Mexican Wave
by Gina Kantzas, Mal James, Kathy Russell and Randall Smith
Top End is heading?
A lot of property hype right now (and from us too).
It all seems illogical in a COVID world, that the Inner Melbourne A-grade home markets are rising rapidly, especially when there is a lot of pain and negativity.
So, Mal and Gina and all at James Buy Sell, what is really going on?
Top End is on a wave, a Mexican wave as we have called it in the past.
You know, like at the ‘G, the MCG.
One person starts and another joins until the whole crowd (sans members) has their hands in the air and the circular intensity builds and builds and ……… yep……. it pauses……. and it starts again.
It feels like a building phase of the Mexican wave and if so, then that’s exciting – be you buying or selling.
Whoa Mal and Gina, that’s reckless to be saying such positive things about the markets, about life.
Surely if the market is good, we need to be careful, as it can’t last!
For every argument to say Melbourne Top End is not rocking and/or it can’t last, we can give you a logical counter to say it is and it can.
Why live your life in denial or in fear, that’s no fun?
A rising market is actually great for early buyers. (yep 100% true)
Of course, the market can tumble (even in the short term) and like a Phoenix rise again and it will, as long as the demand and supply characteristics of Inner Melbourne remain as is BUT……this article is not a mind-numbing, fence-sitting examination of stats and disclaimers. We covered all the stats in the last 3 weeks *Marketnews 13/3/2021
The 2021 Opening market is statistically as hot as it was in the Opening market of 2016 – proven, verified, stamped as official. The only difference we can see is the C-graders are not selling as quickly or as much over reserve as 2016.
So let’s get to specifics:
- What is happening in the secretive world of EOI and Off-markets over $10million?
- What is happening on the streets in the $2m to $6m market driving suburbs?
- What is hot, actually white-hot and what is not?
And we’ll finish with a question many are asking. Should we wait or should we go?
Summary: It’s heartening to see activity and positivity, after so much of the other stuff. A rising market is good news for sellers, but it’s also good news for buyers. The market is, without doubt, right now, solid to hot.
Here are some real-life stories, our stories.
$10m+ Off-market
This is the James Buy Sell front grille, the showy part of the business and it’s shining as bright as ever, right now.
Recently we’ve had 3 buy sells over $10million with an average price of $17million. This compares to a time in late 2016 when we bought Towers, Kooyongkoot and Moule – those 3 buys averaged $16million. *Marketnews 23/12/2016
Top Tier agent and man about town, Marcus Chiminello completed 3 x circa $20million sells in the last fortnight (including one with us).
Where is this all going on?
Toorak is the epicenter of the big exchanges, but it’s not the only suburb – think Brighton and Hawthorn as well.
$2m - $6m On Market
Overall: Simples (sic).
PPP A-graders are Code Red, which is on fire.
Up 10% and some even more (already), since the big lockdown.
It’s across the board, but the real $2m to $6m activity hub and leader in 2021 is Kew, Hawthorn and surrounds (Boroondara).
- As Boroondara was in Australia’s post-GFC property renaissance, in the autumn of 2009 for 18 months *Marketnews 23/5/2009
- As Boroondara was in Melbourne’s rocket launched property frenzy, beginning in February 2015 for 2 plus years. *Marketnews 21/2/2015
The Drivers?
- Overseas money flows have returned to Boroondara and then the wider fringe markets have turned on the back of these. The ripple effects are leaking through to Bayside’s Top End, where the overseas money influence has traditionally not been as strong.
- Locally, many are on the current family home bandwagon because:
- The pandemic overall hurt the poor but helped the rich.
- Top End buyers who are borrowing largish sums of money are convinced times will be good for a while (meaning their incomes) and interest rates will stay consistently low for enough time to pay off some debt (meaning their expenses).
Local and Overseas money, has in early 2021, begun colliding on limited stock (when are A-graders ever not limited) creating a residential property recovery’s perfect storm.
We know the market is hot when our auction buying rate is not!
Our Boroondara $4m-$6m auction efforts of the last few weeks
- Mary @ $4m we missed $700,000 over the top of the agent quote
- Kinkora @ $6m we missed $1,200,000 over the top of the revised agent quote
- Adeney @ $4m we missed at the top of the revised agent quote
- College @ $5m a miss for us at $500,000 over the top of the agent quote
- In fact in the last month in this $4m to $6m price range, in this geographic area, we have only bought publicly Gellibrand @ $4m – $700,000 over the top of the agent quote – yes a volcano of overseas and local money.
Some perspective please – whilst it’s not an exact science, only Kinkora was ($300,000) above our expected price range, given to our clients before we started negotiations. Our clients chose to go no more. As we said last week, the market has risen 10%, not 100%.
A well-worn client quip for March 2021 has been:
It’s hard to pass speeding bullets, no matter how much ammo you fire at them.
Shiny new Lifestyle
We have covered the submarket of one P: $10M+ Price and another submarket P: Boroondara Position, what about a third submarket P: Property types?
Hot Property in a word (well 3): Shiny new Lifestyle.
Post-Covid the world has changed, as it did when we brought the toilet inside, made the kitchen a focal point not an afterthought and built rooms bigger for us overweights in the 20th Century.
Life is short.
The homes that present a ready to move in shiny new lifestyle are the Top of the Pops.
From Sorrento to Aspendale to Brighton to Queensland. From Toorak to the Country.
Buyers are looking for the beach, for the air, for freedom.
And they don’t want to wait – they don’t want to renovate!
If you have the right home, then you will have buyers who will compete as strongly as they did in 2016, as they did in 2009, as they did in 2006.
Aspendale today (halfway between the Peninsula and Inner Melbourne) – we stopped $800,000 over the quote @ $4.5million and some. Yes, you heard right, we were bidding at Aspendale (some lateral beachfront thinking) and yes $800,000 over the top end of the quote was still not enough. Well done Stavros Ambatzidis and Kimberley Ferguson, obviously, I’m not that good after all!
Aspendale Perspectives: It was on the market at $4million and we did advise the likelihood of the $4.5million number and that stop figure prior to auction, based on client circumstances.
Howzat for balance?
Have we hidden our views on the market, have we fence sat on what is really happening now?
Is your big buying question possibly becoming:
Do I wait or do I go?
And our answer back to you is a question:
Are you feeling lucky?
- Historically the good stock really only comes out in good numbers, in good markets.
- AND it’s harder to sell well in the future if you didn’t buy good, in the first place.
- BUT hold on Mal and Gina, surely prices will ease!
Oh yeah we forgot (hashtag no we didn’t). Prices eased maybe 10-15% in 2018/2019 …………………..but that was after they had gone up 30-50% in 2015 and 2016.
So we guess you need to ask yourself, as Clint Eastwood would say, are you feeling lucky?
Are we now in the same part of the cycle as 2017 and it eases from here?
or
Are we in the same part of the cycle as 2014 and it rises and rises…….. and rises again, before it eases?
Bottoms
This is why smart buyers like rising markets. Besides more choice, right now several of our buying clients will have $250,000 to $1,500,000 in additional home equity between signature and settlement. A year on, possibly all our current clients will have better balance sheets than those who didn’t buy this weekend. This is who a rising market can be really good for, buyers who push past the noise AND act on an A-grader.
For every man or woman who tells you they’re waiting till the market cools, there are a dozen from a decade ago, who thought the same and paid more for less, later in the cycle.
For every dinner party bottom bragger, there are by market math’s logic, nine sitting around that same table sipping drinks, smiling uncomfortably and saying nothing.
So is 2021 the same market cycle timing as 2017 or 2014?
Who really knows? Does it actually matter? Some further thoughts.
- What will happen to TOP END prices when they open the borders again?
- Will the government be encouraging wealthy migration to pay off our debt?
- Will Melbourne still be world leading in schools, health, stability and a clean environment?
- When high end visits from expats and foreign nationals are allowed en masse, when even more demand and money come to Inner Melbourne Top End, will night follow day?
Our best advice: If you see an A-grader AND you like it, buy it. If not move on until you do.
Seen the movie before
Despite the above magniloquence, we’ve had a strong month, but an emphasis on that, would not have added to the intended learnings in this article.
We really enjoyed writing today’s upbeat piece on the up market – we totally believe in what we have written, but again…… please do the research, get your pricing right and make good long-term A-grade purchasing decisions (maybe even consider engaging with us to help you buy or sell). Over our 20 years we’ve seen this movie a few times before, we don’t know when intermission is, but we know how it ends.
We will see you again for a new episode of James Buy Sell Marketnews after Easter. We hope you have a happy and safe time (and chocolate) with your friends and family.
Design Trends - Kathy & Randall
In Melbourne Real Estate we see some incredible homes. We also see homes described as a ‘renovators delights’, or a ‘unique opportunity’. Some have potential and others make me want to run and hide. We also witness emerging design trends.
Design trends guide everything from the shape and colour of the fittings to the types of rooms in a house. Trends emerge into existence, become ubiquitous and then, often, fade away. In recent years we have seen the re-emergence of arches and curves in walls, staircases, kitchen counters, and even mirrors and artwork. (Have you seen the neutral-toned rainbow on every child’s bedroom wall?)
Fixtures and finishes are also always changing. Tap and door hardware is no longer just stainless steel. It’s black, bronze or even coloured. Once desirable, semi recessed basins have been replaced by above-counter coloured basins.
While trends in decor are generally fleeting, bigger picture, more structural trends gradually change over time. Our homes evolve as society changes. For example, over the last few decades, Australian homes have been becoming larger, with smaller gardens.
Not too long ago, it was considered a luxury to include an ensuite bathroom. That’s a trend that didn’t die; it grew. Now we expect an ensuite and a walk-in robe. More recently, we’ve been finding family homes with multiple kitchens – a butler’s pantry, family kitchen and an outdoor kitchen!
I’m not against fashions and trends changing with the times. It’s exciting to see new things emerge. My concern is when trends blind homebuyers to the fundamentals of good design, such as the ‘bones’, proportions, flow and orientation. Good design is timeless and doesn’t come and go out of fashion.
So how do we ensure our homes are both fashionable and able to evolve? Even with bigger picture trends, try to look beyond the multiple bathrooms, cinema and mudroom to the basic fundamentals of good residential design. How will the home adapt to your needs over time? In the past year, our homes have become so much more than a place to live. They have been our sanctuary, our work place and our place of education.
Perhaps our overall aim should be that we respond to the fashions of our time without compromising the fundamentals of good design.
Can you help someone?
We continue to admire and thank our health and ancillary pandemic health workers and leaders.
And we acknowledge the hurt many Melburnians are experiencing and we are genuinely sorry. As a small group (Simone, Kathy, Randall, Gina, Maddie, Phoebe and Mal), we feel it’s time to help in the rebuild of our community and we have pledged $50,000 in 2021 ($25,000 given in 2020) to the Marshall White Charitable Foundation led by Leonie Hemingway and James Connell with Jack Bongiorno, who have joined forces with Launch Housing led by Bevan Warner with Jeanelle Mariani and Silvana Butto in building a non-partisan public fund supporting (with the little things) Melbourne women and families experiencing or at risk of homelessness.
Launch is a brilliant organisation we have supported substantially since 2003 – they get it done. The work they did, during the pandemic, was amazing. Please support when this public appeal is Launched pretax time. It is an incredibly beneficially partial solution to an unfortunately increasing need.
We also encourage you, if you can, when you see somebody in need to just help them out. Give them a business break, or some money, some time – please do what you can. Many of us have been incredibly lucky, but many of us Melburnians (through no fault of their own) have not been so.
