Health Check
The market is changing, however overall we think it’s healthy and goes into the new year nicely balanced
Health Check
The market is changing, however overall we think it is healthy and goes into the new year nicely balanced
RESULTS OVER CHRISTMAS BREAK
James Buy Sell
CAMBERWELL <$4M
Sold OFF-MARKET (Volcano)
James Buy
MALVERN EAST
Bought ON-MARKET (VOLCANO)
James Buy
NORTHCOTE >$2.5M
Bought OFF-MARKET
James SELL
DANDENONG RANGES
UNDER CONTRACT (VOLCANO)
James Buy
GRACE PARK HAWTHORN
UNDER CONTRACT OFF-MARKET
WEEK OF DECEMBER 11
James Buy Sell
MALVERN <$4M
Sold
James Buy
MELBOURNE
Bought
James Buy Sell
HAWTHORN EAST <$6M
Sold OFF MARKET
James Sell
CAMBERWELL $3.5M
Sold OFF-MARKET
James Buy Sell
RICHMOND <$2.5M
Sold
James Buy
SURREY HILLS >$2.5M
Bought
BUMPER HOLIDAY ISSUE – HEALTH CHECK
State of the Top End Melbourne Market going into 2022
Why Mal and Gina do you need to consider the state of the market?
Market Signs that Matter
Measurements: Ahead of time v Autopsy
We just launched 14 selling campaigns in December – Why No Auctions?
Bidderman
Stock
Market Price v Your Price
Fresh is Best and Dirty Miners
A-Graders – 3P’s
Underquoting is unnecessary and counterproductive
Addendum to Clearance Rates
State of the Top End Melbourne Market going into 2022
In the last month we’ve talked of market change.
Our market opinion going into the summer break is:
Overall, we think the signs are healthy and the market should start next year, barring a world event, with its usual February Pep.
You know our views on bankers and economists’ fairy tales for longer-term predictions…
Why Mal and Gina do you need to consider the state of the market?
Good question.
Take selling and look at the fact we launched 14 sale management campaigns (multi-list) in December and not one was auctioned.
Why?
Because our advice on the state of the market was prices were falling and bidder numbers (Bidderman) were tumbling. Good for buying, bad for selling. Yes, they may fall further in Feb, but we felt that was a reasonable risk worth taking based on the reliable Feb Pep.
Our 14 methods of sales were determined by the asking prices of the clients and the state of the market.
However, we still think the market is solid and the 6 deals above anecdotally support that assertion.
Market signs that matter
What are the shorter-term signs of a market’s health that you look at Mal and Gina?
Well, we don’t just look at one sign such as Clearance Rates.
When you go to the doctor and get a state of your health checkup – you don’t just do one test. You get eyes, ears, blood pressure and so on. These are interconnecting tests to make an initial assessment of your overall health. And a good doctor looks holistically, looks at more than one or no signs.
A holistic Melbourne Market health check is no different – yes there are Clearance Rates. But there are also other key stats, Bidderman and Stock Levels and even more specific ones for submarkets beyond that. We use all these measurements to consider the state of the market, the submarkets, and your specific home to buy or sell.
Measurements: Ahead of time v Autopsy
To just use Clearance Rates is a lot like a single blood test – you can tell if you have malaria, but not if you have a sunspot or high blood pressure. You need to check more, otherwise you risk an incorrect diagnosis on your overall health.
- Clearance Rates
- Bidderman
- Stock Levels
Clearance Rates. We use them a lot but differ from The Age on Clearance Rates on two fronts. Dr Powell is The Age analyst, and we think Nicola is the Casey Briggs of property stats analysis – the best – nice person as well. However, we differ from her explainer on Clearance Rates percentages and what they mean. * more in the Clearance rates addendum
James Buy Sell assertions on Clearance Rates from 20 years of in the field, buying and selling in %:
- 60’s is an easing (that’s spin-doctoring for falling) market
- 70’s is balanced to a gently rising market
- 80’s is a rapid price increasing market.
90’s is ballistic and 50’s and below are icy, recessionary.
So, when we wrote about the market the last 4 weeks and finished with 60’s and price falling – like magic CoreLogic November monthly stats and journalists’ articles came out later in the week saying “surprisingly market prices fell in November”. It was no surprise to agents and those in the market, in the know!
So Mal and Gina why not wait till CoreLogic’s report and then decide what to do?
Because it’s a bit like waiting for your autopsy to decide on how to look after your health.
We’d rather the blood checks and x-rays ahead of time than an autopsy after the fact.
We just launched 14 sell campaigns – Why no auctions?
So Mal and Gina if the agents knew that the market was weakening in November (read our Marketnews November articles) then why was this weekend a record auction weekend?
Why of the 14 selling homes we launched In December was not one auctioned in a weekend of record auctions?
Here is another question. Why did your selling agent recommend an auction?
Was it no strategy or company line or was it your home truly was an A-grader and it went off like a fire-cracker? (more on what we think a true A-grade is, later in this piece)
Bidderman
Back to the other market measurements we use.
Bidderman. Drum roll please. Fourteen years ago, we introduced to Marketnews and you, Bidderman or Bidderwoman. It’s simple and our best predictor – if we had to choose one, we would choose Bidderman over Clearance Rates.
Bidderman = Number of bidders counted / Number of auctions. We use a sample size of a hundred auctions. So, 180 bidders counted (we attend and count ourselves) over 100 auctions equals a Bidderman of 1.8.
Our Bidderman measurement interpretations:
Under 1 bidder per auction, the market is falling. Logic tells you this. It’s simple demand and supply. We also find under 1.5 and the market is still probably easing.
1.5 to 1.8 bidders – give or take and the market is steady – again logical as bidders bid on more than one home and so there is roughly the same number of homes for sale, as buyers to buy them.
Over 2 bidders per auction and the market is on the up (due to another of our concepts – the wounded underbidder phenomenon) and you know our favourites – volcanoes – a term we describe to 4 or more bidders per auction – when the lava is flowing in abundance, we are in a tearaway market and boy do us agents and advocates love telling you about them. Bidderman of 3 and the market is on fire. It all sounds a bit egoish – our ideas etc – but some companies do actually think about strategy and do communicate so you can understand and make good decisions.
The market shifts every week and there are statistical inconsistencies (even with us), so we look for a sustained Bidderman measurement rather than say it’s dropped in a week and therefore the market is easing – that’s like saying the market has gone from on fire to boiling – what useable knowledge have you gained – it’s still damn hot!
Stock
The third measurement. Without knowing stock levels – Bidderman and Clearance Rates can lead to a poor diagnosis of market health. Most agents could see in November there was going to be a huge amount of stock in December and they knew it would lower the Clearance Rates (success) and Bidderman (intensity). We chose to pass on recommending auctions in December.
Let’s be extreme about stock, to make a point.
Let’s say on Christmas Day 2021 there was one home auctioned and 1000 buyers looking for a home.
Now let’s look at today, 1700 plus homes (most auctions ever recorded says The Age) and there were still 1000 buyers looking for a home. You would get very different Clearance Rates and Bidderman stats two weeks apart and yet the market is essentially the same. You need to know stock levels (off-market as well) as you get false readings looking at demand stats in isolation (Bidderman and Clearance Rates).
The market was incredibly strong straight out of Lockdown 6 and we recommended and ran multiple auction selling campaigns then. We read the predictor blood pressure stats, (not today’s autopsy reports) and felt it was likely to ease under a significantly increased supply and buyer fatigue. It did – and we feel good our selling clients had no auction campaigns today or this month. Overall happy to buy at auction though right now!
Despite all this we feel the market is still good – look at our above results. We think it is healthier than it may seem, and the down is due to stock levels (massive) and fatigue.
Market Price v Your Price
The market state is only one of three considerations we look at with regards to Price
The market Clearance Rate doesn’t determine your price in isolation.
Your market price is determined by
- Yes, in part, overall market sentiment (Clearance Rates) +
- Your individual PPP’s when you bought years ago and are now selling +
- The specifics of your campaign (agent and presentation and method of sale and asking price strategy and luck and marketing and…)
Fresh is Best and the Dirty Miners
OK Mal and Gina, but why not go to market any ol way and just wait till it sells, lower the price if we have to – who cares.
If you were buying or selling you should care if a home is what we call a stale.
And yes, we do stale measurement rates – but that is like an MRI or Ultrasound, a more specific test and not one for detail now.
So, if your home is stale – passed in and unsold for some time, then it’s so much harder to get the price you want, as buyers think there must be something more than price, wrong with your home.
Emotion makes buyers overshoot numbers both ways – eg to go higher and higher and sometimes over all logic on positive emotion. With negative emotions, us humans tend to go lower and lower, past all sense of logic on the downside. Bad for sellers and good bargain hunting for savvy buyers. That’s why avoiding a stale if selling and finding a stale if buying (if it’s an A-grader on Position and Property) is important.
If you go to market and fail at auction, like say today, then the question the agents will be handling through the summer break and even next February is why did you fail, what was wrong with your home, rather than how good it is to find your home and what does one have to do to buy it.
Of course, if the Feb market is weaker and you sold today, then you are roosters and we feather dusters. The science is imperfect, and we are not know-all’s – it’s just calculated risks and strategies to mitigate.
Stale issues are exacerbated by the dirty miners of the internet like realestate.com.au and domain.com.au and even us at Marketnews at times. Like dirty miners we take the good bits out and leave a lot of slag lying around – so great results get highlighted on searches, but also failed campaigns are left all over Google.
And good luck asking Domain or Realestate.com.au to remove info about your home – sometimes even when you are paying them good money – they will leave up damning evidence of a failed or recent sale campaign – it’s all about their google rankings. We are not perfect either, however our policy is now, if you ask us to take something down, show a personal connection, then we will. We have lost google rankings as recently we wanted to be more internet environmentally friendly to buyers and sellers. Domain and Realestate should likewise consider paying and past customers’ rights v right for the public to know.
- Fresh is always best. Always look fresh (even if you are not) and your prices will be better than if you look stale. Well-handled off-markets always look fresh to the new buyer. However, poorly handled sellers are very nutritional for our buying clients.
- Your presentation needs to be good in the home but it also needs to be good out of your home – eg no leaky internet taps for a buyer to find hey!
2022 clients looking to buy your home off-market now
A-Graders - 3P's
Anybody is allowed to call something an A-grader. There is no rule of law on what an A-grader is. It’s like the word natural, you can say something is natural with impunity – even if it’s not. In fact, when has an agent come up to you and said G’day I’m Matt and this home I am selling is a C-grader. Of course, it’s a C-grader if his competition was selling it! No holier than thou criticism, we do not volunteer negative aspects against the clients we represent either.
At Marketnews and James Buy Sell we have a rule on what we think an A-Grader is. We say an A-Grader is about the three P’s, not just one or two of them.
The big 3. Position, Property and Price.
In our definition, you can have an A-grade Position; say Gascoigne or Grace Park or St Vincent Place or Beachfront and/or you can have an A-Grade Property (great land say north-facing rear and a great home say great floorplan); however, if the Price, the third P, is say 30% over market then it’s not an A-grader in our mind.
The reverse is nearly true, you can make a poorer property A grade on Price – but really, to some extent its still a s…box just cheaper.
There are 3 P’s to an A-grader (in our mind) Position, Property and Price.
True, P for Price is the least important (within reason) of the 3P’s when buying an A-grader, but it is the only P you can alter when you are selling.
Underquoting is unnecessary for Volcanoes
Underquoting is counterproductive when only 1 bidder
Finally, we would like to finish on the contentious topic of quoting and underquoting.
Ethical step quoting is far better than underquoting when an agent and seller are unclear on price AND it is near on impossible to drag a savvy lone buyer up past a low quote – you are far more likely as a seller to get a higher price, if you are upfront to begin with.
Sure, underquoting works sometimes, but it is illegal and more to the point it doesn’t work a lot of the time (you only hear the good war stories). Many times a low quote gets you the seller less money than an ethical quote would have got you.
You don’t need to bs buyers or sellers to be successful. In fact, whilst you think your agent is giving the bs to the buyers, he or she is actually giving the bs to you the seller.
Our last ten selling quotes:
Range: Sold within the range
Single Price: Sold within 3%
Range: Sold within the range
Single Price: Step quoted down off-market and sold within 2%
Range: Sold within the range
Range and we auction step quoted up: Sold within the final week range
Range: On market in range and sold 2% above the range
Range: Sold 3% above the range
Range: On market in range and sold 13% above the range
Range: Sold within range
When we work for the seller, we encourage sensible exploratory quotes at beginning of campaigns and we Ethical Step Quote if appropriate (another concept from Marketnews).
Professional step quoting can be legal, moral and ethical. However, once a campaign is settled, we encourage sellers to be within the range we quote, through the agents we multi-list with at James Buy Sell.
We cannot always control every specific outcome but we do try and consistently inform buyers and sellers where we think the market is at AND it pays off for all.
Timeless Big Spaces
In 2022 and beyond many are looking to combine the new and the old – to combine space and size and sky with convenience to schools, friends, work and shops.
To live a different way in a familiar place.
Many are looking to combine classic spaces that can be updated easily (at minimal cost) – refreshed at any time into the future, whilst still maintaining the exquisite light, flow and feel of a truly original design. Recycle. Reuse. Climate Respect.
Classical Spaces. Timeless.
It’s hard to believe this home is 20 years old – a testament to its design and its build. Live in as is – update to reflect your art, your world. From the moment you walk through the front door you are offered paths of real choice. Left formal, right informal, up private.
More and bigger choices. You could take the Ponderosa back to its minimalist roots or completely transform via a new kitchen, engineered floorboards, freshened stone. Whatever you choose it would be minimal time, cost and council permissions as the current footprint in relation to the sun, connection indoor/outdoor and proportions are perfect.
Our clients have chosen to change nought since they bought, except to acquire some rear land and make a paint change here or there.
On a summer’s morning this Russell Casper architectural family home is fresh and zings.
On a summer’s evening you just relax with friends and family by the pool in a Rick Eckersley garden – wow.
Home flow is effortless and uncrowded.
Moments from Anderson Park – but you don’t have to go – cricket – basketball – in the backyard – self-cleaning pool and trampoline – huge entertaining, seamless connections – all orientated to the north.
Big land size.
In fact, everything is big. The bedrooms are big – the living spaces are big – the garage is big – the lifestyle is big. You know when you get up in the morning and you want some freedom – yeah – well even the walk-in robe and ensuite are big.
The buyer may well be an art connoisseur……. but equally could be a family of Carey, Scotch or Bialik or Camberwell Girls or Boys, St Kevin’s, St Catherine’s or mixtures of both. All the local primary and secondary schools are easy access.
So, what’s wrong with this home? The current clients have been called interstate with a job opportunity and what they have found wrong with the home is………. they have to leave.
Private Light Alive Big Flowing Spaces
See you in 2022
Thank you for this year, Happy Holidays – and to quote our most read, most commented on article of this Marketnews year – Baby Please Don’t Go.
See you next year for our 19th year of Marketnews on Inner Melbourne Top-End property.
James Buy Sell is open right up till Christmas and then we are harder to find than an article without covid (almost did it) until mid-Jan 2022.
Take care of yourself, your family and peace to all.
Lynden Park Precinct Camberwell
North facing rear, sits proud on the street, 849 sqm, 5 bedrooms, 4 bathrooms and pool.
Addendum: Clearance Rates
The Age Clearance Rates are really the good news Clearance rates, rather than the State of the Market Clearance rates. They go on reported results, rather than all results in a sample.
In our clearance rate tests, our Auction tests, we use a pre-determined sample (one hundred randomly pre-selected auctions over 3 weeks, over similar periods 4 times a year).
Going on reported results only, is fairly accurate in strong markets because all agents (us included) rush to tell you how good we are when we are successful. However, we tend to run and hide (not report) when we come second (pass-in). So, in poorer markets the clearance rates are distorted when done on reported results only.
As well we consider the off-market – harder to measure, but very substantial.
We have found the best way is to pick a sufficient sample size and then track down every result good or bad. We chose 100.
And why do we do it only 12 weeks a year – February, Post Easter, Early Spring and pre-Cup (the four majors)?
To avoid number fatigue and therefore no actionable meaning and to reduce our biases.
As our methods are still subject to how we randomly choose, and we only choose 33 each week at certain time periods – some criticism on our own selection process would not be unreasonable. But we feel it’s the best for our buying and selling clients at the Top End.
We have found these 4 times of the year, each year, are good pointers to market fortunes – for it’s a bit late to decide your buying or selling strategies in the middle of May or November. To use the health analogy – you’re already in surgery and under the pump and changing course is then fraught with additional risk.
SOME 2021 HIGHLIGHTS
Mentone $5m
Glen Iris $3m
Brighton $6m
Hawthorn $7m
Malvern East $6m
Middle Park $7m
Hampton $3m
Toorak $19m
Eaglemont $9m
Brighton $9m
Malvern East $7m
Hawthorn $5m
Elwood $5m
Armadale $4m
Sorrento $3m
Hawthorn $13m
Toorak $14m
Hampton $7m
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