There. In the distance. A band is playing. But it’s so far away that you can’t tell whether the tune is Auld Lang Syne or Happy Days Are Here Again.
At the very top end, in real estate if not the share market, the trumpets are soaring. In a roller-coaster week there were four sales above $10 million; perhaps the biggest week at the top end in over six months.
Elsewhere? Gloom is the new black. Confusion, deep pockets, trepidation.
But if you were looking for evidence that the AAAAA top end is not a prisoner of the share market, you’ve found it. It’s also a comment on the lack of genuinely premium housing stock in Melbourne.
Sydney is different. A quick look here will give you some idea how big their problem is.
Melbourne has vendors who are ready to sell, but buyers are either running scared or bargain-hunting. Bargains, where they exist, too frequently lack the quality to make them interesting.
And there’s a bit of strangeness about. We heard last week that the owners of a large block of land in Toorak knocked back a $14 million offer against a $10 million+ quote price. Big call. The would-be buyer turned around and bought a similar block in Hopetoun Road for $12 million. That?s a gutsy vendor as that buyer definitely isn?t there any more; when expressions of interest close at the end of the month someone is going to be a hero or an idiot.
(A client of ours describes this as peak cycle stuff – before suggesting he’s happy to sit and wait like a tiger in the long grass.)
Blocks of land were certainly the flavour this week with a block of land at 4195 Frankston-Flinders Road in Shoreham selling under the hammer for $10 million against a quote price of $9 million with two bidders (finished on a round number ? clearly they had set their limits!).
Elsewhere? Feel the gloom.
The lowest clearance rates for some time are finally reflecting the real state of the market (even the REIV is now admitting concern ? its members must be squealing).
Next weekend will see all sectors tested. The sense we’re getting, from our own clients and others, is that houses are being seen as a safe option. As one client put it ?I get 365 sleeps a year, they may as well be good ones as opposed to staring at the ceiling worrying about shares?.
Our expection is that investment in units will suffer. That negative cashflows will only be borne when there’s an expectation of a decent capital gain.
But a soft landing may still happen in the housing market. Unemployment and interest rates are half what they were during the 80’s bust; and there’s Melbourne’s chronic lack of housing stock.
There’s gloom; but not doom. Or, at least, not yet.
Bayside: Where to now ?
While the Spring selling season grinds on, last weekend it became apparent that it will take more than a boost in the first home buyers’ grant and further easing in bank interest rates to kick-start the Bayside market.
The official (read REIV) auction clearance rate fell to 57% from last week?s 62%.
The real clearance rate (read Morrell and Koren) of properties actually put to auction was only 46%. If that rate continues, with over 1,000 properties scheduled for auction next weekend you’d see over 500 disappointed vendors.
Buyers are marking time and are, as with the stock market, they’re looking for solid evidence that the bottom is in sight before committing to a purchase. That said, the continuing volatility in equities is starting to impact on those seeking the relative stability of property. Canny home occupiers and investors will not wait for the herd, they’ll grasp the opportunity sooner rather than later.
48 Martin Street, Brighton had the relative luxury of three bidders competing before being bravely passed in at $2.1 million. This bravery was rewarded with another $85,000 being put on the table to secure the home for $2.185 million; a solid result for a well presented but somewhat compact residence.
24 Roslyn Street, Brighton did not fare so well. It sold only 16 months ago for $2.3 million. Last Saturday’s most optimistic bid was the auctioneer?s: $2.1 million with the reserve not disclosed.
Brighton East had a better day with 1 Farmer Street achieving $1.36 million, 2 Stone Street $1.11 million and an excellent new home in the Landcox Park Precinct at 26 Milroy Street achieving a vendor-pleasing $1.75 million.
Not so pleased were the vendors at 17 Connor Street. The bidding was kicked off at a modest $1.7 million with the auctioneer countering with vendor bid of $1.9 million. This was enough to prompt the $1.7 million man jump into his car and roar away as the auctioneer was referring the vendor bid. Reserve is set at $2.2 million.
No joy (for the second time) at 6 Imbros Street, Hampton. Auctioned last year, this well renovated single storey timber residence then had a reserve of $1.7 million. It has now been passed in on a real bid of $1.31 million, further discussions came to naught and the vendor is resolute at $1.43 million. That’s brave.
Bayside?s Beach Road, from Brighton to Mordialloc, is often regarded as a barometer of the local market. In good times all eyes are on the sweeping bay views and prices soar. In poorer times all buyers see is the traffic and buyers’ backs are turned. And so at 85 Beach Road, Mentone a two storey family home with pool and ?views from Arthurs Seat to Ricketts Point? attracted a vendor bid of $1.2 million and was passed in with a reserve of $1.35 million.
Bentleigh and Bentleigh East felt the pain with uncharacteristically low clearance numbers of four from nine offered.
The real test of the Spring market will be next weekend, but in times of what seems to be unrelenting change, the stock market constantly discovering new directions, CPI figures due in the next few days and who can tell what levers are left to be pulled by Canberra…