October 22. How high can it fly?

The weekend’s clearance rates were over 80%. But can they fly that high for much longer?

There are properties at the top end being passed in without a bid while some vendors’ reserves are running ahead of what buyers are prepared to pay. While we can’t yet say the market has plateaued, the frantic bidding of past months is definitely becoming more muted.

Blame rising interest rates? We don’t think so. It’s more about specific properties.

Some of last weekend’s mixed results:

11 Nareeb Court, Toorak. 10,000 sq ft of land, sold after being passed in for $4 million ($400 per foot). Since the start of the current market surge, this is the first land sale in a AAA area that we have seen go for under $450 per foot (is Mr Rudd still looking for that holiday house?)

19 Maple Grove, Toorak. A large family home passed in for $6 million and the vendor’s reserve is $6.6 million – that is, 10% deeper than buyers’ pockets.

120 St Georges Road, Toorak, a modern home on a busy road on the river. Not one bid.

2 Ross Street, Toorak, a modern townhouse on 2,500 sq ft of land sold for $2.25 million, but what that result doesn’t tell you was that there was only one person putting their hand up.

In Caulfield on Sunday a similar tale unfolded: 32 Halstead Street, North Caulfield, an eight year-old modern 4 bedroom home on 6,500 sq ft, facing north (all you could want and more), advertised at $1,500,000 – $1,650,000, had 150 spectators and just one lonely bidder who offered $1.6 million with a vendor holding out for $1.75 million.

Clearly the 80%+ clearance rate isn’t in every suburb. For example, in Malvern three out of the five auctions were passed in and in Malvern East some results would have been seen to be disappointing given the market over the last several months.

Investors were again dominant in inner city sales. 64 Somerset Street, Richmond, a four year-old 2-bedroom townhouse – advertised at $540,000+ – sold for $696,000 against a $600,000 reserve with three investors competing.

Next weekend will be the biggest test of the Melbourne market in six months. There are 100% more properties than there several months ago ? but will there be 100% more buyers? We don’t think so! Quality property will continue to attract premium prices ? it’s the “B Grade” properties and homes with issues where the multiple bidders are likely to fade and vendors’ expectations to become unstuck.

Worm turning in Sydney?

Sydney experienced a generally strong but not particularly stellar week with signs of softening in certain areas. Although too early to say that this particular “worm” has turned, the large number of offerings at next weekend’s auctions will give a better indication.

Generally, the old adage “quality sells” held true at the top end all across Sydney except Hunters Hill where supply exceeds demand and some vendors have starry eyed expectations. 11 Stanley Road, Hunters Hill was passed in on a $4 million vendor’s bid and another four bedroom house at 6 Madeline Street, Hunters Hill was withdrawn from sale.

Elsewhere in the west, the picture was more like normal with $1.6 million picking up a 3-bedroom renovated home on 700 m2 pre-auction at 38 Crane Avenue, Haberfield and five out of five Strathfield homes over $1.5 million either selling prior to or at auction. The highest of those sales was 13 Ada Avenue, Strathfield for $2.48 million. It was a similar story in Birchgrove with a trifecta recorded in Birchgrove peaking with the sale of 5 Rose Street for $2.45 million. Abbotsford again posted one of the highest sales of the week with $4.67 million securing a magnificent waterfront four bedder with jetty at 39 Abbotsford Parade. Quadruple that figure for something similar in the eastern suburbs.

$3.125 million picked up a four bedroom house at 8 Upper Cliff Road, Northwood (the best street in that suburb) and a five bedroom beachfront with pool at 6 Monash Crescent, Clontarf topped the list at $3.863 million. Again, at least double that for something similar in the east.

In the course of buying mid-week for a client – an unrenovated freestanding home on a rare 430 m2 at 67 Ocean Street, Bondi – we ran into more underquoting. The agents were quoting around $1.3 million which, as anyone who had done their research would have known, was miles below the market. Pity the 10 or so registered bidders who relied on the quoted range to spend time and money on due diligence only to find themselves knocked out of the race by an opening bid of $1.35 million. With the property then on the market, five other parties took the bidding to the knock down price: $1.521 million.

At 30 Womerah Avenue, Darlinghurst, $1.25 million was needed to secure a beautifully renovated three bedroom terrace with no parking. In one of the best streets in the suburb and with rear lane access, it is interesting to see these prices compared to other similar suburbs further away from the City – especially Redfern which now seems to be on par in price with its traditionally more salubrious north-of-Cleveland Street cousins, Surry Hills and Darlinghurst.

In Paddington, persistent marketing by the second lot of appointed selling agents eventually secured an undisclosed but believed to be over $5 million off-market late on Friday night for the unusual terrace/gallery and warehouse offering at 65-67 Goodhope Street, Paddington.

Further east and again proving larger blocks command larger prices, $ 2.8 million was needed to buy a south to the rear four bedroom renovated house on a level 400m2 at 9 Gibson Street, Bronte.

* Links are to agents’ and search websites – they may be taken down after properties are sold.

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