Archive for November 2016

Auctioneer Peter Kakos (Marshall White) sold 8 Lagnicourt Street Hampton for $2.41m.

Under big auction numbers on the weekend, the property market passed with flying colours, with clearance rates solid again – the REIV reported clearance rate was 77%. While we saw many pass-ins, most properties sold by the end of the day. Do we think this is a sign of a change in the market? Not yet. At inspections during the week, many agents were commenting that vendor expectations are rapidly rising, buoyed by the strong results.  

Surely this rising market has to stop soon? This is a question that often comes up in discussions with us. Of course, nobody really knows the answer to that question. However, there is no doubt that confidence is high and there is more than one thing driving this market: low stock, slow town planning processes, increasing numbers of new buyers and many ‘wounded’ underbidders.

Who is buying and where is the money coming from? These are other questions we are often asked. Apart from traditional buyers/sellers, it comes from sources such as:

Off-shore: either foreign buyers and/or expats wanting to return home for a better family lifestyle/investment.

Downsizers: selling the big family home on large land. Wanting to stay in similar areas, they are often competing alongside first home buyers (but with larger budgets) for smaller single-storey single-fronted homes.

Investors: who feel that Melbourne property is a safer place to park their money long term, compared with shares and term deposits.

Parents: many first home buyers can’t afford (or get approval from the bank to borrow required funds) to live in the areas they have grown up in. Rather than waiting to give inheritances, some parents are contributing to their children’s purchases now in an attempt to keep children closer to them.

Growing and/or blended families: who have outgrown their smaller first homes and need the larger spaces.

Upgraders: buying larger homes and choosing to keep their smaller homes as investments.

How is the building / renovation market? In a word, flat-out. With an architectural arm to our business (we administer around six residential projects at a time), we see this first-hand. Many property owners who were thinking of buying are now working out that it is better to stay and renovate or even rebuild. Stamp duty, agent fees and advertising are big costs, and, in addition to that, there are further questions about what and where they will move to. All of our contacts (engineers, town planners, builders) have a healthy work outlook for next year. There is a backlog of work ‘stuck’ in planning that developers are waiting on to commence projects.

A big thank you for following us this year – we appreciate your support. Today’s Market Pulse will be our last one for 2016 (the Year of the Bulldog!) and we are looking forward to returning when the auction season starts again in 2017.

Auction Highlights:

Land Sales:

Auction Spotlight:

22 St James Road, Armadale

James Tomlinson (Marshall White) was the auctioneer at St James Road, Armadale, which saw bidding from five parties.

Great little single-level period home with front and rear car access, and a short walk to High Street shops and Union Street Reserve.

The facade was pretty and the rear, while very liveable, was a series of lean-to structures – all of which could easily come down and make way for an ‘easy’ extension. Auctioneer James Tomlinson gave a concise preamble and the auction opened at $2m. With quiet, timid bidding from multiple parties, the property sold under the hammer for $2.46m. Any one of the five bidders could have (and probably should have) bought this home … who says the most money always wins?

22 Warida Avenue, Malvern East

Auctioneer Damien Davis and agent Talia Tomaino (Jellis Craig) conducting proceedings at Warida Avenue, Malvern East.

The good-sized crowd at this auction surrounded and spilled into the pretty front garden to watch Damien Davis from Jellis Craig run proceedings. The 1930s home had lovely period features throughout the original front part, with a more modern rear extension overlooking the pool and alfresco area. The crowd was shy to start with, but a vendor bid of $1.7m brought out a couple of bidders. After two discussions with the vendors, the property was declared on the market at $1.96m. A third bidder tried unsuccessfully to vie for the property, before being outbid by a young family, who won the keys for $2.1m.

7 Motherwell Street, South Yarra

Gerald Delany (Kay & Burton) opened proceedings at Motherwell Street, South Yarra, with a vendor bid.

This house, with a dated renovation with good bones, north rear and OSP, was a little slow off the mark. Auctioneer Gerald Delany (Kay & Burton) opened proceedings with a vendor bid of $2.3m. With three bidders, the bidding gathered momentum when the third entered the fray. On the market at $2.531m, the final result settled at $2.675m.

Agent Opinion: How have you seen the market in 2016, and how do you see the first quarter of 2017 looking?

Stuart Evans, Marshall White: The market in 2016 has been a market starved of quality homes in Boroondara. Pent-up demand has created strong results consistently throughout the year.

The first quarter of 2017 is shaping up well. We are seeing vendors commit to a February / March campaign already. This will provide frustrated 2016 buyers finally with more opportunities to secure their family home. Well presented, well located homes will see strong interest in the first few weekends of open for inspections in late January. I believe this will culminate in strong bidding for auctions in the first quarter of 2017.

A sign of rising demand, as buyers move into neighbouring suburbs: Mathew Cox, from Buxton, fires up the large crowd at 9 Mount View Avenue in Parkdale, which saw frenzied bidding and a strong result.

Observers of Melbourne’s property market have been talking about the boom for several years. The intensity shows no sign of letting up, with buyers in 2016 increasing the intensity levels at auctions up yet another notch. The REIV reported an 80% clearance rate on the 976 properties auctioned this weekend.

We believe this booming demand is not attributable to one single factor but a combination of several, such as more expats returning home, downsizers with increasingly strong budgets (and poor performing super funds), heavy interest from overseas buyers (especially from China), rising frustration for first-home buyers and strong local investment interest.

Many buyers who began the year looking at properties are still searching, attending opens and trying to find the elusive right property within their budget that will allow them to finally enter the market.

This demand is pushing buyers into areas they may not previously have considered and we are seeing some very strong results in areas we haven’t before, such as 9 Mount View Avenue in Parkdale. This was an updated home, with a north rear with good garaging and lifestyle options on 711sqm (approx.). Situated on the east side of the Nepean Highway, where 12 months ago a result over $1 million was considered strong, it sold on Saturday for  $1.815m.

Buyers who have felt they can no longer afford to buy where they want and have moved their search further out are in part leading these strong results, as they are taking their higher budgets with them, unaware of where the property may actually sit in the overall Melbourne market.

Of course, if you’ve bought your dream home, price can very quickly fade into a distant memory. If down the track, however, you realise the home is not what you want or where you need to be, it can be very costly to start the process again, particularly if the market is not a booming one such as we are currently experiencing.

Another risk that buyers should watch out for in this racing market is the recently renovated home. Buyers should ensure they undertake full diligence to make sure no shortcuts have been taken, so there are no unwanted surprises once you have moved in.

Auction Highlights:

 Land Sales:

Off Markets:

Properties we like, schedule for auction December 10:

8 Ash Grove Malvern East – Heather Elder/Rae Tomlinson, Marshall White 

84 Bowen Street Camberwell – Scott Patterson/Rebecca Edwards, Kay & Burton

2 Dundas Place Albert Park – Simon Carruthers, Geoff Cayzer, Cayzer

27 Arthur Street Sandringham – Stephen Wigley/Cain Malthouse, Hodges

Auction Spotlight:

18 Soudan Street Malvern

Entertaining auction at Soudan St Malvern by Jack Bongiorno (Marshall White).

Picture perfect conditions at this well renovated, single level brick Victorian home in Soudan Street Malvern. This home was well located, with an easy walk to the train station and local coffee shops – Millstone and Café Claremont to name two. Auctioneer Jack Bongiorno gave his usual, spirited preamble and then kicked the auction off with a vendor bid of $3.8 million. Not long after, an Airbus 380 flew overhead impressively low, which takes the focus off Jack and bidders for a brief moment, before the auction kicked back into action. After consulting with the vendor, the property was announced on the market at $4.2m. Three bidders in all took part here , and the property sold under the hammer for $4.24m to the original bidder. 

105 Willis Street Hampton

The pool and green backyard provided a pleasant backdrop to this auction.

Stephen Tickle from Hocking Stuart held the auction at 105 Willis Street in the sunny rear garden, tempting everyone with a dip in the pool as proceedings heated up.  The large family home boasts a contemporary style, with an extensive list of technology and designer fittings. Bidding opened at $2.65m, rising steadily before stalling a $2.91m. After a half-time break with the vendors, three bidders eventually pushed the price past reserve before all were trumped by a single knockout bid of $2.98m from the successful buyer.

20 Victory Street Sandringham

Plenty of welcome shade for the auction crowd at Victory St Sandringham.

The beautiful gum trees on Victory Street Sandringham provided sought-after shade for auction attendees at number 20. Paul Bond from Hodges espoused the many benefits of the location, including the option of renovating or rebuilding, before proceedings started. A strong opening bid of $1.8m was quickly built on by back and forth bids between two bidders.  Once the first bidder stepped out, a third – and eventually the winning – bidder joined the auction. A solid finish of $2.142m for the ecstatic buyers.

Agent Opinion: What is your outlook for the early part of 2017?

Jenny Dwyer, Hocking Stuart: As we head into the new year, people are now starting to reserve auction spaces for February and March to take advantage of the ‘pre-Easter’ market. There is the expected continued demand from buyers left disappointed by the legacy of this spring market, where supply has been unable to meet demand.

Great crowd and entertaining auction from Mathew Cox (Buxton) at 12 MacGregor St, Parkdale. It sold for $1.64m – a strong result that was well above reserve.

The outcome of the US presidential election and sharemarket fluctuations did little to dampen buyer confidence on Saturday, with continued strong results across the board being reported.

If vendors are listening to agent advice regarding reserve levels, more often than not there is a sold sticker on the board, usually comfortably above the reserve levels. Auction clearance rates still sit around the 80 per cent mark and it seems this may not change much up to Christmas.

Auction Highlights:

Land Sales:

Off Markets:

Properties we like, schedule for auction December 3:

 28 Dickens Street Elwood – Torsten Kasper/Kylie Hill, Chisholm and Gamon

17 McCallum Street Brighton – Kate Strickland/Bethany Lu, Marshall White

14 Edward Street Hawthorn – Stuart Evans/Duane Wolowiec, Marshall White

35 Warley Road Malvern East – John Morrisby/Ian McLennan, Jellis Craig

Auction Spotlight:

30 Airlie Avenue, Prahran

A large crowd saw this well positioned period home go under the hammer for $1.8m (Tom McCarthy, Biggin & Scott).

This superbly positioned, single-fronted period home drew a large crowd to the auction on Saturday. Offering excellent potential with good street frontage and holding the northern side of the pair, four bidders competed for the keys to the property. Tom McCarthy from Biggin & Scott ran an enthusiastic auction with bidding starting at $1.57m, quickly going on the market at $1.6m and eventually selling for $1.8m. 

9 Glyndebourne Avenue, Toorak

Four keen bidders fought it out for this elegant modern home, which eventually sold for $6.05m (Mark Wridgway, RT Edgar).

Situated in a picturesque tree-lined street, this architectural home delivers garden views from every room, with many cleverly positioned windows and skylights adding to the bright interior.  The home is solid brick throughout, well proportioned and fitted out with an elegant, modern style. Mark Wridgway from RT Edgar ran the successful auction, keeping the bidding going steadily from four keen bidders. The property was announced on the market at $5.8m, with bids continuing back and forth until the property was knocked down at $6.05m.

Agent Opinion: ‘There has been plenty of talk this year about low stock levels in comparison to previous years. Can you see this picking up in the early part of 2017?’

Rob Fletcher,  Fletchers: Stock levels were unusually low, especially around June/July this year, but we have seen quite an increase in properties that have come onto the market in recent months. Traditionally January is a quiet listing month for most of our offices but also a strong selling period until stock levels increase in the following months, which I predict will continue again next year.

There are only three weekends for new campaigns to start before Christmas and the pressure is rising for buyers to secure a property before the close of the season. Lower stock levels have contributed to continuing higher clearance rates.

Even with a small increase in expected stock over the next few weeks, we don’t envisage any major changes to the market for the remainder of the year.

Auction Highlights:

Land Sales:

Off Markets:

Properties we like, schedule for auction November 26

6 Belmont Avenue Kew – Chris Barrett/Peter Mitchell, Marshall White

3 Alleyne Avenue Armadale – Lachie Fraser–Smith/Andrew McCann, Jellis Craig

14 Kingsley Street Elwood – Torsten Kasper/Sam Gamon, Chisholm & Gamon 

Auction Spotlight:

30 Grace Street Malvern

Keen interest from a solid crowd at 30 Grace Street Malvern (James Tomlinson, Marshall White).

James Tomlinson from Marshall White ran a spirited auction at Grace Street Malvern in front of a solid crowd. After an opening bid of $1.8m, another four bidders vied for the property, which was called on the market at $2.04m. The eventual selling price of $2.26m reflected the keen interest the final parties had in this well positioned, free-standing small cottage with a lean-to extension.

89 Guildford Road Surrey Hills

Michael Wood (Marshall White) conducted an enthusiastic and entertaining auction at 89 Guildford Road Surrey Hills.

A large crowd wrapped around the tree-lined corner position for the auction of this single-level solid period home, well located near the Union Road shops and public transport. An opening bid of $1.9m was first greeted with extended silence from the crowd before a strong contest ensued between five bidders, two of whom were particularly eager to win the property. The home was on the market at $2.15m, eventually selling for $2.345m. An entertaining auction by Michael Wood (Marshall White). Solid result for a brick period home on a corner block.

Agent Opinion: ‘There has been plenty of talk this year about low stock levels in comparison to previous years. Can you see this picking up in the early part of 2017?”

Maurice Di Marzio, Hocking Stuart, Balwyn: Most of 2016 saw a noticeable decrease in stock levels, right across Melbourne. Momentum during the second half of Spring seems to have lifted and I do see this shift continuing into the first quarter of 2017.

Many people have asked my opinion on the low stock levels throughout 2016 and my thoughts are that, while we have just been through possibly the strongest and most aggressive market conditions ever seen in Melbourne (with the bullishness of the market over 2015/2016), where many people traded up and downsized, and basically transacted, people have been content to sit back and not get involved. This has seen a shortage of supply and, with the healthy level of buyer enquiry (which includes investors coming back into the market), it has been difficult to satisfy the demand.

In our market, which also has a large Asian influence, traditionally, they also tend to buy and hold, so those properties that have been transacted over the past few years are not coming back into the market place.

Now that all the interruptions are out of the way, for the year (football, horse racing, long weekends etc), there will be a significant increase in supply over coming weeks, that should carry us into the start of the 2017 market and once things settle into a routine in the new year, I am confident ‘things will get back to normal’.