oc | Thursday 23rd January

The New Normal

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Balwyn North, 39 Sutton, Jeremy Desmier, Under Hammer, $2,550,000, 4 Bidders.

Balwyn North, 39 Sutton, Jeremy Desmier, Under Hammer, $2,550,000, 4 Bidders.

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James Market Summary

  • 6.00 pm Saturday May 23rd
  • $M+ Clearance Rate 79% (29 auctions)
  • 2.4
  • Ducks 10%
  • Lone Rangers 14%
  • Norms 48%
  • Volcanoes 28%

$M+ Market remained very strong.

Significant drop in Bidderman – Is today a statistical anomaly or market easing or indeed simply more buyers placing more aggressive opening bids, which reduces Bidderman?

Too early to tell.

Our James buying experiences this week – no market easing on the good homes. We bought 2 from 3 at today’s auctions, but both were bought before i.e., during the week, Brighton East, (Daniel Wheeler) and East (Steve Burke). Each had 3 bidders. And clients whom we had bought for previously, today sold their homes well in (Tom Ryan) and Hawthorn (Stuart Evans) with 2 and 5 bidders respectively. Average price across the 5 was $2m. Average Bidderman was 3. Of the 12 clients we have in direct negotiations at 9.00 am this morning, only 6 (50%) of the sales processes were auction. 11 negotiations are for local families and 1 for a client family overseas.

Definitely more pass-ins, which is a clear sign that vendors are becoming more aggressive with their price thoughts.

Bigger Auctions:

  • Brighton East, 46 Canberra Grove (Peter Kennett, Hocking Stuart), after auction, $4,010,000, 1 bidder.
    Peter Kennett said he had all day at his disposal and took his time to impress upon the huge crowd of 150 the many reasons why they should buy this four-bedroom, four-bathroom home on 800m2 … (See more in Auction Reports)
  • Camberwell, 27 Donna Buang Street (Campbell Ward, ), under hammer, $3,370,000, 3 bidders.
    A big house with big view across Camberwell surrounds. It seems like a big crowd at the pre-auction inspection too, although the home swallows them up easily so it’s hard to tell … (See more in Auction Reports)
  • Kew, 102 Sackville Street (, Marshall White), under hammer, $2,580,000, 4 bidders.
    A cheerful crowd rolled up for the call by Hamish Tostevin for this 1910 timber home in the Sackville Ward … (See more in Auction Reports)

Bidderbuzz:

  • Brighton, 16 Elm Grove (John Clarkson, Hocking Stuart), under hammer, $1,657,500, 6 bidders.
    For a cool autumn day, a bit of a crowd gathered up to see auctioneer John Clarkson auction of this ready to knock over house for some new home builders through to those who may consider renovating and keeping for a future land bank … (See more in Auction Reports)
  • , 7 Norris Street (Antony Woodley, Marshall White), under hammer, $2,300,000, 5 bidders.
    A crowd of 70 gathered for what was about to be a long auction! Auctioneer Antony Woodley introduced the and was keen to get things under way … (See more in Auction Reports)
  • Balwyn North, 39 Sutton Street (Jeremy Desmier, Fletchers), under hammer, $2,550,000, 4 bidders.
    There was a serious atmosphere amongst the large crowd at this auction, most likely due to the property being located in the coveted Balwyn High School zone … (See more in Auction Reports)

Bigger Pass Ins:

  • Hawthorn, 33 Glen Street, pass in, $3,625,000, 1 bidder.
    The slow burner at number 31 had just been wrapped up and now it was Steve Abbott’s turn to rouse some interest for number 33 … (See more in Auction Reports)
  • South Yarra, 2 Cunningham Street, pass in, $3,500,000, 0 bidders
    My first outing out to South Yarra, and it was certainly a different market over here in the Inner-City … (See more in Auction Reports)
  • Middle Park, 156 Page Street, pass in, $3,400,000, 0 bidders.
    A large crowd slowly trickled into the tree-lined street of this beautifully renovated home … (See more in Auction Reports)
South Melbourne, 12 Hotham, Michael Paproth, After Auction, Over $2,100,000, 1 Bidder

South Melbourne, 12 Hotham, Michael Paproth, After Auction, Over $2,100,000, 1 Bidder

The New Normal

Inner Melbourne Homes are now part of the INTERNATIONAL PROPERTY MARKET – that is the New Normal.

1)  Inner Melbourne Homes are more affected by what goes on in Wider Asia, than what goes on in Canberra.

2)  Interest rates have a big effect on Inner Melbourne homes, but not just through borrowings; it’s also through the dollar exchange rate. The current drops are not primarily driving the Inner Melbourne Market because they allow more borrowing – the current drops are primarily driving the market because they weaken our exchange rate, encouraging more overseas people (in particular from Asia) to buy homes in Australia.

3)  There has been a number of key articles this week on the increasing traffic congestion and public transport overload in the coming decades as governments continue to avoid trying to find answers for the massive infrastructure needed. This will continue to encourage the more wealthy local community to live closer in.

4)  Significantly increasing population, a lot of it through migration is what both sides of the politics are advocating. Australia has a policy allowing International buyers to buy land and homes here.

“The New Normal”

  • Increasing population
  • Limited schools
  • Deteriorating outer Melbourne infrastructure such as trains
  • Migration
  • Wealth growth from the Rich

“The New Normal”

  • Increased Overseas and even more Limited Supply

The New Normal sounds a lot like the Old Normal + International Buyers with Demand focus on…

  • Position to CBD, Airports, Schools, Lifestyle Amenity
  • Property – Bigger Homes on Bigger Land driven by Overseas and Local families
  • Price – Up in the longer term with shorter term hiccups along the way, of course

In the last twelve months I have spent considerable time in France, Tanzania, New Zealand, Vietnam and the U.S. Our property looks good from all angles when you compare what the rest of the world has to offer.

“Our Inner Melbourne homes, right now, look as good and as cheap to northern Asians as their food looks to us when we are travelling there.

Inner Melbourne $M+ homes are now firmly a part of the INTERNATIONAL PROPERTY MARKET.

Of course the current market will go off the boil at some stage – the intensity will drop – but in the past with very few exceptions (1991-93 and 2008 being those exceptions) all that meant (on good homes) was a flattening of price for a short or extended period of time.

“When the current excitement 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.”

Here is why we think this.

Inner Melbourne is not some property outpost anymore. Inner Melbourne is part of the International Property Market and the world will have to seriously, seriously change for INTERNATIONAL BUYERS (China, then India, then Indonesia or Brazil) to no longer be THE NEW NORMAL at Inner Melbourne Auctions/Private sales/EOI’s.

According to Census figures there are approximately 200,000 homes in the $M+ catchment area we buy in – Inner East and Bayside. In China alone there are more than 2,000,000 millionaire families. Of course not every Chinese family will come to Inner Melbourne. But in 5 years the number of Chinese millionaire families will continue to exponentially increase as they will in India, Brazil, Indonesia, not to mention Europe and Africa.

A number of those wealthier families will be looking for schools, safety, lifestyle and a good footy team to support, such as Collingwood.

Those International families are the never ending demand tap. In Australia its turned fully on to receive.

Perhaps as family home buyers, you need to get used to it, deal with and manage the New International Normal, rather than hope it goes away.

PS Thank you to International Client Phil Dreaver for the title suggestion.

words experts graphicAgent_May-23_2015

At James Buyer Advocates we have always had a policy of supporting the younger, up and coming stars in our industry – be they buying or selling agents/advocates. Our Experts section from now till spring will be publishing their opinions. Below are our first three younger experts, Carla, Leor and Stuart – all tough cookies who will keep you on your toes as buyers and represent you well if you are sellers.

Agent Survey: From a buyer’s point of view do you see any in a very strong opening bid? Do you, as a selling agent like them? And what are the negatives?

Carla Fetter (Jellis Craig, Armadale):
I personally don’t see the value in placing a strong opening bid because at the end of the day, if there is a buyer who has budgeted to pay more, they will bid against you regardless. Some might argue that it will knock out some of the competition, however in this market we are finding that more buyers are taking an aggressive approach and it could even create a more intense battle.

As an agent I don’t mind a strong opening bid, in the current climate we tend to see competition thereafter. The only negative in my opinion is potentially placing a bid that is above reserve when there is little interest for the property. I haven’t seen this happen for a long time.

Leor Samuel (Gary Peer, Carnegie):
We love it as it breaks the monotony and sets a vibrant mood for the auction!

It can be a double-edged sword for the buyer as sometimes it can bench mark the property at a higher level and possibly encourage a higher final sale price, however there are also times where we have seen it work very effectively for a buyer by scaring competitors away and creating an assertive position in intimidating and stifling others.

Stuart Evans (Marshall White, Hawthorn):
It’s a good topic of discussion at the moment as buyers are looking to find different strategies in this market. Experienced bidders can secure an advantage by dampening the potential enthusiasm and achieve a favourable outcome. Also, first home buyers can be put off by a strong opening bid.

As an agent I like them, because a strong opening bid can be at, or even above, the vendor’s expectations. Overall, it’s a great strategy.

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