Archive for March 2021

The Melbourne property market over recent weeks has been particularly strong. We believe one of the reasons is that there is still a great demand and urgency from property buyers to buy, for many reasons: fear of missing out, having a greater appreciation/need of living at home, greater savings and not having much to spend on…. the list goes on. There is a lot of talk out there about there not being enough supply. We feel that supply is not necessarily just the issue but also the high demand from buyers.

Some other key observations:

• Bank loans are taking longer to process due to resourcing issues.
• Many people that bought in regional/Peninsula areas are possibly starting to question that move. As employers demand more people return to the office in person, some people are finding the extra travel onerous.
• While there will be a slight pause for Easter and school holidays, May is looking to be a particularly busy month (there are five Saturdays). With such a good steady run of selling opportunities, will this flush out a lot of the demand? By the end of May, we should know where the market is really standing.

All of the above is predicated on Melbourne not experiencing any significant future Covid-related interruptions.

As you might have read in the media, there have been some very strong results in the past few weeks.

Many homes have sold before auction, more often still with competition. There are some properties out there, however, that have struggled or failed to attract buyers.

As a general rule when out and about, many buyers have decided a good strategy is just add 10-20% to the quote and you’ll be about right.

That is one strategy, but what if the quote is accurate already? Do you add 20% and then make an offer? You could be the only buyer at this level and well above everyone else – or possibly on your own.

While the market is still positive, if vendors don’t get the quote right, or, more importantly, if their expectations are not in line with the market, then they may not see a positive result for their home. For example, here are some pass-ins from last weekend:

For the type of properties these were, in the context of ‘their’ market, these results did not necessarily surprise us. Vendors need to know how their property fits into the market.  Just because a house around the corner achieved a certain price, it doesn’t necessarily mean that nearby houses will fetch the same.

There were also some very big sales over the last week:

So where to from here?

Easter (and the school holidays) may provide some time for buyers to pause and reflect. The recent results may also instill confidence in some vendors to take the plunge and put their homes on the market.

There could be an increase in homes for first/second time buyers in the market. Changes to the Residential Tenancies Act come into place this week, with landlords and their homes required to meet minimum standards of living for their tenants.

A number of landlords have owned homes for 20, 30, 40 years or more with little or no maintenance to the properties over the years. For some, costs to meet the new standards may be $50-100k or more, of which many may not have the cashflow to fund, possibly resulting in more choices for buyers if they are prepared to do some work. As we’ve found for some of our clients, looking for a B-grader that could become an A-grader could result in greater opportunities in the coming months.

Generally, however, Melbourne and Australia are continuing to prove a great and safe place to live. Expats are still moving back and families are wanting to enjoy their homes with the thought that if we are ever locked down again, at least it will be something a little more comfortable. Stock and interest rates remain low, so possibly things won’t be too different after all. But who really knows?

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

85 Finch Street Malvern East – Joanna Nairn/Maria Vovos, Marshall White

44 Hawthorn Grove Hawthorn – Sam Wilkinson/Gerald Delany, Kay & Burton

‘Off-market’ Properties:

• Edwardian on approx. 1,300sqm with court & pool, Brighton – circa $11m
• Timber Edwardian on corner block, Malvern East – circa high $2m
• Two storey brick Edwardian, 4-3-2, approx. 800 sqm, Malvern east – circa $5m
• Fully renovated Victorian Terrace, 4-2.5-2, South Yarra – circa $5.65m
• Brick Edwardian, 3-2-0, approx. 187sqm, Armadale – circa $1.8m
• Well positioned older contemporary home, approx. 720sqm, Camberwell – circa $2.3m
• Fully renovated/extended Edwardian w pool, Hawthorn – circa $6m
• Fully renovated 3 bed home, close to beach, Sandringham – circa $2m+
• Single level, fully renovated family home, Brighton East – circa $3.4m
• 3-4 bed period home on approx. 505sqm, St Kilda East – circa $1.8m+
• Contemporary family home on approx. 772sqm, Brighton – circa $5.75m
• Large, renovated, family home, approx. 800sqm, Elwood – circa mid $4m
• Updated 80s family home on over 700sqm land, Brighton – circa high $2m
• Timber single level Edwardian, pool, Brighton – circa $2.5m
• Extended period home, looking for update, Brighton – circa mid $3m

Auction Spotlight:

Positioned on the corner to Coppin Street, 52 Finch Street Malvern East offers the new owner the opportunity to work with the original front of the period home to create their dream family home (stca), on a good sized block of approx. 811sqm, with a bright north rear aspect.   The front rooms deliver lovely proportions to work with, while the whole rear would benefit from a fresh start.

A large crowd of interested parties and neighbours came to watch or participate in the auction, run by Iain Carmichael on behalf of the Jellis Craig team.  Opening with a vendor bid of $3.1m, two bidders dug deep to secure the property.  The home ended up selling for a solid $3.575m.

Buyers, sellers, agents, analysts and reporters woke on Saturday morning with an air of optimism as the Melbourne property market hosted the largest auction weekend since the pre-Covid days in early 2020. They weren’t disappointed. Traditionally the end of February is the first big weekend of a new year, as it is four weeks since school resumed and campaigns can run uninterrupted.

There was an 84% clearance rate and some of the highest results we have seen. This is not just compared to pre-Covid; many properties sold at levels higher than the highs of 2017.

Many quotes were smashed, sometimes by more than 20-30%, such as:

For many buyers, it will be back to the drawing board. For the moment there are three options:

• Find more money
• Move to a suburb (or two) further out
• Be prepared to accept a less comfortable home

With the first option perhaps being the hardest for many buyers, recalibrating the search area and the property non-negotiables may be the best option for success.

We are encouraging our clients to be flexible with the property, with the knowledge that it can become what they want down the track. This isn’t always easy to determine. Having an architect on board certainly makes it easier to focus on the B graders that can turn into A graders. Not all homes can become what you want/need and some can cost a lot more money to achieve the same outcome. Buying well is important – and sometimes passing on properties is important too, as many properties are just not worthy (or possible) of a renovation.

On a brighter note for buyers, many homes currently on the market are likely to see an updated Statements of Information this week. Where it has been hard for agents to find sales within 2km, in the last six months, this is now no longer the case.

This could help buyers make better decisions around their chances of success, as some of the due diligence undertaken requires financial outlay such as contract checks or pest and building inspections with no certainty of success.

We saw many homes on the weekend sell with 3, 4, 5 or more bidders vying for the keys. That would suggest there are still multiple buyers searching for their new home. With the stock levels for ‘the right homes’ still very low, we don’t expect to see much change to the current market sentiment.

Of course if vendors suddenly decide that they want to sell and expect that the market will see 10% plus increases each week, the market could very quickly start to see some more pass-ins, as buyers may not be able to keep up with their expectations.

Open for inspections were also very popular on the weekend, with some agents recording groups of 50 or more on the well-presented and marketed homes. Are stock levels low? Well, not really if you look the numbers; however, the buyer numbers are so great now (i.e. those that still haven’t bought from last year, expats coming back and also many ‘new’ buyers), the demand is certainly outweighing supply.

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

11 Lyall Street Hawthorn – Campbell Ward/Peter Vigano, Jellis Craig

6 Lileura Avenue Beaumaris – Errol Driver/Jim Kalogerakis, Hodges

‘Off-market’ Properties:

• Land opportunity, wide north frontage, approx. 682sqm, Toorak – circa $6.6m
• Fully renovated brick single fronter, 2-1-0, South Yarra – circa $1.2m
• Art Deco family home, pool, DLUG, fully renovated, Ripponlea – circa mid $4m
• Renovated single level brick Edwardian, 3-1-1, Prahran – circa $2m
• Contemporary, dated, family home, approx. 700sqm, Hampton – circa $2.3m
• Brick period with modern rear, 3-2-2, Elwood – circa $2.3m
• Land with plans for dual occ or family home, Camberwell – circa $2.25m
• Golden mile family home on approx. 360sqm, Brighton – circa $3.7m
• Brick Edwardian semi on approx. 400sqm, Glen Iris – high $1m
• Modern family home on over 700sqm, Glen Iris – circa $4.7m
• Renovated 80s family home, Malvern East – circa $4.7m
• Single level renovated home, Hawthorn – circa early $2ms
• Gascoigne Estate, family home, two storey, Malvern east – circa $4.75m
• Updated single level home, Malvern – circa $5m

Auction Spotlight:

Halli Moore from Buxton, with joint agent Jenny Dwyer of Belle Property, had a great crowd to work with at the successful auction of 46 Retreat Road Hampton

The home on offer at 46 Retreat Road Hampton ticked many boxes for families looking in the area – a well presented updated home with a good range of spaces. It’s proximity to shops and the suburb’s amenities, coupled well with the park only one door away. As a bonus, the playground is currently undergoing a major redevelopment.

The auction was late in the day, so a buzz of expectation was palpable in the crowd, having seen some strong results at auctions earlier in the day.  The opening bid was placed at $2.3m, matching the lower end of the quote range. From here it quickly went up in $50,000 bids, picked up another bidder, dropped the first and exceeded the reserve of $2.6m. More bidders stepped in, although offers now ranged between $1,000-$10,000.  The home was very nearly knocked down at $2.736m before a bid was placed in the very last second before the contract hit Halli’s hand. This brought forth a flurry of activity, with neither of the last two parties willing to give up the keys to the home.  The property was eventually sold for $2.872m to enthusiastic applause from the crowd. A reasonably strong result for the offering we think.