oc | Sunday 29th March

Some very strong results. Some very weak results.

The Very Strong

4 bidders – Volcano – $4,322,500 – 23 Duke Street, – Walter Dodich

This was a home we were intimately involved in the sale management of from start to finish and it was brilliantly sold by Walter Dodich. He priced it well, marketed it well and auctioned it well.

Whilst it got slightly more last time around, this time showed that if you get it right, then there is still strength in the market – TODAY.

4 bidders – Volcano – $9,010,000 – 92 Page St, – Warwick Gardiner/Simon Gowling

WOW! Truthfully, we were expecting a pass-in. This says the market is far from dead. This is a first-rate result for the Greg Hocking team. We’re just trying to think of a bigger public auction result in the last year anywhere in Melbourne?

What to say about our high-end market – the only consistent thing of the last few years has been its inconsistency

We wanted to start today’s James Marketnews with two of the volcanoes, lest you feel our presentation of the current market is all negative.

Far from it – it’s not all negative – it’s just all over the place and has been for some time.

At 6.00 pm Saturday the clearance rate on 25 randomly selected auctions over $2 million in Inner Melbourne was 60%. Overall that is now borderline cold on 3 of the last 4 weekends we have reported on 59%, 81%, 52% and 60% clearance rates respectively.

The market is gyrating and it has been from late last year, actually, you could say for many years (see our graphic below.) But in between the gloom has been some absolutely stellar results and overall market price upsurges.

As we go into a longish period of , we feel it’s not as good as the optimists are saying and it’s not as bad as the pessimists are claiming.

We transacted twice this last week and have had a very good six months but for the next 3-6-12 months, of course we are not as confident. However, it will be what it will be and then, after that, the market will go on again, ever interesting!

The Very Mixed

Today’s Stats

No Bidderman stats as our staff have stopped widespread auction attendance.

Bought-befores are not always a sign of strong buyer numbers, despite the current press to the contrary.

In fact, more often than not they are a sign of weak buyer numbers with a good agent making it happen with only one strong buyer on a bought before.

The Very Weak

Today we tracked the pass-ins from the 3 Week Melbourne Opening Market 100 Auction Test on Feb 22, 29 and March 14.

Unsold pass-ins we call Stales.

Stales are effectively B or C graders – meaning either Position or Property or Price or combination of 3PPP‘s is regarded as poor by the market, in that they didn’t sell.

A-graders are homes where the 3P’s are good or above. A-graders sell in almost any market.

When the stale rate is high after a week, a fortnight and/or a month, then whilst the market may appear hot with good clearance rates on A and B graders, it is not really as hot as it seems, as some B and almost all C-graders are not selling at auction or at a reasonable time after.

In the tearaway markets of 2015 and 2016 those few that didn’t sell at auction were almost all sold within hours or the same week. In the GFC many homes that passed-in hadn’t sold months later. In other words, stale rates of almost zero only a week after the auction in 2015/16 and say 80 to 100% a month, two months later in the GFC.

Stale rates and Bidderman are slightly more technical data (actually not really that technical as I can work them out) and confirm or not the true strength of the market, where clearance rates alone cannot. We have not done Bidderman in almost 4 weeks for social distancing reasons – but our buyer numbers from our business confirm a significant drop in Bidderman and this combined with a poor stale rate here, gives you are a clear indication of the current market.

So what is the stale rate of homes that have passed-in during the 3-week Opening Market?

Red is No sale. Green is Yes sold.

We regarded them as unsold if we couldn’t find a result or agent didn’t return a call.

Whilst one or two may change – overall we feel this is a correct indication of the stale rate.

It’s longer than a minute – sorry!

Q&A in the Coronavirus Market

Buying Don’ts:

1. Narrow your

2. Pay too much against no one

3. Put your health at unnecessary risk

Selling Don’ts:

1. Race to the bottom

2. Stop-Start – wrong agent managing

3. Put your health at unnecessary risk

Question: Are you still acting for buyers?

Answer: Yes. In particular, if you can find the right home, then this is a good time to buy for doctors (they are very busy of course and we have added extra help protocols for them), cash buyers and those who feel confident in their employment.

Question: Where do you think the market will go?

Answer: We have had a significant drop off in enquiry in the last fortnight and even existing clients who want to act are less prone to do so. If this trend continues to spread across the market, we will go into a GFC-like winter. However, we still transacted all through the GFC and in fact, early last year had more difficult trading conditions than the GFC and look what happened.

Question: What is your message for buyers?

Answer: Do what you feel comfortable with. If it feels right, why not? If it doesn’t, then Ok wait. We can transact electronically for safety.

Question: Anything else?

Answer: Yes, we have bought around 20 homes in 20 years for clients who had not seen the homes before we bought. There are a few do’s and don’ts, but it is possible. So if you are an overseas ex-pat moving back next year or you actually have to go into isolation, then we can still complete the purchase for you.

We do believe this will be a difficult but very positive market for some buyers, especially those that can get in ahead of the almost inevitable upsurge that will occur sometime post-Corona.

Question: That sounds like sales speak?

Answer: I agree, but what is wrong with positive facts! Property is a great long term and future (migration and wealth) and (no more inner ) imbalances are clear on family homes.

We feel prices will continue their long term trends.

Take care.

Question: Are you still acting for sellers?

Answer: Yes, but not as many, as we have advised waiting if they can wait until post coronavirus, unless its part of a buy/sell, upsize or something else that makes sense. This advice has been the same through most of February.

Question: Where do you think the market will go?

Answer: We have had a significant drop off in buyer enquiry and even existing buying clients who want to act are less prone to do so. If this trend continues across the market, we will go into a GFC-like winter. However, we still transacted all through the GFC and in fact, early last year had more difficult trading conditions than the GFC and then, look what happened.

Question: What is your message for sellers?

Answer: Don’t panic – don’t race your home to the bottom and may we suggest you have a talk with us. Even if you choose not to take our advice – it won’t have hurt or cost you.

IT IS HIGHLY UNLIKELY ANY BANK WILL FORECLOSE ON YOU – We saw almost none in the GFC, despite newspaper headlines to the contrary. Talk to your banks, they are a lot more human these days and may well be able to work out a way to hold on until things get better.

Question: Anything else?

Answer:  We do believe this will be a difficult market, however if you have to, or want to sell, then there are clearly things you can do and things you can avoid, to make the process and ultimately the outcome work a lot better for you.

Question: That sounds a bit like sales speak?

Answer: I agree but what is wrong with positive facts! Property is a great and future demand (migration and wealth) and supply (no more inner land) imbalances are clear to us on family homes.

We feel prices will continue their long term trends.

Take care.

We are isolating all our Coronavirus Property News to jamesnow.net.au

We support our PM, our opposition leader and federal/state government and medical leaders and hope for all our sakes, most people can see their way clear, to tone/turn down the personal attacks and give objective criticisms, while supporting them and following their group instructions.

We also thank the doctors, nurses and ancillary medical staff and food and essential service workers for their work now and into all our futures.

Thank you, please keep going and look after yourselves as much as you can. We strongly support you.

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