There are trends and there are exceptions. When the exceptions cease to be exceptional, that could be a new trend emerging or, like waves on a beach, it could quietly disappear into the sand.
All of which is of casual interest to the casual observer but is in the you-bet-your-future category if you are buying or selling.
So how do we make sense of today’s volatility?
Firstly by acknowledging that there will always be exceptions; and then by looking at the market as a whole and augmenting that view with our own observations – often made in private – of what is happening at the top end.
The market as a whole? That’s easy. It’s now faltering against the sandbars of over-supply and bubble-pricing (by vendors still living in bubbles), by the threat of increasing interest rates and buyers’ fears of paying too much now for what may be devalued later – and who are in no hurry while their choice is as wide as it is now.
And then there’s the top end. Always a world of its own, but not wholly unaffected by happenings further down the beach.
Here the exceptional – in terms of the quality of property and its scarcity – is closer to the norm. Here the fears of missing what may be once-in-a-long-while opportunities still count. Here the bubble is still to pop. Here, in some cases, the market is still ahead of where it was a dizzy 12 months ago.
- 88 Mathoura Road, Toorak, sold prior to auction for $6.5 million – that is $650 for each square foot – and this is not a AAA address
- 2/155 Domain Road, South Yarra (no link), sold privately last week. A good first-floor apartment – but $7.5 million? $20,000 for each and every square metre? Pass the smelling salts
- 50 Charles Street, Kew. Two-storey Victorian. Busy street. No garage. Sold via a boardroom auction for $4,379,000 (it sold only a couple of years ago in the high 2’s). What did it really have going for it? Schools.
- 2 Bromley Court. AAA land for $5.6 million or $550 per square foot. That’s up there.
So, at least at the top end, the right house in the right place is still seeing people put their hands up. Not as many hands as six months ago, but still enough to hold the market higher than we would like or believe to be sustainable.
Under $3 million? Different story.
The volume of pre-Christmas stock is huge and much of it won’t find a buyer before next year. Those vendors who committed to sell on the clearance wave of a couple of months ago must be now wishing they had placed their advertising budgets into their Christmas stockings rather than sending them in the direction of their estate agents. $20,000 or $30,000 or more for the pleasure of watching an auctioneer get no bid on a wet Saturday? All that stress for no result? Paradise for masochists.
And the buyers? One we were competing with at the weekend was not alone: “Yes, I will have a go, but I’m not going to chase it because I don’t want to regret it in March.”
That Boy’s Club, the REIV, had their AGM and a motion was put that auction reserves should be published – which would at a stroke end infinite market manipulation and distrust. As we could have predicted, the motion was thrown out and he who was brave enough to put it was chastised by the heirarchy for bringing the industry into disrepute. Nice one, REIV, you’re about as in touch with community views as our departing State government – and appear to be nailing your own coffin.
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Bayside. All wet.
The constancy of wet weekends interspersed with two elections and two football grand finals during the Spring selling season has played havoc with auctions – resulting in lower attendances and a predictable week-by-week ebbing of clearance rates. The expansion of supply of properties by those wanting to off-load their castle prior to Christmas has also made it harder for agents to clear even the new stock, let alone those properties passed in over the past weeks.
We are still seeing resistance from a significant number of sellers to the new order of real value; and this is largely to blame for the ebbing clearance rate – so it’s not only rain, elections, etc.
When you see agents reported in the media acknowledging the reality of a buyer’s market, rest assured the comment is directed fairly and squarely at sellers who are still living in hopes of what might have been. To those who intone the mantra “We don’t have to sell ,” we say, “Then don’t! Take your over-priced property off the market and stop wasting everyone’s time.”
Genuine buyers want to and should only deal with genuine sellers who have priced their property accurately for these times; or who are prepared to negotiate sensibly from a realistic expectation.
If this is not the case, buyers will and are walking on by.
The Brightons had a miserable day with the eventual clearance rate barely saved by no fewer than six properties being recorded as sold prior. From the 27 scheduled only 8 found buyers on the day.
Top of the heap was 10 Menzies Avenue. An almost-original Queen Anne on 1100 sq m, it needs a significant injection of funds to restore and extend and so the early expectation of close to $3 million was never going to be achieved. To the owner’s and agent’s credit this initial wish was quickly modified and a sale resulted to the one bidder at the auction at $2.6 million.
The auction of 52 Carpenter Street was a little more contentious with the agent’s quote of between $1.15-1.25 million ensuring genuine interest. Five people took the bidding well over the top of the quote range with the agent twice referring the bid. At $1.32 million he still did not have instructions to sell and, somewhat chastened, quickly passed the property in amidst mumblings from the gathered throng. A final sale price of $1.36 million was achieved – a good result for the client but somewhat on the nose for the aspiring buyers.
The highest priced pass-in was that at 12a Manor Street. Essentially land only (1380 sq m), the auction was lackluster with the highest bid the auctioneer’s $3.8 million. This was apparently matched by a genuine later offer of the same amount but it’s still a lazy half a million dollars shy of the reserve of $4.3 million.
At the other end of the scale, the auction of a bargain basement villa unit, 4/14 Brickwood Street, surprised all at the lack of interest at this level. Only a few months ago, first home buyers, supported by mum and dad, would have been all over something like this. On Saturday the only bid was $490,000 and that was again the auctioneer’s. Reserve is set at $520,000.
On the post-auction front, 8 Kent Avenue, passed-in at auction about a month ago, has finally been tidied up with a sale reported at $2.55 million, just $50,000 more than was offered on the day.
Hampton and Sandringham had a better week: all but 4 of 13 sold.
3 Lorraine Court (Brighton Beach if you’re selling, Hampton if you’re buying). A new contemporary house with mandatory multi-car basement garage. The price was undisclosed but understood to be between $3.1-3.2 million.
23 The Avenue, Hampton. Described as “all new”, it’s an imitation period-style timber house which ticked all the right boxes from location to accommodation and quality of finishes. It sold for $2.375 million.
Sandringham was generally very busy, with the exception of 26 Kirkwood Avenue. A contemporary house in a blue chip location, it didn’t quite hit the mark and was passed in. Reserve is $2.7 million.
Some others which did better:
- 45 Gladstone Street sold at $1,503,000
- 39 Sims Street sold at $1,555,000
- 7 Holzer Street sold at $1,767,500 (prior )
- 10 Gladstone Street sold prior at close to $1.5 million
Beaumaris struggled with just the solitary success on the day from six offered: 5B2 Dalgetty Road sold for $1,710,000.
Black Rock managed to stop the rot with both offerings finding buyers, including 5 Ardoyne Street selling for $1,255,000.
With close to 2,500 auctions expected over the next two weekends, agents are praying for dry weather and crowds of bidders. At this stage more than prayers may be needed.
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