oc | Tuesday 31st March

More chance of a rise than a fall ……………

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It was a quiet-ish day today on market – off market is a different story – the auction biggies for May starting in numbers the week after next.

At that time we will be focusing on James Bidderman (for any movement in ) and any drop off from overseas buyers.

Has all the talk of late begun to bite?

This week in James Market News:

  1. Under Quoting update
  2. Our Third and Final part on the Big 3 Changes of the Inner Melbourne Market – Market is Changing – No Change and What You Could Do…
  3. Auction Action
  4. Younger Homebuyers Money Bin competition – another winner

Under Quoting


You will begin to see some agent quoting changes next weekend, HOWEVER not all agents on all homes will adopt all the CAV legal requirements to quoting immediately, as the regulations apply to homes signed up AFTER May 1 2017 – most on the market will have been signed up before May 1.

Nonetheless you will begin to see some change, as all of us go through a transition period.

Good news, many agents have been getting ready to change – the picture above is from a Bayside seminar we attended this week on underquoting. It was put on by the REIV. It was simple, straightforward and very clear on what needs to be done by agents.

I think the funniest (sic) question came from one agent – who asked if he can charge buyers for sending out information the law now requires him to pass on – that is, comparable sheets and what the asking price actually is. Think about his question and although this is not widespread, it’s still how some agents think about you the buyer – amazing in 2017 hey!

Below is a sample of the high quality information material (and it’s simple and easy to understand) handed out to agents by the REIV at the training sessions.

JC 3

Below is an example of how a Buyer Information Statement will look – this is one we picked up today on a Jellis Craig . The three key things it must contain are:

1. Suburb Median

2. Three recent comparable properties or an explanation as to why not from the agent.

3. An indicative selling price – which as we know, cannot be below the agent’s estimate, the sellers reserve (if known) or a specific type of refused offer (written, with terms and a price and ……)

JC 2

Auction Action

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Park Street 1

South Yarra, 9/21 Park Lane (Gowan Stubbings) sells Under the Hammer $2,050,000, 2 bidders.

Click here for full James auction report

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8 Durham Street

Surrey Hills, 8 Durham Road Passes In $2,370,000, 2 bidders.

Click here for full James auction report

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Hampton, 6 Orlando Street Passes In $1,450,000, 0 bidders.

Click here for full James auction report



Welcome to the third and final part in our series on Big Changes facing the Inner Melbourne Market in 2017.


The biggest thing in the Inner Melbourne market right now in 2017 is NOTHING, NO CHANGE, BUT A LOT OF TALK.

However this “NOTHING, NO CHANGE, BUT A LOT OF TALK” will have an affect on individuals who listen to and act on it, believing it to be true.

There is a growing body of opinion, that the market has reached its zenith and there is only one way – down!

All sorts of numbers, graphs and supporting data are being brought into articles, conversations and the collective thinking, in a way similar to a snowball racing down a hill. Very soon a building majority may well believe it all to be true and then the state of play will become such; that under an avalanche of negative opinion, the herd accepts we’re on the precipice of an impending doom.

However we do not yet see the impending doom on Saturday’s playing fields or in the games behind closed doors.

The same happens on the way up. Despite the fact, that the only underpinning of a specific house price is the emotional opinion of two complete strangers – a tsunami of positive market belief begins when those two strangers match on an above average opinion – to it are added more and more opinions of more and more strangers who collectively walk, then canter and then finally run up the price levels, jostling and shouting, until we are on the never ending stairway to heaven.

The market has been on the stairway for five years. Are we stepping off and joining the snowball taking the lift down?

Maybe, but with a hand on my heart of self interest, we have seen absolutely no negative change in the opinions of those actually transacting from six months ago, in fact the opposite.

The Inner Melbourne market of 2012-2017 has not risen on something you can’t understand, it’s not defying gravity, it is operating on the fundamentals of demand and .

Hence our Part 3 on 2017 changes – NO CHANGE NOW, UNLESS YOU THINK THERE IS.

More and more outside the market, do not think demand can continue and they may become the new “voice of reason” and then we all change course and set sail for lower destinations.


…the stats – my favourite is Bidderman (bidders per auction – demand depth) which granted we haven’t tested post Easter – but the stats/opinions we collect from the actual contest including price, bidders, clearance rates, client strength, agent aggression – have not reflected the media-centric community and the political/business elite’s view of the market’s current state of play.

The headlines of SHOCK, HORROR, PANIC are not what we at James are seeing from Mum and Dad – as they put their hand up and put their hand up again and then ink in their signature or pull out their handkerchief.

So the final in the 3 part series on Big Changes to the 2017 market ……………..is……………….. there is a BIG change if you think there is.

And there will be a BIG change if enough of us think there is a BIG CHANGE – but for us at James, we can’t see that change yet or happening in a hurry.

At the moment our perceptions at James of the 2017 changes are …………..Nothing, probably prices a little bit higher!

Hold the phone, did you say higher prices?

Yep, the Federal Government appears to not be making any budget announcements, that will have a significant affect on the Inner Melbourne market.

They are not floating any proposals that actually drive the Inner Melbourne housing market.

* Immigration control (demand) and

* Population control or direction (demand) and

* Locals with Negative Gearing (demand)

* Expats and Locals who are wealthy and want to be near schools (demand)

* Regional Infrastructure (supply)

Please note we believe the discussion on Housing Affordability is very important and relevant to many, but in Inner Melbourne, especially at the higher end, it is currently a non-story.


The Inner Melbourne high end market is not transacted through income affordability, it is transacted through asset exchange.

And asset exchange happens on longer term opinions, not weekly pay packets.

We are almost at the point that if you don’t have the assets, your income is almost irrelevant (well for most anyway).

The vacant deck chairs are gone, but the music hasn’t stopped – and unless we get a tune from North Korea or such –  then where is the immediate music stopper that will bring back all those vacant deck chairs (unsold bargains)?

JAMES OFFICIAL STATEMENT ON PRICE – Da ta da ta da (trumpets).


Why is James Buyer Advocates sticking their necks out, saying the market will rise this year? It’s not our usual style.

Well we are not saying that for sure and we actually get it wrong more times than right when market guessing, but please read on anyway!

We are trying to put some balance back, into what we perceive is a distracted discussion AND distracted discussions cause some buyers MAJOR problems.

Where are the real reasons the market will fall – eg demand and supply – eg population and immigration and wealth changes.

The Inner Melbourne market is unaffordable for many, yes – however the market is not broken or out of control, as it is also still very affordable for others (many) – eg overseas buyers and those locals with assets.

Stay tuned for James humble pie, if the market does fall and you pessimists turn out to be realists.


If James Bidderman alters big time, then that would be very different. We will be watching James Bidderman (bidders per auction) for any sustained fall; however it has been strong at 2.7 bidders per auction for a long time.

Finishing this THE BIG CHANGE IS NO CHANGE, UNLESS YOU THINK SO article with three anecdotes and Q&A?

Anecdote One:

We all read those articles in 2008 of hundreds of people in Toorak being foreclosed on by the banks during the GFC, but did you ever see a foreclosure sale – maybe one? The hundreds were an urban myth.

Prices dropped by 20% in the GFC Mal! Yes they did. Why?

Well a lot of people got really nervous about their jobs and they didn’t borrow to buy.

And what happened to those in a home?

They were stressed, but life went on (for most).


For those that didn’t buy?

Most paid higher prices in the future and a percentage of them still haven’t bought – are they worse off?

Anecdote Two:

People will have their lives materially affected, by the doubt that “expert” blanket comments such as “don’t buy, rent” put into people’s minds.

Those same “experts” never tell you in the future when it’s the bottom and to buy now.

Here is a far superior “money” headline and article by Noel Whittaker (The Age April 28). Get rich by focusing on process not outcome. This is a really sensible article – click here

So you want to rent hey!

Have you read the Choice Survey on Renting?

The research, undertaken by CHOICE, the National Association of Tenants’ Organisations and National Shelter found that 83% of renters in Australia, have no fixed-term lease or are on a lease less than 12 months long.

83% of renters in Australia DON’T know where they will be living next year.  This is a really interesting survey on renting from CHOICE – click here

Anecdote Three:

The market is only a small part of what happens to you and there is an element of luck in the timing, BUT by far the biggest influence on your end outcome is YOU.

It’s your individual decision and action or inaction that counts.

Yes, renting or not buying could be argued as being a better decision below.


A few streets down, we at James Buyer Advocates bought this for an overseas client in 2011 (also tricky times in 2011).

They sold in 2017 – the home had a 2nd storey put on, in a renovation – but there would be no argument about renting vs buying here.

, good home, good position and real action.

They acted wisely – it was their decision, not the market, not the noise that determined their outcome.



Click on the photo to view Kerrie & Michael’s Brighton story.

What should you do if you are thinking of buying but are having second thoughts?

1) If you don’t want to, don’t – hey, listen to your inner self before anything I say. I may not have even met you and I make mistakes and I get it wrong. A blanket statement from me saying everybody should buy now, is just the same as some nincompoop saying that all young people should not buy now, they should rent.

Look at Mid America in 2008 – and the all the banking collapses in the US in 2008. I ask you – do you think that will happen here, and why? And can you live your life like that?

If you think it will happen or it stresses you too much – then don’t buy.

2) Buy when you have found something you really like, a home that will last you 10 to 20 years. Do it – if it makes sense. I am currently looking at trying to organise a loan to buy another child’s home around $1 million – I know it may drop 10% in the future – I’m still doing it because of my experiences and it makes sense to me. But please refer to point 5 below.

3) When you buy – have a financial buffer for unforeseen issues in your life, such as change or job changes.

4) By all means if you are older – eg over 60 and money is not that important – buy an apartment at any time.

HOWEVER if you are younger, rather than buy an apartment, buy an OK home on good land, near a railway station and at a price, that from your research you know makes sense (or get an advocate to help you find and buy one).

If you are young and can’t afford that, then consider the following:

  • Buying a cheaper OLDER apartment, NOT brand new AND CERTAINLY NOT off the plan; or buy a home a bit further out (maybe even as an investment); but with the fundamentals of good land size, OK floor plan, condition OK (maybe you can fix up) AND not too much above other homes in the area AND near a regular TRAIN line. Sorry to repeat over and over again.

When should I consider not buying a home, Mal?

5) When you are not sure what you want or not sure you even like the home and/or you cannot afford it or you have no buffer.

6) If buying is going to make you more stressed than renting. But hey, instead of spending $3 million why not spend $2 million. Or instead of $1.8 million what about $1.4 million – modify your PPP’s and wants, but keep the good process the same.

7) When you are thinking short term – transaction costs and risks are substantial and short term does feel more risky right now.

8) When the government changes the laws on immigration and that changes the population increases or Asian and other foreign people begin to dislike coming here or can’t afford to. Wait then, because the market may well go down, as it has in Japan which basically has no immigration and no overall population increases. Interest rates can affect the market at the Top End by hurting businesses or pushing the dollar up, making it more difficult for overseas buyers – there is usually a big lag for you to see this.

9) When they change negative gearing significantly (not just a few percent around the edges) – I’m not sure what that will mean – but it should alter demand and I would wait to see the ramifications.

10) When hell freezes over and despite what Mr Trump says, with global warming that feels unlikely, any time soon. Although North Korea, mmmm … interesting.

If you would like to read Parts 1 and 2 of the James Big 3 2017 Changes then click below;

Part One was Underquoting – click here.

Part Two was Zone Changes – click here.

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Simone & Rob

Rob & Simone

This week Simone presented Rob with a $1,000 cheque for his winning entry of the James Money Bin competition. Rob is our third and very worthy winner.

We still have two more cheques to give away! Have something to write about? Why not give it a go!

Robs winning essay:

“Prices can’t keep going up…”

I’ve heard this from so many people, so many times over the last few years. If we’re talking about an infinite amount of time, then sure, there will be periods in the future when prices of homes will probably decline.

But if we take a short-medium term view of things (say the next 1-10 years) then due to a number of macro factors, the of good quality homes in Melbourne are unlikely to decline. Sure, the rate of growth may slow down, but if you’re holding off to buy that single-fronted terrace in for under $1m, then forget it – that ship has sailed.

What are the macro factors? There are a lot of detailed articles about these on the James website, mostly involve basic :

  • They’re not making any more land (supply is limited).
  • Infrastructure development (roads & public transport) is an extremely long and difficult process to achieve (supply of homes with good access to this is limited).
  • Population is growing (demand is increasing).
  • The world is becoming more “global” (demand is increasing).
  • More families have dual incomes – specifically professional couples with two strong incomes (demand is increasing).
  • More people can buy homes as investments using their super (demand is increasing).
  • Interest rates are at historic lows (demand is increasing).
  • Negative gearing / CGT benefits appear as if they’re here to stay (demand is not decreasing).
  • Brexit – sounds like a few ex-pats will be returning home (demand is increasing).

So what do you do? Do you keep waiting? Keep in mind that generally prices are rising quicker than wages or most people’s ability to save a deposit.

Or do you bite the bullet, accept the fact that you’re going to have to pay more than you want to but given the macro factors outlined above take advantage of the growth that’s likely to continue over the next decade?

Assuming you choose the second option, and it’s your first purchase, what should you actually buy for $1m? The land component of a property is underpins the value. It’s an old saying but it’s true, they’re not making any more land. But it doesn’t mean you have to buy a large block that can be developed in the future, it could be a single-fronted inner-city property that’s attractive to young couples and downsizers. It could be a 70s villa unit of which there are 3 on a large block, giving you effectively 200-300sqm of your own dirt.

Sounds OK in theory, what about some practical examples?

  1. House on land

In my opinion people who live “Bayside” get a bit carried away with being close to the beach. For me, unless you’re within 1km of the beach, you’re going to get in the car to go there anyway. And if you’re getting in the car, there’s not much difference between being a 2-minute drive and a 10-minute drive. So instead of pushing 25km down the highway to Beaumaris, Mentone or Mordialloc (which will take you 45 mins to drive into the city on a good day); what about something the other side of the highway but 10km closer, such as Moorabbin? If you’re young and still want to go out on Friday and Saturday night but paying $1m for a house means you can’t afford a cab home, there’s also a train station for city access.

This place sold for $1.025m in December. Sure, it’s ugly, but it’s liveable and on 525sqm, 15km from the city and a 5 minute walk to the station.  https://www.realestate.com.au/sold/property-house-vic-moorabbin-124139338

This one is a little further from the station, but on larger land and sold only a few weeks ago for under $1m: https://www.realestate.com.au/sold/property-house-vic-moorabbin-124666550

I had a breakfast meeting at Hendrick’s café last week and it is as good as any café around Prahran or Armadale. Just saying…

Other suburbs I’d consider are Hughesdale and Chadstone. I grew up in the Carnegie / Murrumbeena area and although these suburbs are probably over $1m for a house on land these days, Hughesdale is right next door. Good train access, great city access via Dandenong Rd, straight up North Road to the beach and of course you have Chadstone right there – I mean really you’d never need to leave the suburb, right? These both sold for around $1m before Christmas. So you might need to stretch the budget a little bit further now but there could still be opportunities:

$965k: https://www.realestate.com.au/sold/property-house-vic-hughesdale-122419886

$1.05m: https://www.realestate.com.au/sold/property-house-between-0-1250000-in-hughesdale%2c+vic+3166/list-1?includeSurrounding=false&activeSort=solddate&source=refinement (ok, this one barely inhabitable, but still..)


  1. The villa unit

These used to be seen as daggy properties that only grandparents would occupy. I see them as a great opportunity for a first homebuyer that typically give you more space and privacy than an apartment, an outdoor area and the all-important land component. Supply of these properties is not going to increase in the future – any developer buying a block is going to put either townhouses or on it to maximise value. If you can find a 3br version then you could easily raise a young family there. I remember looking at these 3-4 years ago as an investment option when they typically went for around $500k. Another section of the market that has grown significantly lately but one that should continue in the future and that people should be able to get into for $600k – $750k for 2br, a bit more for 3br. You won’t find them in the inner-city, but areas in the middle-suburbs around Caulfield and Elsternwick usually have a good selection. If you buy one today, then another in the block comes up in 5 years time then it could be a good strategy to acquire a significant land holding one piece at a time.

https://www.realestate.com.au/sold/property-unit-vic-murrumbeena-124684642 – $802k last month.

https://www.realestate.com.au/sold/property-unit-vic-glen+huntly-124695146 – $892k last month.

https://www.realestate.com.au/sold/property-unit-vic-elsternwick-123999326 – $750k late last year.

So there you have a few options of “what to buy”. What about the deposit? I can only give a few tips on what worked for me:


Live at home for as long as you can. Drive a 10 year old car. Buy clothes & holidays on sale. Catch public transport when you go out. Have pre-drinks. Collect frequent flyer points. Work hard and improve your earning capacity. But still have a life! My graduate salary was $32k…

My story: 36 years old, married, with a 2 year-old and 4-month old.

Lived at home until 25; then moved out with my girlfriend (now wife) and rented for 12 months. Took 6 months of looking to buy our first house. During that time (early – mid 2007) the market moved a lot, so we had to revise our budget up and ended up having to settle for an inferior property than one we missed out on at the start of the process. Missed a 2br Victorian in Iffla Street South Melbourne by $5k (sold before auction) and ended up buying a 2br Victorian in Prahran for $50k more (we’ve still done well but the South Melbourne place was better..)

Lived in Prahran for a year, then moved overseas and rented it out. Came back a few years later, moved back in, then bought an extended single-fronted Edwardian in StKilda East in March 2011. We had only just started looking but this came up as private sale and had the address withheld – the vendors wanted to sell quickly and quietly. It was only on the market for 2 days before our offer was accepted. The property ticked the boxes in terms of accommodation (4 bedrooms – could have kids there and never have to move), low-maintenance, renovated (didn’t need to spend a cent) and is close to family. Importantly it was within a price range (sub $1m) that would allow us to retain Prahran as an investment.

Fast forward to 2016 and although we didn’t have to move we wanted to get back into the market before the next round of maternity leave hit and we’d essentially be “on hold” for another 18-24 months (we didn’t think the market was going to wait for us!). We ideally wanted to buy something in Armadale, but that ship had sailed. We copped a bit of a “wet fish slap” when a property we fell in love with (5 Alleyne Ave) that was quoted “low 2s, may push to mid 2s” actually sold at auction (to Mal!) for $2.9m – well out of our range. We kept an eye on Armadale in the off-chance that everyone else’s internet went down and we were the only ones that would discover a hidden gem, but unsurprisingly that didn’t happen. So we had to broaden our horizon a bit. What’s near Armadale and offers similar proximity to all of the amenities, but is something we can actually afford? Malvern? No – the prestige associated with the suburb has seen it follow a similar trajectory to Armadale. $3m+ for a period house that needs work is out of our league. Prahran? Very few houses on 500sqm+ with a backyard. ? Sure, plenty of variety and the good bits (Gascoigne) are really good, but the average bits are a bit suburban. All of those suburbs are north of Dandenong Road. Not sure why it took so long for the penny to drop (I should have read the James “Clarity” articles a few more times); but the other side of Dandenong road ticked pretty much all the same boxes as Armadale, but cost around $1m less.

So we ended up buying in Caulfield North.  A beautiful period house in a stunning heritage street in great condition (rents well) with scope for extension and renovation in the future. 5 minutes walk to Malvern Station, 10 minutes walk to Malvern Central / Glenferrie Rd, within a footy kick of Caulfield Park. The best part? Bought at a price that let us retain our two other properties (“play monopoly”).


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