Archive for September 2019

The third quarter Melbourne Market for 2019 has been anything but predictable.

We have seen consistently high clearance rates, above 70%, since July and very low increases in stock levels.  Why?  Because there are more people wanting to buy in Melbourne than people wanting to sell.

Many vendors of well-located homes (close to shops, schools, transport etc.) are choosing to renovate, update or extend rather than sell.

Stamp duty is also becoming more of a consideration for seller/buyers (5.5% in Victoria).

A $2 million property will attract stamp duty of $110,000, therefore if the location works, why move?  Often an updated kitchen and/or bathroom can be enough to satisfy any restless thoughts that it’s time for a change.

Combine this with low stock and the uncertainty that it may take a long time to find something to buy and it can make sense to remain where you are and improve what you have.

That is why we believe it is more important than ever to buy right first time, with a home that has the flexibility to grow with you over a number of stages of life, from starting out as a younger couple/family through to downsizing. A quality buyers advocate can guide you in finding the one.

We think the current market is starting to feel more like the late 2016/2017 marketplace, where buyers were desperate to buy anything just to get into the market, although currently we still see properties with identifiable issues (internal and/or surrounding) finding this new market tough.

Quotes have become more confusing for buyers.

Many of the current vendors selling signed up before the market was showing signs of improvement.

Their motivations have been for genuine reasons (such as relocation, divorce, death etc.) and their quotes have been in line with past results, yet talk of underquoting has become the common topic of conversation again and we are seeing many buyers left disillusioned, spending money on building inspections and contract checks, as well as investing a lot of their time and emotion into properties to find they were never in the game in the first place.

For many properties selling at the moment, they are the only option available for buyers and some are achieving high prices as a result.  If it meets your needs, that is great; however, we think it is equally important to consider how the property will stand up not only in the current competitive market but also if the market were to change back again, just in case you have to sell unexpectedly.

Contact the professional team at WoledgeHatt Buyers Advocates to kick start your journey.

Highlights:

A property we like, coming up in October:

8 Heath Street Sandringham – Charlie Darlow/Scott Hamilton, Buxton

“Off Market” properties

• Fully renovated Edwardian family home, Malvern East – circa high $3m
• Single level/fronted Victorian, renovated, Armadale – circa $2.4m
• Double fronted, single level Edwardian, renovated, Malvern East – circa high $2m
• Double fronted Victorian, dated renovation, north rear, Armadale – circa mid $2m
• Edwardian weatherboard, original on approx. 498sqm, Elsternwick – circa $1.8m
• Single fronted Victorian, 3-2-0, approx. 253sqm, Malvern – circa $1.75m
• Family home on approx. 1,650sqm, Beaumaris – circa $4.5m
• Family home in the Castlefield Estate, approx. 900sqm, Hampton – circa mid $3m
• Conveniently positioned Townhouse, 3-2-2, Brighton – circa $1.75m

Auction Spotlight

Bill Stavrakis from Biggin & Scott had two bidders fight it out for 14 Parnell Street Elsternwick, with neither wanting to let the home go.

Only a few years ago, 14 Parnell Street was a little single-fronted weatherboard home with a dated extension at the rear.  With its more recent full renovation and extension, it has become a well-thought-through family home. Children have their own zone with two bedrooms, bathroom and retreat upstairs.  The master suite, a study and two further living zones make up the ground floor, plus a bonus studio at the end of the north-facing rear garden, behind the pool.  The spacious laundry/mud room and butler’s pantry are ideal for families, as is the BBQ area flowing off the informal living at rear. Perhaps its only shortcoming is the lack of covered car parking at front, which would ruin the pretty façade.

A large crowd was spread around the rear open plan kitchen and living zone for the Bill Stavrakis-led Biggin & Scott auction.  After the customary delay to build anticipation, Bill got things started, but was made to wait by potential bidders in return.  Just when it seemed like there may be no bidding on the home, a lady came forth with an offer of $2.55m.

As is often the case, the second bidder was standing almost beside her and the two traded swift $50k bids to reach $2.9m in a blink. Daniel Ashton quickly dashed off to confer with the vendors while the auction continued, coming back at $2.95m to declare the home on the market. The announcement certainly didn’t have the desired effect, as bidding almost stopped, then crept up in painful $5k amounts. At $2.985m bidder 1 declared she was out and bidder 2 looked to have it in the bag.  At the last gasp, a relative of bidder 1 jumped in, clearly not willing to let the home go for her family.  She was determined to win the property, but so was bidder 2. With bids of $1k or $4k the two traded blows, hoping to outlast the other. Often it looked like one was giving up (mainly bidder 2), but Bill cajoled and prodded until another bid was placed to restart the process. The first party was getting extremely frustrated with this, threatening to stop bidding, but then again not wishing to give up the home. She eventually outlasted the opposition, securing the property for $3.175m.  Around 100 bids were placed throughout the auction. A very strong end result for this part of Elsternwick.

2 Little Boundary Street South Melbourne – Simon Graft, RT Edgar – opened at $1.4m, 5 bidders, sold strongly for $1.611m.

The market continues to perform strongly, on low stock levels, since it resumed after the Winter break.

Clearance rates have been solid and many properties have seen multiple bidders again, particularly the good ones (ie well located, orientated, functional floorplan, renovated etc).

There are a number of buyers in the market who have been waiting since this time last year to buy a home.  Some have been successful over the past couple of months, others are still searching.

Adding to the volume are a number of new local buyers as well as expat Australians, currently living/working overseas, wanting to return home and ready to buy.

Buyers are also more ‘buy fit’ now than they were when searching 12 months ago, particularly when it comes to finance.

They are aware the process could potentially be tedious and time consuming as finance companies dissect in detail living expenses and capacity to repay loans.

Speaking with a number of mortgage brokers, second-tier banks, such as ING, Macquarie, BankWest etc, are also eager to increase their residential mortgage portfolios, providing good opportunities and help for buyers requiring finance, in addition to the major four.

We believe low stock is still the major driving force for the improved results and increased clearance rates.

There is still a reluctance for vendors to sell if they don’t have to.

Two of the three most common reasons for vendors to sell are divorce and death (or aging vendors moving into care facilities).  The third, debt, really hasn’t resulted in vendors needing to sell and is unlikely to be an influencing factor in the short term if interest rates remain low, unless job security becomes more unreliable.

Discretionary selling to upgrade or downsize has been put on hold for fear they may not find anything to buy after they sell.

A number of these potential vendors have made the decision to renovate/extend instead, particularly if their properties are well located to the most desired amenities.

The sudden change in the market has also seen an increase in price confusion for buyers.  With the high and low results over the last 6-12 months, buyers are finding it harder to determine where the price may really be and why.

Quotes are also becoming more confusing. 

Many buyers (in retrospect) feel like the quotes are too low, yet others too high.  The quote is, however, only one piece of the puzzle and takes into consideration not only the recent sales but also the vendor’s expectations and motivations.

Take, for example, a home quoted at $2-2.2 million.  Bidding commences, the auctioneer announces the property ‘on the market and selling’ at $2.18 million and competitive bidding results in a final sale price of $2.45 million.

This is unfortunate, however, the right research prior to the auction could have disclosed this, potentially increasing your chances of being the buyer or reducing the disappointment of missing out.

It could also save three weeks of hope and excitement wanting to buy a property you could not afford and miss other opportunities in the meantime. Working with a local buyers advocate can help you foresee these circumstances and help you make the right decisions.

The low stock is also encouraging buyers to jump suburbs for the ‘right house’, particularly if the proximity to amenities is still convenient.  These buyers can sometimes bring higher budgets to the auction with local buyers needing to decide whether they wish to compete, sometimes well above what may make sense for the area.

Making good decisions at the moment is the key to good purchasing; in particular, knowing what you are buying and how it will work for you.

We have heard of multiple underbidders, disappointed in their misses, very quickly buying lesser quality (often off-market) properties, with little or limited due diligence and understanding of price. The good agents are taking advantage of their disappointment and emotion and achieving some strong results for vendors.

When buying, our clients know in advance what they’re buying (due diligence), why it suits their needs and have in hand a full price analysis, before auction day or before making an offer, so they can make an informed decision.

Too often we see buyers purchase a property, only to find it up on ‘realestate.com’ within two years, usually for a lot lower price. WoledgeHatt can help you avoid these situations, contact us today.

Two properties recently purchased in Brighton East were back up for auction this month:

Some of the better properties scheduled for Auction on 14 September; an architect’s view

42 Dixon Street Malvern – Carla Fetter/Andrew McCann, Jellis Craig

1 Chavasse Street Brighton – James Paynter/Sam Paynter, RT Edgar

‘Off Market’ Properties

• Single fronted timber Victorian, 3 bed, 2.5 bath, approx. 251sqm, Malvern – circa $1.75m
• Californian Bungalow, close to beach & shops, 4 beds, Sandringham – circa $2.5m
• French Provincial new build, 4 bed, 4 bath, DLUG, Hawthorn East – circa $6.5m
• Victorian double storey terrace, unrenovated, approx. 173sqm, Richmond – circa $1.9m
• Art Deco semi attached, fully renovated, 3-2-2, approx. 393sqm, Malvern East – circa $1.75m
• Single fronted Victorian, 3 bed, 1 bath on approx. 228sqm, Malvern – circa $1.75m
• Weatherboard Victorian, updated some years ago, approx. 567sqm, Brighton – circa $2.7m
• Two storey family home, 4 bed plus study, 3 bath, DLUG, Caulfield South – circa $1.9m
• Victorian brick home, fully renovated, 4 beds, Hawthorn – circa $4m

Auction Spotlight

Justin Long from Marshall White orchestrating proceedings at the auction of 22 Bailey Avenue Armadale.

22 Bailey Avenue Armadale offered a single-level brick Edwardian that has undergone a classy renovation. The home is well positioned to the shops and restaurants around Glenferrie Road, as well as a multitude of transport options. Sitting on approximately 640sqm with a west rear, the home gets good afternoon light, while being hampered earlier in the day with a block of apartments to the north.

A decent crowd of more than 50 people gathered in the garden for the auction led by Justin Long with Fiona Counsel.  As per his customary style, Justin opened with an instant vendor bid of $3.05m.  An extended silence ensued from the crowd, until a bid of $3.075m was finally received. A second bidder jumped in before bidder one placed his second and final bid.  “Was the home on the market?” Even with a negative answer, bidder three entered the competition, bidder two countered, again the question of “Is it on the market?”. Justin gave everyone some thinking time by going inside to speak to the vendors. The break did nothing to speed things up, with bids dropping to 10k and repeated calls of whether the home was on the market. Eventually bidder three stated she would not bid again if it was not on the market. Justin again went in to speak to the vendors, taking quite some time to do so. Bidder three did place one more bid even though the home was not on the market, bidder two countered and the home was passed in to him at $3.27m. The home sold shortly after for a slightly higher amount.