bidders
    Auctioneer Scott Patterson told the crowd to be flexible with their budgets, and he was right as six bidders did their best to stretch each other’s budget to the max … (See more in Auction Reports)
  • Elsternwick, 20 Grafton Street (Bill Stavrakis, Biggin & Scott), under hammer, $2,010,000, 5 bidders
    Lots of with young kids. For a lunchtime auction – there was plenty of interest in this one … (See more in Auction Reports)

Bigger Pass Ins:

  • Toorak, 4 Lawrenny Court, passed in, $3,770,000, 1 bidder
    ‘Clocktower house’ – a country estate in Toorak – is on offer today. Auctioneer Warwick Anderson, before the assembled crowd of 70 or so … (See more in Auction Reports)
  •  Hawthorn, 42 Mary Street, passed in, $3,400,000, 0 bidders
    Auctioneer Campbell Ward took to the crowd that had gather to see what was on offer … (See more in Auction Reports)
  • , 47 Linacre Road, passed in, $3,275,000, 1 bidder
    This seemed to be my “corner plot in Hampton” day.  This time the home on offer was a five-bedroom, four-bathroom recent construction of “visionary design” … (See more in Auction Reports)


Agent Survey: How do you deal with buyers attempting to buy before auction?

Michael Armstrong (Kay & Burton): I have a degree of sympathy for buyers trying to secure properties before Auction at the moment.  Auctions of family homes are typically producing big premiums which in turn makes it difficult for vendors to determine what’s fair vs. what is a great result before auction – it’s often easier and more rational to let the market decide on the day.

I think offers before auction are always carefully considered on their merits by agents and vendors regardless of the market and that’s the way we always approach it – you need to respect that buyers at the moment are not necessarily trying to gain an advantage, many are just eager to buy!  It is certainly a difficult process in the current climate which is why we’re seeing premiums paid by buyers for off-market opportunities.

Andrew McCann (Jellis Craig): Buyers attempting to purchase a home prior to Auction are afforded the same level of respect and attention as any buyer looking to buy at Auction, Privately or via and Expressions of interest campaign. The real question is “is it in the best interests of our seller to negotiate before Auction?” and in the current competitive selling environment the answer is more often than not a clear NO.

In the event we were to talk/ assist and encourage buyers to purchase a home before auction they would certainly need to be encouraged that their offer would need to be “well ahead” of our expectations to be considered, would need to be on a written contract and be accompanied by a 10% deposit cheque.


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