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2016’s Opening Market is (…..drum roll)

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Nothing wrong with this market (if you are a seller). Bang on the market with a strong opening bid of $1,500,000 against a $1,300,000 quote and a volcano followed to be sold under the hammer at $1,720,000. Hawthorn Single fronter  at 34 Bell - Steve Burke presiding.

Nothing wrong with this market (if you are a seller). Bang! On the market with a strong opening bid of $1,500,000 against a $1,300,000 quote. A volcano followed, to be sold under the hammer at $1,720,000. Hawthorn single fronter at 34 Bell – Steve Burke presiding.

2016’s Opening Market is …..drum roll … Pumping…….Strong …….Rocking. There’s no doubt and no other way to really describe it. We’ve had three big auction weekends in a row, with today a virtual Super Saturday and the market has spoken.

2016 has started with a real bang. The only difference between 2016 and 2015 is the amount of homes on the market (less in 2016) and ferocity (strong in 2016 compared to ballistic, out of control in 2015).

At James Buyer Advocates we have had a big month in terms of activity – we bought again today. However it was what we didn’t buy today, what we missed out on, that reveals the true state of the Inner Melbourne home market.

34 Bell Street, Hawthorn (Steve Burke and Tony Doh)

  • Good single fronter in Hawthorn (James Home Rating 655).
  • Agent quote was $1,300,000 and conservative.
  • We assessed for our investor clients around $1,600,000 – we gave a range of $1,518,000 to $1,718,000 after careful examination of recent sales in the area.
  • The opening bid of $1,500,000 put it on the market and 3 additional strong bidders pushed the sale price to $1,720,000. Volcano bidding after $1,500,000 for a single fronter.
  • That was right at the upper end of our pricing.
  • If the bidding had of opened at the agent quote of $1,300,000, we think you would have seen 6 or 7 bidders.
  • Note: Nothing wrong with the agent quote – they got the bidders there and put it on the market with first bid.
  • Message One: 34 Bell Street tells us the market has significant depth for single fronters in Hawthorn.
  • Message Two: Buyers are not solely engaging a James Buyer Advocate to deal with agents, but increasingly so to deal with opposing wounded underbidders. For success, we are back looking at strategies away from under the hammer auctions, as we were this time last year.

5 Nelson Street, Sandringham (Julian Augustini and Romana Preston)

  • Very high quality, single level, renovated, timber, period home on average sized block on a B grade street in Sandringham (James Home Rating 727).
  • Agent quote was $2,200,000 to $2,300,000.
  • An opening bid of $2,400,000 really spooked the crowd and pushed the auctioneer to stall for time, while other buyers got their breath back.
  • However that near loss of consciousness was for some, only temporary, as 5 more (yes 5) put their hands up ’till $2,655,000. The top end of our range pricing was $2,725,000. Volcano bidding after $2,400,000 for below average position and above average single level timber home in Sandringham.
  • In the last two weeks we have seen 6 Bidders on 67 Mills to $2.79m, 4 Bidders on Edward Street to over $2.6m and 6 Bidders here today (would have been a dozen over $2m) – so there is real depth for family homes in the Middle Bayside area right now.
  • Note: Nothing wrong with the agent quote –  they got the bidders there and put it on the market after the second bidder.
  • Message One: When you want to buy a home around $2.5m in Sandringham/Hampton and it’s an A grader, you may literally have a dozen opponents (read wounded underbidders) watching you. 5 Nelson tells us there is significant depth in the market for quality.
  • Message Two: Buyers are not solely engaging a James Buyer Advocate to deal with agents, but increasingly so to deal with opposing wounded underbidders. For success, we are back looking at strategies away from under the hammer auctions, as we were this time last year.

The 2016 Market Start – 100 Auction Proof!

We promised you 100 auctions in 3 weeks and at great expense to the management, we have delivered an absolute clear cut state of the market report.

Today

James Bidderman was strong again at 2.4 bidders per auction on fairly large auction numbers and with the most even spread of bidders for the year. 70% of auctions today had 2 to 4 bidders. Clearance Rate was 78%, basically the average of the 3 weeks and right up there historically.

The Three Weeks (Feb 20, 27 and Mar 5)

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Can you tell us the above stats are not clear cut and convincing?

The market (right now) is “rocking” strong at all levels on almost all properties – it’s as simple as that.

Only the C graders (poor PPP’s) are failing and that is almost always a function of seller opinion v market opinion on the Price part of the PPP equation. Yes, a home can be a C grader on Price alone.

It should be noted that overpriced failed auctions are NOT being taken up as easily a few days later, as they were last year.

The next big Market test is May. Yep, quite a few more sleeps before we get our next instalment of Market Juice or Tea Leaf Reading – due to Easter, School Holidays and Anzac Day interruptions. Selling Agents are expecting larger amounts of stock to hit the market, which is historically normal for May.

Who knows, quite possibly the sustained noise from the stock market boys and girls may influence the market psyche. But it hasn’t yet.

Our last word is that despite the outside noise, the Inner Melbourne market in 2016 has started very strongly.

The indicators we use – simple demand and measurements like James Bidderman – show at this stage it’s likely to continue at least till May. After that, you know the drill – who really knows?

Next week we are off the grid (no James Market News) due to the Labour Day long weekend.

Bang Bang - Volcano, 4 Bidders. $6,740,000 for 12 Barnato Armadale - Michael Armstrong

Bang Bang – Volcano, 4 Bidders. $6,740,000 for 12 Barnato, Armadale – Michael Armstrong.

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Armadale, 12 Barnato Grove (Michael Armstrong) – Under Hammer $6,740,000, 4 Bidders.
It was midway through the auction that I stopped recording the price increases – not because I couldn’t keep pace.

Malvern East, 4 Kerferd Road (Rob Vickers-Willis) – Under Hammer $4,680,000, 2 Bidders.
All the excitement today is at Malvern East for the auction of number 4 Kerferd Road, with Rob Vickers-Willis leading the very large flock of real estate followers grouped along both sides of the road.

Balwyn, 5 Maleela Avenue (Sam Wilkinson) – Under Hammer $3,805,000, 3 Bidders.
It was a hive of activity inside the house at 5 Maleela Avenue.

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Sandringham, 5 Nelson Street (Julian Augustini) – Under Hammer $2,655,000, 7 Bidders.
The volcano erupted at this auction called by Julian Augustini – the large throng gathering to witness the event were shell shocked with the opening bid.

St Kilda, 80 Wellington Street (Martin Fox) – $3,300,000, 6 Bidders.
Fountains, burnt sienna walls, lush garden setting – you could be forgiven for thinking you’d suddenly landed in Tuscany.

Surrey Hills, 6 Queen Street (Campbell Ward) – Under Hammer $2,375,000, 5 Bidders.
You could feel the buzz in the air here!!!

Bang strong opening bid of $2,400,000 and effectively on the market. Volcano with 6 more bidders pushing the final under the hammer price to $2,655,000 for a Sandringham timber single level home (see our James Home Rating). Julian Augustini.

5 Nelson, Sandringham – Bang again, strong opening bid of $2,400,000 and effectively on the market. Volcano with 6 more bidders pushing the final under the hammer price to $2,655,000 for a Sandringham timber single-level home.  Julian Augustini. James Home rating 727.

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Toorak, 12 Scotsburn Grove – Passed In $4,500,000, 0 Bidders.

Balwyn North, 33 Madden Street – Passed In $2,650,000, 3 Bidders.

Albert Park, 56 Page Street – Passed In $2,150,000, 2 Bidders.

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Bayside  (Full details in James Auction Reports click here)

Brighton East, 4 Roseberry Avenue (Halli Moore) – Bought After (price above $1,675,000), 3 Bidders.
Halli Moore reminded us that time was tight for buying , wedged in as we were between Christmas and an early Easter. 

Hampton, 52 Linacre Road (Bert Geraerts) – After Auction $2,750,000, 1 Bidder.
Bert Geraerts was the auctioneer presenting this five-bedroom, three-bathroom architect-designed home to a crowd of 50 onlookers.

Hampton, 42 May Street (Robin Parker) – Under Hammer $1,535,000, 4 Bidders.
Robin Parker is the auction whisperer. We’re all clustered in the front yard at May Street, Hampton …

Sandringham, 5 Nelson Street (Julian Augustini) – Under Hammer $2,655,000, 7 Bidders.
The volcano erupted at this auction called by Julian Augustini – the large throng gathering to witness the event were shell shocked with the opening bid

Sandringham, 37 Bamfield Street (James Paynter) – Under Hammer $1,860,000, 2 Bidders.
A crowd of around 50 had spread out to listen to James Paynter list the attributes of this three-bedroom home showcasing ‘modern sophistication’.

Sandringham, 17 Heath Street (Steve Tickell) – Passed In $1,725,000, 0 Bidders.
“…in the why and the wherefore is neither rhyme nor reason.” Why was this to be a silent auction …

Sandringham, 11 Cowper Street (Steve Tickell) – After Auction (Undisclosed price above $2,500,000), 3 Bidders.
Here we were at our second auction by Steve Tickell and this was to prove a different affair altogether.

G-E-R-A-L-D at 12 Scotsburn Grove Toorak - No success yet.

G-E-R-A-L-D at 12 Scotsburn Grove, Toorak – No success yet.

Boroondara  (Full details in James Auction Reports click here)

Balwyn, 4 Boston Road (Jellis Craig) – Bought Before (price undisclosed).

Balwyn, 5 Maleela Avenue (Sam Wilkinson) – Under Hammer $3,805,000, 3 Bidders.
It was a hive of activity inside the house at 5 Maleela Avenue.

Balwyn North, 33 Madden Street (Simon Lord) – Passed In $2,650,000, 3 Bidders.
A large crowd was on hand to witness the auction of this large two-storey home with city skyline views.

Camberwell, 7 Kingfield Court (Patrick Dennis)– Passed In $1,560,000, 1 Bidder.
The sky is overcast as auctioneer, Patrick Dennis talks to the small crowd gathered at the end of this cul-de-sac in Camberwell.

Canterbury, 83 Warburton Road (Steve Abbott) – Passed In $2,100,000, 0 Bidders.
A small crowd of 35 was greeted by auctioneer Steven Abbott, who had gathered them all around the driveway of this recently constructed residence.

Canterbury, 4A Rubens Grove (Steve Abbott) – Under Hammer $2,300,000, 2 Bidders.
Steve Abbott greets us for the auction today at Rubens Grove in Canterbury and starts off the action with a vendor bid at $1,800,000.

Glen Iris, 54 Hortense Street (Karl Fitch)– Bought After (undisclosed price $1,550,000), 1 Bidder.
In the tree-lined street, auctioneer Karl Fitch was offering this 1930s home to the market for the first time in its existence.

Glen Iris, 3 Watson Street (Doug McLauchlan) – Under Hammer $2,030,000, 4 Bidders.
A period clinker brick draws a sizeable crowd of 100 onlookers despite the early hour.

Hawthorn East, 4 Havelock Road (Brad Cooper) – Bought After (Price undisclosed above $3,210,000), 2 Bidders.
Prior to auction the clouds remain, the heat is rising and the day is beginning to steam up.

Hawthorn, 85 Berkeley Street (Richard Earle) – Passed In $3,250,000, 0 Bidders.
All gathered around the pool, auctioneer Richard Earle welcomed the home on offer before calling for an opening bid..

Hawthorn East, 12 Mowbray Street (Scott Patterson) – Under Hammer $3,000,000, 4 Bidders.
A very humid day did nothing to deter a strong crowd from watching on as this home went under the hammer.

Hawthorn, Bell Street (Steve Burke) – Under Hammer $1,720,000, 4 Bidders.
Great location, great suburb, very good home, good crowd numbers, excitement in the air …

Kew, 40 Sackville Street (Marshall White) – Bought Before (undisclosed price mid-$3,000,000).

Surrey Hills, 6 Queen Street (Campbell Ward) – Under Hammer $2,375,000, 5 Bidders.
You could feel the buzz in the air here!!!

Halli Moore gets 4 Roseberry Brighton East away after auction - 3 bidders and over $1,700,000

Halli Moore and Gary Yue get 4 Roseberry, Brighton East away after auction – 3 bidders and over $1,700,000.

Glen Eira  (Full details in James Auction Reports click here)

Caulfield North, 12 Pental Road (Bill Stavrakis) – After Auction (price undisclosed above $3,550,000), 2 Bidders.
Auctioneer, Bill Stavrakis described the home as a stunning period home, an elegant landmark residence on some 1,450 square metres of resort-style living.

Port Phillip

Albert Park, 56 Page Street (Greg Hocking Holdsworth) – Passed In $2,150,000, 2 Bidders.
A big turnout at this auction had whispers flowing in the crowd that there would be a ‘sold’ sticker out the front of this property by the end of the afternoon.

Elwood, 24 Selwyn Avenue (Adam Guest) – After Auction $2,200,000, 2 Bidders.
The Auction of 24 Selwyn Avenue Elwood, conducted by Adam Guest started off sedately enough.

St Kilda, 80 Wellington Street (Martin Fox) – $3,300,000, 6 Bidders.
Fountains, burnt sienna walls, lush garden setting – you could be forgiven for thinking you’d suddenly landed in Tuscany.

St Kilda West, 5A Longmore (Oliver Bruce) – Bought After $2,320,000, 3 Bidders.
A group of 50 gathers to view this architect-designed three-bedroom home in a coveted cul-de-sac location.

Stonnington  (Full details in James Auction Reports click here)

Armadale, 12 Barnato Grove (Michael Armstrong) – Under Hammer $6,740,000, 4 Bidders.
It was midway through the auction that I stopped recording the price increases – not because I couldn’t keep pace.

Glen Iris, 10 York Road (Maurice DiMarzio) – Bought After $1,350,000, 3 Bidders.
A small crowd had spread out in front of this property, waiting for auctioneer Maurice DiMarzio to get things rolling.

Malvern East, 3 Manning Road (Damian O’Sullivan) – Under Hammer $3,362,500, 4 Bidders.
Gascoigne estate. Renovated Period Federation. Good land size. Huge attendance.

Malvern East, 44 Washington Avenue (Daniel Wheeler) – Bought After $1,860,000, 1 Bidder.
A beautiful tree-lined street forms the backdrop for the auction of this as-new four-bedroom home.

Malvern East, 4 Kerferd Road (Rob Vickers-Willis) – Under Hammer $4,680,000, 2 Bidders.
All the excitement today is at Malvern East for the auction of number 4 Kerferd Road, with Rob Vickers-Willis leading the very large flock of real estate followers grouped along both sides of the road.

South Yarra, 31d Motherwell Street (Marshall White) – Before Auction (price undisclosed above $2,000,000).

Toorak, 12 Scotsburn Grove (Gerald Delany) – Passed In $4,500,000, 0 Bidders.
All quiet today in Scotsburn Grove, Toorak with the master Gerald Delany from Kay & Burton presiding.

Yarra

Richmond, 45 Abinger Street (Andrew Gibbons) – Passed In $1,520,000, 3 Bidders.
This property sat in amongst a maze of one-way Richmond streets.

(Full details in James Auction Reports click here)

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Apartment 8

are $ Disasters  –  Apartment Living is Brilliant.

At James we have bought a lot of apartments. We have also not bought a lot of apartments.

G’day, my name is Craig Whitten and in a past life I was a selling agent and a qualified valuer – now I am a James Buyer Advocate.

When at James Buyer Advocates we are engaged to buy an apartment for clients, our brief, almost exclusively, is our clients want to make a good decision and get a good apartment outcome.

There are some truly sensational apartments out there, but there are also some real dogs.

So how do you buy a good apartment well?

Let’s start where you should start; the beginning!

Why are you buying the apartment, you may be considering right now?

The way you may answer this question will fall into two broad categories – Emotional and Financial

Lets start with the Financial reasons first;

There is a lot of confusion amongst apartment buyers on the subject of money. It appears there is a project around every corner, and a lot of the product on the market is described as grade stock, marketed largely through third tier marketing programs and evenings. Generally speaking this is the start of where the apartment buyer gets stars in their eyes on being presented with a depreciation schedule and proposed tax savings. This is further complicated with off the plan purchases where the buyer thinks they’re making a big saving on stamp duty, but effectively they are paying a premium price at the outset for new, in the belief that there will also be good opportunity for .

The Financial Reality hits home, when the property is valued two, three, five years later for considerably less than the original purchase price! Believe it or not this is quite common in today’s market place (and has been so for 15 years). It’s a bitter pill for buyers to swallow, particularly when the time comes to buy another property, investment or otherwise.

For many apartments the reality is that the property will never be as good as the day you first bought it.

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Problem: Buying an Off the Plan is like buying a new car from a showroom – it never looks as good, or is worth as much as the day before you become the owner.

Solution: Get independent professional expert help such as a James Buyer Advocates to choose the right apartment or the right investment option.

Please note, if we are buying an investment apartment there is ONLY ONE type of apartment we buy and no, its not in the glitzy brochures and no, it doesn’t come beautifully wrapped from your “financial advisor”.

Modern, medium and high density apartment developments are common in Melbourne and outer metropolitan areas, and as a result can be particularly price sensitive. If economic conditions deteriorate, or a large number of similar properties are put to the market at the same time, the value of the apartment is likely to be detrimentally affected at all price levels from $800,000 to $10,000,000.

So, how can you be sure to buy an apartment well financially? How can you increase your chances of avoiding the pitfalls? What do we look for when buying apartments for clients?

Here are just a few key things from James Buyer Advocates’ 50 point apartment checklist:

  1. Is the developer reputable and delivers a good standard of product, (visit other completed projects to get a feel for their overall style and design, look at the quality of building materials- are there double-glazed windows for example?
  2. Is the apartment a good size for the accommodation it offers?
  3. And is the floor plan functional?
  4. Are there generous open space areas– ie, either balconies or courtyard areas.
  5. Car parking for example – type and size, the market typically views internal basements car parking above car stacker systems.
  6. Look at the orientation of the apartment and use of natural light,
  7. Ceiling heights and
  8. Quality of lifts.
  9. Location, location, location. The apartment market is subject to the same rules of property as every other . Location and views are just as important drivers of value as it is for other asset classes. If it’s for investment purposes the property will certainly need to be readily accessible to schools, shops, transport and amenities. You will also need to consider ongoing occupancy costs, for example body corporation fees, or sinking funds, and ensure these are factored into your overall numbers.
  10. And the most important of all, what is the…………….? (this is the one key issue to making money on an apartment).

Problem: There are good and there are poor apartment buying characteristics.

Solution: Get independent professional expert help such as a James Buyer Advocate.

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With a plethora of medium and high density apartment developments currently being advertised for sale around Melbourne, prices are particularly sensitive given this strong competition.

It is also worth remembering that the supply chain includes a number of similar new apartments being presented and are scheduled to be presented to the market in the near future. This increase in supply will further affect the value and marketability of the subject property going forward.

It’s therefore important to consider buying something that stands out from the pack, and stands the test of time if finances are important. The rules for buying an apartment are the same rules for buying real estate in general, some people lose their way on this point. We need to apply the same rules and principles for apartments, it’s a different asset class, but the fundamental principles remain.

Problem: There is an oversupply of apartments – meaning careful is more important than ever. This applies to all price ranges we operate in up to $10m.

Solution: Get independent professional expert help such as a James Buyer Advocate – scarcity counts.

Still on the subject of financials, there is a lot of confusion when it comes to apartment size. Apartment size is an important consideration. Some developers adopt apartment size as prescribed by the Property Council of Australia, being the mid-point of party walls, and others use measurements taken in accordance with the Australian Property Institute being the net liveable area (NLA) using the internal finished surface of party walls, excluding balconies, car spaces etc.

This can mean that the actual size of the apartment may be much smaller than the purchaser thinks they’re getting. As valuers we often make the observation that the developer’s plan and marketing material may advise the living area of the subject property to be larger than our measured area because they have adopted the Property Council of Australia guidelines. It’s therefore important to ask how the developer has calculated the apartment area, at least then you will know exactly what your buying, and can make an informed decision!

The difference between a net liveable area and a gross building area could be in the vicinity of 4-6% smaller than the quoted area, when you’re talking $7,000 or $8,000 or $9,000 p/sqm, this translates into hundreds of thousands of dollars in value, that you may be throwing away!

Problem: Apartment measurements are a big issue.

Solution: Get independent professional expert help such as a James Buyer Advocate to arrange a measure up.

If you are going to buy an apartment just keep a few basic principles in mind as part of your decision making process – financially.

If you are considering buying an apartment and you’d like to have a no obligation discussion on the topic, feel free to contact me directly on 0477 776 138 and I can help to clarify your thinking, property search etc, with specific regards to your emotional requirements and off-market offerings as well.

Craig Whitten 0477 776 138
Licenced Valuer
James Buyer Advocate

(AAPI CPV)
JAAA

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