Archive for June 2017

Completed homes in good suburbs continue to sell well, as this auction in Vickery Street Malvern East demonstrated. Seven bidders fought it out for this home, which sold under the hammer for $3.6m. (James Tomlinson and Rae Tomlinson, Marshall White).

Mid-year is a good chance to pause and take stock of the Melbourne property market’s performance so far. There is no doubt the market has performed strongly this year, particularly for good properties, ie well-renovated period homes, striking modern homes or premium land parcels.

For less than perfect offerings or those with issues, the gap between buyers and sellers has been widening recently, with a lot more properties left on the market for private sale after a failed auction than has been the case in previous months.

Winter is not traditionally a strong selling season in Melbourne, as colder weather and darker days means properties do not present in their best light. Many eyes are now on August and September auction selling campaigns.

While traditional residential suburbs (eg Camberwell, Brighton) had limited offerings, the inner-city suburbs like Carlton / Fitzroy recorded some good results, as you will see below.

Some sales of note:

‘Land’ Sales:

Off-markets

New quoting law analysis

Almost two months after the introduction of the new Victorian quoting laws, what sort of impact are we seeing?  At WoledgeHatt, we physically inspected dozens of properties in our area of specialisation ­­– $1.5m-plus in Boroondara, Bayside and Stonnington councils – taking note of the Statement of Information (SOI) quotes and comparables, as well as the eventual selling price of the properties. As a result, we have seen a reasonable shift in numbers (taking out outlier results for properties that sold vastly above reserve).

For May sales, where properties were still signed up under the ‘old system’, we saw sale prices on average 4.8% over the top of the quote range. Nearly two-thirds of properties were quoted below the eventual sales price.

For June sales, where the market has started to settle into the new laws, we have seen a lessening in this number, with properties selling on average 2.3% over the top of the quote price. Nearly half of all properties are now selling within the quote range.

While it will take a few more months for the backlog of properties signed up before the new quotation laws came into effect to clear through the system, if this trend continues, it looks as though quotations are coming more into line with buyers’ willingness to pay.

From general discussions with agents throughout this time, there are probably a few teething issues to continue to work through in regards to the selection of comparable properties. Depending on the property and the area, can the 2km and six-month limit at times be too restrictive and eliminate better-suited comparables, or is it too liberal and permits the inclusion of properties that are realistically not a comparison?

As a buyer, has this made things better or easier? Perhaps. Yet understanding the true value of an individual property, given its scarcity or place in the market, is still key to paying the right price for a property. More importantly, what the buyer wants to get out of the property should influence what they are prepared to pay for it, more so than the range that it is being quoted at.

Renovating – as a buyer/owner are you under-developing?

In recent years, as you may have noticed, there has been a huge amount of development going on around Melbourne and, in certain areas, councils are really encouraging this development. If you are considering renovating, it pays to keep this in mind when planning. Some call it ‘over-capitalising’, some call it ‘under-developing’, but the result is the same: the real value of your property could be in the dirt bounded by the fences, not the house itself.

Having architectural experience, we are often asked how to renovate homes and we welcome these conversations. A common theme lately has been with people wanting to undertake extensions to their existing homes, or build new on their land. Here are a couple of issues that have come to light:

• While the home may have intrinsic period quality, it may not be protected by a heritage overlay, or it could be subject to new zoning overlays that mean higher height levels are permitted. This of course encourages development. If you are able to build up to 11m metres (say) and don’t choose to (which is fair enough), your neighbours may do so and this could adversely affect your amenity and capital growth (ie your renovation costs mean nought in the end, as the true value of the property is in the land).
• Alternatively, the home may be in a Heritage Overlay area, or in a more restrictive Neighbourhood Residential Zone. Getting the right balance of old and new is critical, and you need to be very careful when planning.

These two issues can have a big impact on the re-sale or property in Melbourne. You may love your house and area and see yourself there for the next 20 years, in which case whatever money you sink into your renovation will be worth the cost. But if you are thinking of selling your house within 5-10 years, don’t expect to get the money back.

You should also plan a sympathetic renovation that is in line with the overwhelming wants and needs of buyers in that area. Spending $1 million on a renovation in Malvern where there is a lot of development and many newer properties are being built could be a waste of money. You may be better to sell and move to the Gascoigne Estate where you will be protected by heritage overlays. Similarly, building a modest cottage that’s more suited to the inner north in a leafy eastern suburb where dual occupancies or larger family homes are more in demand is also not a worthwhile investment.

More than ever, it pays to get the advice of a good architect, town planner and experienced selling agent before making any of these key decisions.

Auction Spotlight:

9 Alleyne Avenue Armadale

Andrew Hayne conducts an entertaining auction in front of around 200 people in Alleyne Avenue, Armadale.

This was a landmark 2017 auction, and a very good crowd attended. Why was it landmark? Well, the home was a beauty – cleverly designed, well renovated, enjoying an ideal north-facing rear aspect, and very conveniently located to most things great in Armadale.  The property was also very well marketed and presented. There was not a stone left unturned here by the vendor. While there was were clearly a lot of interested parties within the quoted price range, a vendor bid was still needed to get this auction kicked off and Andrew Hayne did that at $4.4m. Not long after, the first bidder entered the fray at $5m, which clearly made a strong statement. A fight was on not long after between the original bidder and one other, and the property sold under the hammer for $5.925m, almost $1m over the announced reserve. A lot of people will be surprised by this result but it just shows that buyers in this market will pay a premium for quality offerings, especially those they can move straight into. Expect to see plenty of renovation projects in this area in the coming months … the formula and process isn’t that easy though.

44 McKinley Ave Malvern

Andrew McCann and the Jellis Craig team had the sun shining down on them at the auction of this property in Malvern.

This home is an example of an unrenovated version of double-fronted period properties in the area that have recently sold for between $5-6m. Well positioned to amenities and transport, the property currently offers off-street parking, but may not allow for future garaging.

With most of the crowd spread along the opposite side of the street, as well as some key bidders on the property side, Andrew McCann from Jellis Craig needed to make his voice carry far and wide. A swift opening bid of $2.75m started proceedings and bidding from a number of parties easily brought the property onto the market at $3.01m. By the time the property was knocked down for $3.19m, five bidders had put their hand up for the property and the chance to transform this home into the period beauty it could be.

2C Kerferd Street, Hampton

Two bidders bid strongly for this property, which showed the demand for ‘position’ first. (Kate Strickland/Robin Parker, Marshall White).

‘Hampton’s style’ in Hampton.  This new home was very well located to the Hampton shops, station and beach, offering four good bedrooms (the main downstairs) and multiple living options, including a separate room off the back of the garage. On a ‘battleaxe’ block, the home had no street frontage and was accessed via a stony laneway shared with the dwelling in front.

Two bidders bid strongly in $50,000 rises from the initial vendor bid from auctioneer Robin Parker of $2.8m. With little time to pause, Kate Strickland ran inside to consult with the vendors before returning to confirm the property ‘on the market’, with the eventual sale price settling at $3.15m.

This sale supports the increasing demand for ‘position’ first.  With limited choices available for buyers wanting family homes, the position encouraged buyers to overlook any potential or future negativity brought about by the lack of street frontage, lower ceilings and limited windows in the family room.

Tennis courts always make fantastic settings for auctions. 49 Lisson Grove Hawthorn sold strongly under the hammer for $7.65m, almost $1m over reserve. Listing agent Jock Langley and auctioneer Tim Derham, Abercromby’s.

For the first time in quite a while, the clearance rate dropped to the lower 70% range, with the REIV reporting a clearance of 74%, at 6pm Saturday.

Do we think that means the market is turning? We don’t think so, but we do think that some buyers are confused by the mixed methods of quoting (some are still being quoted using the old system, while those listed post-1 May use the new ‘more accurate’ system).  We also saw some good properties pass in (eg 29 Bridge Street Hampton – see auction spotlight below) at what we believed were strong levels and some sold for even more afterwards.

Next weekend is now the last ‘big’ weekend before the market goes into hibernation before resuming with some numbers again in August.  This may result in some increased sales of homes sold privately, or, as many like to now call it, ‘off market’, particularly for vendors who have recently bought and want to minimise their exposure to any potential changes in the market place.

With reports this morning that the Melbourne population, currently sitting a little over 4.5 million, is likely to grow to nearly 8 million in the next 30 years, it is hard to imagine demand changing for the well-located, good-quality family and downsizer homes.

Highlights: 

‘Land’ Sales:

‘Off Market’ Properties:

Properties we like, scheduled for auction 1 July 2017:

63 Liddiard Street Hawthorn – Alastair Craig /  Veronica Khoo (Jellis Craig)

20 Byron Street Brighton – Ross Walker / Greg Costello (RT Edgar)

65 Karma Avenue Malvern East – Daniel Wheeler / Justin Krongold (Marshall White)

26 Salisbury Grove Northcote – Sam Rigopoulos / Eric Brown (Jellis Craig)

Auction Spotlight:

29 Bridge St Hampton

Stephen Wigley from Hodges Sandringham faced a large crowd with four bidders at the auction of 29 Bridge St Hampton.

This auction provided prospective buyers with another opportunity to purchase a well-positioned, north rear development, similar to recent good sales in Willis and Littlewood Streets in Hampton. With approximately 716sqm of land in close proximity to the beach, shops and train stations, the property included approved plans for a dual occupancy development, if potential buyers didn’t want to retain the site for a single home.  A good crowd of more than 70 people sought out the winter sunshine to watch Stephen Wigley and Paul Bond from Hodges run proceedings. Opening with a vendor bid of $2.0m the auction began slowly before picking up pace after a quick break. Four bidders brought the price up to $2.25m, where Stephen again conferred with the vendors. No further bids could be drawn from the crowd and the property was passed in at this level. The property sold afterwards for an undisclosed amount around $100,000 more.

Going to an auction as a buyer, it is important to be prepared for multiple strategies, including post-auction negotiations, as vendor expectations may be above market levels.

3 Johnson Street Hawthorn

A chilly, still winter Melbourne morning, but the bidding was hot at this auction – four bidders.

Premium north-facing land only a stone’s throw away from Glenferrie Road, this single-fronted Victorian, which clearly had seen better times, was up for auction less than two years after it last sold for around the $1.35m mark. Auctioneer Tim Derham looked for an opening bid and had to wait a while, so a vendor bid was placed at $1.8m. This started the auction and measured bidding between four bidders saw this property announced on the market at $1.975m and eventually sell under the hammer for $2.053m. What does this tell us? Good land (with above average width for the area) is still in good demand and the auction system is alive and well, as apparently this buyer (a younger Chinese couple) had only seen the property a few days ago. 

Agent Opinion: How do you see the market heading into the winter hibernation period?

Anthony Grimwade, Director, RT Edgar: As winter begins to set in and with the June / July school holidays looming, housing stock is starting to tighten. Competition for well located period and contemporary homes continues unabated and this was witnessed with last week’s RT Edgar sale of 49 Murray Street, Prahran. An original two-bedroom double-fronted brick Victorian directly opposite Victoria Gardens and in the Hawksburn Village precinct, it was hotly contested between two buyers and sold for $3,110,000, $210,000 above the reserve.

Another key RT Edgar sale at the other end of the spectrum was 8 Chesterfield Avenue, Malvern, an unrenovated 1930s two-storey home on about 1,400m² of land that sold one week into the marketing campaign (price undisclosed) but believed to be in the vicinity of $7 million.

This Elwood auction opened and was on the market for $2.95m, and sold for $3.21m. Inan/Manning, Hocking Stuart

With just under a month before the winter school holidays begin, the Melbourne property market is chugging along steadily.  The REIV reported a clearance rate of 78% and, while we attended quite a few auctions that passed in, most were sold shortly afterwards.

We have noticed numbers are down at some open for inspections. Some buyers are choosing not to inspect homes if the quote is above their preferred buy price.  Before the recent changes to quoting laws, they may have been attracted by the quote, fallen in love with the home during the inspection and then made the decision to increase their limit to try and buy it.  Now, some aren’t making it to the property for the rest of this scenario to occur.

Although the new quoting rules have been implemented, there are a number of the homes listed (the day the vendor signed the authority to sell) prior to the 1^st May being quoted the ‘old’ way.

There are also the properties quoted using the new system drawing on ‘comparables’ that aren’t really comparable.  For homes being sold in larger suburbs (such as Camberwell, Brighton, Hampton, Malvern East etc), it is important for buyers to understand the nuances of the difference precincts: their past history, current desire and potential future changes, to determine whether the example is a suitable comparable or not.

For buyers finding pricing confusing, it is even more so at the moment.

That being said, if the home is a good one, the buyers will come. We attended the official first open at 9 Alleyne Avenue Armadale on Saturday and it felt more like a party than an inspection.

Highlights:

‘Land’ Sales:

 Properties we like, scheduled for auction 24 June 2017:

9 Alleyne Avenue Armadale – Madeline Kennedy/Andrew Hayne (Marshall White)

8 Leslie Street Hawthorn – Campbell Ward/Richard Winneke (Jellis Craig)

29 Hambleton Street Albert Park – Kaine Lanyon/Justin Holod (Marshall White)

3 Champion Street Brighton – Campbell Cooney/Alana McGuinness (Hodges)

Auction Spotlight:

78 Hope St South Yarra

There was a strong crowd and spirited bidding from five parties during this auction.

This home is an unpolished gem in a prime location. Interested parties could envisage what a thorough renovation of this north side of a pair home could deliver and the value of the proximity to parks, public transport, restaurants and the city. Opening with a vendor bid of $1.85m, Tim Brown from Castran Gilbert received numerous offers that quickly placed the property on the market at $1.95m. With one party trying to slow momentum with smaller and smaller bids, another bidder tried to intimidate the opposition with large offers. With five parties vying for ownership, the first momentum-slowing-bidder was eventually successful in buying the property for a solid $2.21m.

3 Vaucluse St Brighton

Julian Augustini from Hodges Bayside was made to work hard to entice a bid from the audience at this auction.

This spacious family home with a north rear is well positioned to the Bay Street shopping precinct, a range of schools and the beach. While its proximity to the development growth zone and Hampton Street traffic noise may have held bidders at bay, the property offered a good step into the Brighton market. Seeking opening bids of $2.2m, Julian Augustini from Hodges placed a vendor bid at this level to open proceedings. As we are seeing more frequently recently for properties without a strong wow factor, there was only one bidder present, placing a bid of $2.22m, which the property eventually passed in at. Post-auction negotiations secured the sale for $2.25m. 

Agent Opinion: As one of the newer agencies in Bayside achieving strong results, including your sale at 31 Third Street, Black Rock on the weekend (over 900sqm with large, but dated, family home) selling for $2.52m, where are you seeing the strength in the market?

Kylie Charlton, Director, Charlton King (Sandringham): We are seeing two separate markets at the moment – the downsizers and the younger families.

Speaking specifically for south Bayside, the downsizers can be broken into two groups – those under 65 who are still prepared to do some renovations, and those over 65 who want to move in to a home that is all done with no extra work.

Most downsizers are wanting to stay within 2 kilometres of their family homes and are not prepared to sell until they have bought.

This is having a flow-on effect on stock levels for families trying to buy into the area, many of whom have been renting in the area and are now ready to buy, or want to upscale.