Welcome to this year. Hope it’s a good one.
“What is the market doing?” “What will the market do?”
If we had a dollar for each time …
Let’s start the year with a clarification: there is no Melbourne market. There’s a whole series of them. And then there are markets within markets. Sometimes in the same street.
Things will change. Significantly. Quickly.
Is it time to re-calibrate?
At a couple of auctions in Portsea last month, there were multiple bidders who took each property to close to $9 million (and well past both their reserves and logic). In all of last year there were only two or three Peninsular properties sold at that level and each took around six months.
OK, at least seven people are ready to pay over $8 million for land in Portsea. Does this mean fasten your seatbelts in Toorak?
There’s still a backlog of mansions out there waiting for offers. And waiting. And waiting.
Grab your wallet:
They’re all $10 million plus “trophies”, all with a poultice spent on marketing. All still on the shelf.
Meanwhile, over just the past couple of weeks we have bought a number of properties at that level. One in particular highlighted the fragility of some positions: three weeks ago the vendor had a written offer with eight numbers in it. And vacillated. The offer evaporated. We bought it for a number approaching a million less.
And then there are the expressions of interest campaigns. As often as not, they’re people putting toes into the water and hoping there will be a punter who knows no better than to pay what an agent says will be needed.
(Why do people ask agents? You’re far better off asking other people at inspections what they think a property is worth. They’re the ones who will – or will not – be putting their hands up.)
Why such great inconsistencies? They’re at least in part explained by the lack of supply at the top end. Little choice can lead to bad choices; or irrational decisions to spend too much money.
- 14 Scotsburn Grove, Toorak. An unsurprising $7 million, but only looked good because there was nothing else good to look at.
- 1 Yarradale Road, Toorak. Declared on the market at $2.3 million and went to just over $2.8 million with multiple bidders. Handy premium.
And then there’s the complicating factor of timing. We’re in a stop-start season. It’s on for two or three weeks in February, stops for a long weekend and is followed by (this year) an early Easter.
The feedback we’re getting is that there are people who are ready to sell, providing it’s into a market with more certainty. They’ll list post-Easter if the run-up looks promising. For buyers, patience may pay.
Lower down, there’s strong interest at $1.5-2.5 million which thins when there’s a 3 involved. And crowded open-for-inspections because there are so few to inspect.
And then comes google.
This is far more significant than toe-in-water stuff. It’s potentially a major, major business for google and will affect local heavies realestate.com.au and domain.com.au — to say nothing of estate agents. Their future business model may be as consultants, not agents, and require a serious culture change. (It’s a model we have already embraced, but we must still anticipate change.)
It seems everyone’s an authority on the top end (estate agents who would like some listings, buyers’ advocates we never see). We suspect there’s a lot in common with the fan magazines’ fascination with the royalty of Hollywood. And is about as reliable.
The top end is our backyard. We don’t rely on rumours, we know what’s happening there (we have, for example, bought more of Toorak than anyone in its history).
And so a word of caution: do not believe all that you hear. If claims are being made, ask to see proof.
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Bayside: It’s still very lonely lonely lonely at the top.
Bayside was largely deserted throughout January. Those agents who were still around mostly stared forlorn at unringing phones while colleagues, buyers and sellers were out of range on beaches or the ski slopes of the US and Japan.
Yet the need for a break was compelling after the roller-coaster of 2009. Had anyone ever had a year like it?
A year which began with echoes of not-distant thunder of the financial meltdown – and you could buy despair for a penny a pound – by its end had prices and volumes headed for unpredicted stratospheres.
Who woulda thunk it?
Then what to expect now, when the unexpected seems the only certainty?
The sense we get is that the extended summer break has given buyers some time to pause, to catch their breath and to reflect on how they are going to deal with the market in 2010. That it is well and truly 12 o’clock on the Bayside real estate dial and it’s time for a more measured approach; that heads rather than hearts should rule.
It’s a cyclical thing: the sellers have now moved ahead of the market. This is most evident at the very top end across Melbourne; and certainly in Bayside.
We commented in Top End Trends late last year that the $5 million plus segment was suddlenly innudated with gleeful sellers hoping to cash in on the surge of foreign buyers who appeared mid-2009.
That surge turned out to be a wavelet and, as predicted, that end of the market is now parked. A dozen or so properties that were extensively marketed in Spring and the pre-Christmas period remain unsold or in some cases withdrawn from sale.
- 319-323 St Kilda Street on the corner of Bay Street in the Golden Mile. Still available at around $9 million.
- 29 St Ninians Road. 1000 sq m on the beach. No takers at around $10 million.
- 1a Martin Street. Beachfront 1930’s mansion on 700 sq m and recently refurbished. Still looking for around $10 million.
- 52 South Road. Brighton’s 5500 sq m “Gone with the Wind” which, frankly, no-one seems to give a damn about, at least at $15 million (but the brave souls knocked back an offer not far from that).
- 184 The Esplanade. Glitz. Glam. Views. And nobody’s darling at $8 million plus.
- 22 Glyndon Avenue. Old Dowager in Golden Mile with partial beach frontage seeks new partner with $9 million to spare. (OK, really a block of land and now withdrawn from sale).
- 316 St Kilda Street. Vast land, appealing period house. No takers at around $7 million.
- 23 Cosham Street. The wallflower of 2009. Still available at over $5 million.
Why are so many still to find buyers?
Our view? It’s the money. (The agents’ view? It’s the money. But they won’t say that out loud and rarely to their vendors.)
But among this hive of top-end inactivity, there were a few sales which were made:
The pick was 25-27 Glyndon Avenue. On the beach and a very strong $15.5 million paid by Mario Salvo.
For the Warnes, for Christmas, a beautifully restored Victorian mansion on William Street, with an adjoining house, and all it took was around $9 million.
And there were a few (private) tunes whistled to break January’s silence:
Following an expression of interest sales campaign, 6 Martin Street was resold by James Brayshaw for $4.9 million.
28 Normanby Street sold for “close to $5 million” a gleeful agent reported to Top End Trends. A source close to the vendor said it was really $4.76 million, but agents’ arithmetic has always been negotiable.
A new house on the corner of of Meek Street and James Street sold for around $3.5 million.
79 Well Street finally sold after a change of agent: $2.75 million.
On the auction fron the only sale of note was 1-4/380 St Kilda Street. 4 old villa units on 1000 sq m on the corner of New Street. Following an initial quote of something over of $1.8 million, the property sold under the hammer for $2.585 million. Is a hmmm? in order?
This weekend was really the beginning of the season and although the clearances were strong, of the 6 or 7 auctions attended by Top End Trends in Brighton, most were uninspiring with muted or no bidding.
8 Carpenter Street should have sold for at least $2.5 million and if auctioned in November, would have reached $2.7 million. Three lame bidders hardly fought over it before it stumbled to $2.4 million and, after a vendor referral, was declared on the market. And that is where it finished.
51a William Street was passed in on a lone bid and a sale at $1.5 million was negotiated shortly after. We remained unstirred.
2 Alton Avenue, a little over 500 sq m marketed as an opportunity to do up or tear down pulled two bidders who almost aplologised to each other for bidding for the same property. A reasonable result ensued at $1.475 million – $265 per sq ft.
A townhouse at 52 Halifax Street on the corner of Weatherly Grove, had the auctioneer looking somewhat nervous prior to the auction as he scanned the gathered few trying to identify a friendly face, but to no avail. It was passed in on a vendor bid, but smiles all around when someone showed some later interest and was hastily escorted inside. Final result? Sold for $1.555 million.
No joy at 9 Peacock Street. A vendor bid of $2.4 million unbeaten by any genuine bid. Reserve yet to be disclosed.
118 Cochrane Street sold for a very respectable $1.771 million
Surprise of the day was 35 St James Park Drive. Well attended by a number of Chinese buyers, the fung shei must have been right because strong bidding pushed it $260,000 over the reserve to a very giddy $1.91 million.
In East Brighton, 62 Canberra Grove reached an expectable $1.58 million, well within the quote range of $1.5-1.65 million.
Overall, a soft start to the auction season. Watchful buyers and semi-spirited bidding. But it was a hot day and maybe the beach was still beckoning.
The real test will be next weekend with a full book of auctions ahead of the following long weekend with none.
The beach. The beach again will call.
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