Volatility v Consistency
The market is experiencing consistent growth across all sectors, although not always apparent or uniform. Nevertheless, prices are on the rise.
This week, we were unsuccessful in bidding for properties worth $9 million in Toorak with Max Ruttner and $12 million in South Yarra with Marcus Chiminello. Both outcomes were strong. In addition, there was a notable sale of $23 million, representing a $4 million improvement in St Georges from the previous week, along with several results around $10 million by RT Edgar the week before that.
As the market gains momentum at the highest levels, it is important to note that off-market results are currently weaker than on-market outcomes in this phase of the cycle. Social proof, established through face-to-face interactions at auctions, is the true catalyst for trust. Buyers and sellers thrive when trust is present and that trust is returning to mid-tier auctions.
Furthermore, whilst our 100 Auction M2 Test revealed volatile trends between Boroondara and Bayside in terms of geography, there was overall consistency and improvement in the $2 million to $6 million price segment.
So, we acknowledge the presence of volatility while also recognizing the underlying consistency that indicates a rising market.
We have an excellent podcast on corporate giving by the equally impressive Zali Reynolds of Shelter, who offers a refreshing voice in the real estate industry in Glen Iris.
Finally, we will be taking next week off and returning having celebrated the Pies victory over the Dees on the King’s Birthday weekend.
Top 5 suggestions for starting corporate giving:
- How much should you give? Once your basic family needs are met, why not consider 10%? Last year, at James Buy Sell, we grossed around $2,500,000 and donated approximately $250,000. This year, our gross will be around $1,300,000, but our giving will amount to approximately $180,000. It’s a challenging decision, and if we have a better year next year, we may strive to maintain our current giving level and aim for 10% over the long term.
Zali, being a Christian, refers to this practice as tithing and believes that 10% is the right amount.
- Who should you give to? At Shelter and James Buy Sell, we both support projects that meet specific criteria: a) they have clear goals or address needs that align with our values (Zali focuses on housing in Cambodia, while Mal supports child surgeries in Africa and homelessness in Melbourne); b) they have low administrative costs; c) they provide regular reports with visual and specific updates on the projects being funded—essentially, they are verified.
- Go Local even when Overseas: Furthermore, James Buy Sell and Shelter prefer to support projects that are largely run by local people. While white missionaries can be great (sometimes) and may make you feel more comfortable dealing with someone of the same ethnicity: sustainable, long-term giving should involve supporting locals who meet the same verification requirements. Ultimately, it’s a matter of deciding whether to give a fish or teach someone to fish.
- Communication: If you are a significant donor, you may have certain expectations, but it’s essential to recognize that we all come from different cultures, and there is no one right way to approach giving. Consider how you would feel if a Russian concept was explained to you in Swahili by someone you just met. Patience and understanding are crucial, and instead of fixating on process perfection, focus on the results.
- Clear Goals: Even if your giving is fuelled by ego gratification, it is still a step in the right direction. We all crave a sense of fulfillment from our contributions; otherwise, why would we continue? However, Zali and Mal prioritize tangible results, just as our real estate clients expect us to deliver the right deal when buying or selling a property. We understand the allure of feel-good marketing and empty rhetoric, but what truly matters is assessing the actual impact and difference your financial support is making.
To ensure your giving is effective and meaningful, consider the following actions:
- Demand verified reports and be prepared to cover the administrative costs associated with producing these reports.
- Hold organizations accountable for their expenses, ensuring transparency and responsible use of funds.
- Insist on receiving direct feedback from local sources. This ensures that your contributions are aligned with the genuine needs and desires of the local communities. Do not merely accept what the charity claims without verification, regardless of their background or ethnicity.
- Shop around or move giving if they are not delivering – but do move ethically -eg with fair warning.
By taking these steps, you can ensure that your giving is purposeful and makes a significant and positive difference in the lives of those you seek to support.
Do your own research BUT get started – in business you make mistakes and in charity or corporate giving or philanthropy you will make mistakes. If you are not making mistakes, you can’t be doing much. So, get started!
If we can help you set up your own significant corporate giving program then Zali’s number is 0422 576 049 and Mal’s number is 0408 107 988
Glen Iris family home
Multi-Agent Only Off-Market
SOI: $3.65m to $3.85m
James 0417 003 333
Zali 0422 576 049
Glen Iris family home
Multi-Agent
Coming Next Month
James 0417 003 333
Zali 0422 576 049
Forthcoming Family Home over 1/2 acre in Kew
Coming in Spring
James Tostevin 0417 003 333
Marcus Chiminello 0411 411 271
Overall Market is Up but Volatile
2023 M1 Opening
Bidderman
1.5
Stock
LOW
Clearance
64%
2023 M2 May
Bidderman
1.8
Stock
LOW
Clearance
69%
Huge Difference in Council Market Strength
Stonnington
Bidderman
1.3
Stock
LOW
Clearance
65%
Bayside
Bidderman
1.6
Stock
LOW
Clearance
58%
Boroondara
Bidderman
2.1
Stock
LOW
Clearance
80%
What I mean by a volatile market is similar to that unpredictable and fiery relationship you may have experienced. You show up, unsure if it will be an amazing date or a complete disaster. That’s exactly what a volatile market feels like.
It’s a risky situation. Do you take the chance and attend the party, risking a public embarrassment but increasing your odds of a positive outcome? Or do you play it safe and stay home, opting for a text instead, where not much can happen? That’s the kind of volatility you face when deciding between participating in an auction or sitting tight.
Volatility occurs when the market is going through a turning point, and indeed, the market is currently turning. However, it’s not a universal and consistent shift. There’s no bell ringing to signal a definitive change, as it could easily turn back again.
In May 2023, we experienced our second consecutive upswing in the Inner Melbourne Top End market after a chain of five downturning markets.
So, what do we know?
We are dealing with low stock, extremely low stock, and our market relies on the balance of supply and demand. Therefore, a significant increase in supply during spring may impact Bidderman (the number of bidders per auction) and potentially lower the market by the time footy finals roll around. Then again, it may not. My guess is that the market will remain solid in the early stages.
Geographically speaking, Boroondara is currently a happening place and has become quite predictable. If you go to auction there, chances are you will sell. This trend has only recently solidified between the M1 and M2 markets in 2023. On the other hand, Bayside is much more hit-and-miss.
When comparing the Inner East to Bayside, our Bidderman graphic below, representing the first 30 auctions in our 100-auction test for May 2023, shows a notable difference. The numbers indicate the Bidderman at each auction, with green representing an immediate success and red indicating a pass-in or failure.
The Inner East boasts a Bidderman that is 50% higher than that of Bayside, resembling the difference between a Sydney/GWS crowd and a Demons/Saints crowd. We still have some way to go before reaching the levels of the Pies vs. Bombers crowds from early 2022 and 2015/2016. However, last year, we were lucky to even gather a crowd the size of a suburban bowls club at auctions.
Things are on the up, and the early signs for Spring are looking promising.
The market is strengthening. The results are volatile. The stock low and not increasing.
Micro
We have been to 4 homes in the last week to give opinions on price – the most since mid-last year and the markets – it’s really clear and simple what is happening overall, despite volatile individual results.
Overall, the market is creeping upwards but on the lowest turnover in a very long time. It’s volatile meaning not consistent and it’s that because volatility always occurs around directional change.
Some areas as you can see in our 100 Auction tests are on fire – like Inner East.
Bayside warmed today and Stonnington went back into the cooler at the lower levels.
Volatile.
However overall, the pressure is on Inner Melbourne buyers and will continue to build as stock remains low, and as the local, state and fed governments continue to have no housing policies of value.
AND as Xi, Philip and Vladimir do, whatever it is they feel they must do.
Macro
And when’s done is done, there are all the signs the Inner Melbourne property market will explode again once their handiwork smooths over.
Philip is playing with the middle Price segment by making people think twice about buying and selling where a mortgage is involved.
Xi affects Chinese people settling in Aus and once the migration floodgates open, the ripples from Inner East may become floods to the Bay where the Aussie Chinese high-end market is only in its infancy. Xi does affect Position. Why? The lack of private school places could be a catalyst for more Asian background communities to open and in turn, attract more Asian background people with more money and a need for high end homes near private schools. The Inner East is already at bursting point compared to Bayside, so does that make sense?
Vladimir is affecting the world’s supply chains and that is affecting the wealthy’s thoughts on business and also builds (Property) – when those issues are resolved, renovations will get back on the agenda and homes in need of a reno, will begin to attract volcanic bidding again.
It’s simple demand and supply = price change. We have no supply and demand is in a lull.
Buyers and sellers were on hot sauce in 2007, 2009, 2015/16 and 18 months ago, then the second half of last year they fell into treacle, but right now there’s some honey around (making prices volatile). It’s full steam ahead in the East and back on the hot sauce again.
What is happening in the markets on a PPP basis?
Legend: Red is a problem and green in good with amber mixed.
Position: If you were buying or selling a ready to move in home, top or bottom end in Boroondara then expect some action. Well that’s you Xi.
Price: If you were looking to sell a home needing a big mortgage in the $2m to $6m range in Bayside expect little, until you are prepared to give it away. Thanks Phil.
Property: If you have land in Stonnington and its higher end, say Toorak expect a 50/50 – may or may not sell – depends on right agent, right method and right price.
Mmmmm Vlad that’s you and wealth confidence and building chains of supply!
Mal and Gina, so we know you as buyer agents – what’s the “off-market selling” you do?
In a buy sell, on the sell, we manage the whole process. Our focus is price, strategy, presentation, agent selection, execution, and extras, all of which are largely ignored in many off-markets, big mistake.
Price: The most abused tool in your toolkit. Get it right and it’s off to the races, get it wrong and you’re mucking out the stables. Why is so little testing done on price prior to going to market? Why is your decision made on who tells you the highest number or who sounds the most credible, when neither of those is consistently the best strategy to get the best price.
Strategy: When the average bidders at auctions in this market is 1, why is the only strategy suggested by the agent quote ‘em low and watch ’em fly at auction. Don’t worry about the sales pitch of somebody else’s miracle auction, give me the logic on why 1 bidder auctions, quoted low, are a plus for you. They are not, they are efficient for the agent and good for the buyer.
Presentation: Why is there an unwritten law that if you are selling your home off-market: it’s ok to look less than its best? Some of our strongest arguments with our off market selling clients are about spending money on presentation. You need to do it, even if the agent says oh, she’ll be right. That’s total BS. Why would we go out on a limb if we didn’t know it makes a difference – why does an agent not push as hard as we do: turnover and lack of time.
Agent selection: You really wonder about some sellers when they say I am going with such and such, as I know her, or he is a mate, or he has been ringing me a lot for a long time (why isn’t he or she ringing buyers for existing selling clients). WTF. Would that cut it at work?
Does Ross Lyon or Brad Scott make their selections on mates or who is best for the job? The coaches they replaced have been hailed as hardly done by nice guys – but Ross and Brad are very different – a clear plan, good support and they don’t select their mate or who rings them up all the time – they select who is best for the job, after they have been through a series of tests.
Why narrow the field in your first act. Wouldn’t it make more sense to have more agents, bringing more buyers and wouldn’t it make sense to keep more agents on your side?
How do you feel when you are rejected? Pissed off and angry at who rejected you? Probably – so what do you think agents who didn’t get your job are saying to a buyer when asked about your home? Let them have a chance to sell it if they have the best buyer.
It doesn’t feel like rocket science, there is so much history and self interest in how some currently sell.
Competing: What do you want agents to compete on – promises or results. Huh? Why make your final selection on glossy brochures and a slick sales presentation – it’s a pointer for sure – but when all are slick and glossy (all look so similar) doesn’t it just become a case of mine is bigger than his, choose me.
What about bring me the offers – from multiple agents? Why not test credentials in an off-market competition? Agents tell you it’s all about competition to get you the best, well get them to compete. We compete all the time.
But be careful – if you can’t manage the public narrative, then multiple agents instead of a better deal, become a fight to the bottom.
Execution: For all the not so nice things you can say about agents – there is one huge plus – their ability to focus on cutting a deal. It’s brilliant. But what happens if that deal is not in your best interests right this second? There seems to be no pause and reflect button on our agent friends at times. We encourage pause and reflect and then accept or keep going.
Extras: How can your agent take the time to give you something extra when they have 6 to 10 campaigns running this week – sorry I can’t see you at this time or this time or this time, but I can see you at 10.57 in my office for 3 minutes – and you’re the client. The buyers must be getting less. Catch 22 – if they are not full on, then do you want them?
Solution: Let them do what they do best – call and call and call and combine them with someone who can bring strategies to the table like a mexican wave, another buyer, another agent and advice to hold until we get a competing buyer and more.
Real Life: This week the off-market above was a multi-agent home where we ran a mexican wave in Marketnews over the Easter weeks and sold in the low $4m’s having been bought in the high $2m’s during Covid – nothing done to it. It’s a great home.
Multi-agent Off-market began Feb 4 with a welcome meeting:
- Selling client was a reader of marketnews – unhappy with agent advice she had received.
- She rang us. We made a presentation to be open and look at all angles.
- We were given an authority, organised a contract, produced an SOI and gave access. The 4 off-market ducks.
- Gina replaced the styling with a new style.
- We selected to go off-market with a multi-agent strategy.
- We replaced the photography.
- We ran a mexican wave in Marketnews
- Solid interest in Week 1 from 1 buyer, via an agent.
- We at marketnews produced buyer 2 with solid interest in Week 3
- Selling client and agent and James Buy Sell meeting: strategy to make it happen as we now had 2 solid and understood buyers.
- An auction (we do love them when the ingredients are there) was organised over the phone and strong competition from mid $3m’s and on the market to over $4m. Agent did a great job. The buyer bought well.
- The buyer came from a marketnews mexican wave and looked at a beautifully presented off-market home and competed against another buyer from another agent – the brilliance of multi-agent.
- The total cost to our client was less than $10,000 for furniture, touch-ups, photos, contracts etc. and total agent fee was no more @ 2.2% split 50/50 with winning agent.
- Job done: Buyer bought a rare home well and the seller got what she wanted.
- Money: James Buy Sell Multi-Agent increase was $1.25 million or 45%.
Melbourne Median increase during the same time was 7.1% (reiv)
Aspendale Median increase during the same time was 9.5% (reiv)
Increase taking local agent opinion of value and not the result was: 21% (SOI)
The price in this volatile market was a record for area property type.
This graph above shows this and is to scale.
April 25 2023
“If you’re thinking of selling don’t look past Gina and Mal for exceptional results. It’s their business to know how to stage a house and garden, know the best time of the year to sell in different areas, and they will know the key selling points of your house (and they can arrange for all of this to happen for you). They know how to negotiate and more importantly, how to time negotiations. They know the real estate agents and know who will be the right one for you. You’re in really safe hands and most importantly they’re honest – they will advise to not sell if the offer isn’t right. They’re truly ‘on your side’ and advise you on how to get the best outcome for you. My advice: at the very least meet with them – you won’t be disappointed.”
Our Buy Sell Client on this Aspendale home
What real estate advice can look like
2021 Bought - $19m
2023 Sold - $23m
Normally we say nothing - privacy - but somebody else splashed it all over the papers. In 2021 we bought for our client. This week sold for a $4m gross profit in 2 years. Same home, same agent. In fact same clients we acted for on another $4m+ profit Toorak home previously. That's a +20% uplift as the Toorak median dropped 10%.
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