Archive for September 2023

 

Stock levels. Very topical subject this time of year. Not much stock has come on the market in the last week or so due to school holidays (many agents and families are away on holiday), and this is causing frustration for some buyers. Traditionally we don’t see many auctions on AFL Grand Final day and Melbourne Cup weekend either, so that leaves only 6-8 good Saturday auction days remaining for the year. Many homeowners are feeling better with the idea of selling given recent good market results, but what do they buy?

Speaking with agents, there is confidence that volume will be steady as we head towards the end of the year; however, much of the future stock appears to be coming from the rental market.

While most people think ‘apartments’ when it comes to rental properties, many of the properties coming up, even in the $3-4 million housing market, are former rentals. Where in the past, buyers have seen good opportunities to buy a ‘B’ grader that can become an ‘A’ grader, most buyers are still erring away from properties that need work.

As a buyer, one question could be: do you buy ‘the best of an average bunch’ now just to get into the market, bearing in mind you could be living in it for the next however many years, or should you wait until better stock is available?

It seems many people are opting for the best of an average bunch and only time will tell whether the choice to buy now, rather than wait, was the right one.  We think wait – or at least buy a property that has good fundamentals that can’t be changed – ie position, land size, orientation etc – in other words a B-grader that can turn into A-grader.

 

Rebound buying and compromise

We witnessed a skilled agent on the weekend engage with the ‘underbidder’ of a property auctioning the same morning as a property he was selling half an hour later.

The ‘underbidder’ had not considered the property before the 5-10 minute inspection before it was due to go to auction. The ‘underbidder’ had not had the contract reviewed, knew nothing about the body corporate, had not had a building inspection, had done no research on price (or any other due diligence) and had not had time to reflect on the loss of their desired property only moments earlier.

So, did the property suit their needs? On paper it had the same details – two bedrooms, one bathroom, one car space and it was in the same suburb.

What was certain for the agent was the ‘underbidder’ was coming from bidding at a more expensive property to look at something he knew was unlikely to sell for the same price.

The agent had a good idea that the property he was selling was likely to be less than the other (with his knowledge of the property and the knowledge of the interested buyers he had on the property).

The most important thing was he knew that the ‘underbidder’ was a hot buyer with a good budget and hot buyers have money burning a hole in their pocket and their emotions were likely to take over and hopefully bid up to the level they had already bid to if pushed.

The ‘underbidder’ bought the property.

They may even think they had a win, as they bought it for less than they had bid earlier in the day.

The big winner, however, was the vendor. The agent advised afterwards that the auction would have stalled for around 5% less than the final purchase price, had he not convinced the ‘underbidder’ to participate.

Exceptional agent work and congratulations to the vendor for employing such a savvy agent.

Hopefully the buyer is happy too.

Hope in our minds, however, is not the best way to tackle what is, more often than not, the largest purchase you will ever make.

 

Strong sales of note:

And from the week before, an auction result that is still being talked about in the industry at

 

 

Some of the better properties currently on the market; an architect’s view

7 Ashleigh Road Armadale – Walter Summons/Charmayne Dulley, Belle Property

10 Suffolk Road Surrey Hills – James Tostevin/Robert Le, Marshall White

15 Herbert Street Beaumaris – Andrew Solomon/Campbell Moore, Belle Property

  

‘Off-market’ Properties:

• New home site (STCA), 2-1-2, ~838sqm, Camberwell – circa $3m
• MCM home, 3-2-3, ~930sqm, Kew – circa $3m
• Modern Apartment, 3-2-2, Port Melbourne – circa $1.85m
• Original period home opposite parkland, 4-2-2, Glen Iris – circa $2.4m
• Cal Bungalow, 4-3-5, pool, ~850sqm north rear, Malvern East – circa $5.3m
• Victorian, 4-2-3, comfortable home, ~405sqm, Windsor – circa $3.3m
• Victorian, 3-1-0, renovated, ~142 sqm, Windsor – circa $1.85m
• Edwardian, 2-2-0, ~181sqm, south rear, Malvern – circa $2m
• Victoria, 2 storey, 3-2-1, west rear, ~190sqm, Prahran – circa $2.6m
• Edwardian, 2 storey, 4-2-1, north rear, ~567 sqm, Surrey Hills – circa $3.3m
• Victorian, cottage, renovated, 3-2-1, ~250sqm, Prahran – circa $2.2m
• Art Deco, 3-2-2 w pool & cabana, ~730sqm north rear, Brighton – circa $3.5m
• Art Deco, 2-2-2, plus study, ~430sqm north rear Brighton East – circa $1.9m
• New TH w pool, 4-3-2, north rear, Highett – circa $1.95m
• Dated home/landsite ~780sqm (STCA), near Concourse, Beaumaris – circa $2.3m
• Land ~650sqm with approved plans for 2 THs, Elwood – circa $2.8m
• Fully renovated Victorian single fronter, 2-1-0, Albert Park – circa $1.5m
• Californian Bungalow, renovated 4-2-2, ~600sqm, St Kilda East – circa $2.8m
• Single level 70s, 4-2-1, ready for update, pool, St Kilda East – circa $2.5m

 

Auction Spotlights:

22 Percy Street Hawthorn

A strong crowd of around 100 witnessed this auction and it was a good one. Auctioneer David Lettieri and his team from Marshall White had around 90 through the home at its first open (and around 200m through during the campaign). According to the REA it was the most visited property nationally in August on realestate.com.au. The reason for the popularity; this was a well-balanced property in an A-grade location, with a pretty façade and good off-street parking – they don’t come up that often. Opening with a strong crowd bid of $3,000,000 ($100,000 over the top of the quote), the property skipped along with three bidders, being announced on the market at $3,140,000 and ultimately selling under the hammer for $3,270,000. The property last sold in 2015 for $2,550,000, and had some pretty basic upgrade works since then – it just shows that buying a property with good fundamentals can be a very good investment – but of course not everyone knows what a good property is.

 

3A Horace Street Malvern

On a warm Melbourne morning a small crowd of about 30 people witnessed a competitive Auction in the very sough after location of Malvern. 3A Horace St offered a flexible floorplan with 3 bedrooms, open plan kitchen, living and dining room looking out to a west facing courtyard that offered off street parking for one car via ROW. The solid brick Edwardian home also had a unique offering of a spa bath looking into the living room.

The Auction kicked off with a vendor bid at the bottom of the quote range, $1.4m which quickly enticed two bidders to enter the race to secure the home. A third bidder took the price to $1.56m when it was announced “on the market”. It eventually sold for $1.652m which was a strong result.

 

24 Grange Road Sandringham

A pretty single level weatherboard in a row of similar homes, on approximately 330sqm. The home has seen a few updates since the last sale, including the addition of a second bathroom. Positioned between both the Sandringham and Hampton Street shopping precinct and an easy walk to local schools, the home attracted both young couples and downsizers. Perhaps questions for potential buyers were the lack of covered parking and the south rear (although good west light access).

The home had been quoted at $1.5-1.6m, before being upped to $1.55-1.65m during the campaign.  Jesse Raeburn headed up the WhiteFox team for auction day, starting off proceedings with a $1.55m VB.  Three bidders quickly traded offers before a short break, after which a fourth party entered after, and the home was called on the market at $1.76m. Another party joined in as the early bidders stepped out. Bidder 4 and 5 continued to counter each other, the home eventually selling for a solid $1.88m.

 

We’ve just had the first weekend of Spring. It was supposed to be a Super Saturday (with over 1100 homes advertised for auction), but it just didn’t feel like it. The clearance rate figure advertised was not totally accurate, with 200-300 properties being withdrawn from auction due to limited and/or no buyer interest (this happens most weeks, yet the number on the weekend we felt was a bit higher than normal).

If vendor expectations were realistic and/or the product good, properties did sell. 

A few strong auctions of note:

However, for many who sold on the weekend, the sales results were in (or not too far from) their quote prices:

 

Agent feedback and insights

 When questioning the volume of properties being auctioned on Saturday, many of the agents we spoke to in the southeastern suburbs had consistent feedback:

• Stock remains tight – particularly for the A graders
• There has been a slight improvement to stock levels
• Many more investors selling (see below for more detail)
• Quoting the property and realistic vendor expectations is all important – buyers are price sensitive for the B and C graders

 

Off-market properties

We note an increasing number of properties, originally available for sale as ‘off market’ homes, being realised at public auctions with results often 10-15% or more below their original ‘off market’ asking price. 

Maybe vendors are thinking ‘if you don’t ask, you don’t get’. The problem with this though is that it can diminish the effectiveness of an advertised campaign, as many key buyers have already been through the property and others get confused about what the vendor is actually trying to achieve.  Are they really sellers and what is the real price?

We feel a high number (although not all) of the off market homes are overpriced at the moment and, on occasion, a vendor may get lucky selling quietly at their inflated asking price. 

It is becoming apparent that the romance and excitement of buying a property ‘off market’ can often over-ride normal due diligence, including an understanding of where the property may sit ‘price wise’ in the market.

Where buyers are often far more considered when it comes to their spending on the general household, when it comes to the biggest purchase they may ever make, there is still a perception that the agent is ‘helping’ them secure the property for them. 

 Make no mistake, they’re working for the vendor and if they think you are their best option to achieve the vendor’s price, they are not going to be advising if the property is heavily inflated or not. They are relying on your desire to purchase something you think no one else knows about.  

With modern technology that can advise a full office database within seconds of a listing, you could be just entering a ‘smoke and mirrors’ process where the agent can more easily manipulate you into paying the price they want you to pay, rather than a price the property may be worth.

Having said all that, the good ones can sell well ‘on market’ or ‘off market’, as a  couple of recent results in Surrey Hills show, including one in Middlesex Road (just shy of $5m) and Guildford Road (in excess of $4m).

Of note, these were both good, well-presented properties and doubtless the agencies would have loved to have seen these being showcased in the public forum.

There are a number of ‘off market’ homes asking big prices that don’t have the same strengths that these properties offered.

As a buyer, who has your best interests at heart?

 

Changing vendor profile and landscape

A key change to the property market is the number of rental properties up for sale (and these are not just your typical $400-600K apartments). Some of the reasons for the increase in the sale of rental properties include:

• increased interest rate payments and land tax payments.
• greater tenancy rights (often to the detriment of vendors who own the properties).
• increased council rates, insurance, management and renovation costs.
• problematic council orders (mostly relating to cladding issues).
• owners needing to liquidate money for business or personal reasons.
• annual/bi-annual safety checks.
• return on investment just not there, many people see greater value in shares.

There are perhaps two main reasons why ‘others’ don’t want investment properties to be sold:

We think the number of rental properties coming on for sale will continue to increase as we head toward the end of the year, as many vendors won’t want to incur new or increased land tax bills come January 1, 2024. As a buyer you really need to do your homework – as always a good understanding of the due diligence required and understanding of price is key (rather than predicting the next best area and projected yields).

With the footy finals now upon us, the focus for many turns to post-Grand Final, when children are back from school holidays and there are less interruptions to the real estate program. Maybe then we will see the return of the Super Saturday.

 

Some of the better properties currently on the market; an architect’s view

 

33 Jordan Street Malvern – Will Bennison/Carla Fetter, Jellis Craig

139 Thomas Street Hampton – Robin Parker/Kate Fowler, Marshall White

 

 

‘Off-market’ Properties:

 

• Modern newly built family home, 4-3-0, South Melbourne – circa $3.45m
• Contemporary family home, 4-3-2, ~420sqm, Malvern East – circa $3.0m
• Modern 3-3-2 over 3 levels, near amenities, South Yarra – circa 3.5m
• Edwardian brick single fronted, 2-2-0, Malvern – circa $2.0m
• Single level Victorian, 3-1-0, ~270sqm, Hawthorn – circa $2.5m
• 1930s 2-storey semi attached, 2-1.5-2, ~500sqm, Camberwell – circa 2.5m
• Edwardian family home, 4-2-1, ~560sqm, Surrey Hills – circa $3.3m
• Art deco family home 4-2-2, ~850sqm, Ivanhoe – circa 2.75m
• Californian Bungalow, 4-2-2, ~710sqm, Kew East – circa $3.8m
• 2-storey Victorian, 3-2-1, ~190sqm, Prahran – circa $2.6m
• Double fronted Victorian, 4-2-1, ~260sqm, Armadale – circa $2.2m
• Brick Edwardian on ~900sqm, 3-2-2, needing update, Malvern East – circa $4.9m
• Edwardian family home, 4-3-2, north rear, ~930sqm, Malvern East – circa $5.4m
• Edwardian renovated 3-2-1 double fronted, Malvern – circa $2.4m
• Hamptons style TH, 3-2-1, ~170sqm, Malvern – circa $2.0m
• Californian Bungalow near amenities, ~400sqm, Hampton – circa $2.4m
• Striking modern family home, 4 bed, ~890sqm, Hampton – circa $5m+
• Contemporary 2-storey family home, 4-2-2, Beaumaris – circa $2.45m
• Family/multi-generational home looking for update, 5-3-2, Beaumaris – circa $1.95m
• Fully renovated Victorian, 2-1-0, Albert Park – circa $1.575m
• Renovated contemporary family home, 4-2-2, Elsternwick – circa $1.9m

 

Auction Spotlight

 

On a beautiful spring sunny Melbourne morning witnessed by a small crowd of around 30 people, 3 St James Road Armadale went under the hammer with Jellis Craig. A well-presented single fronted 2-bedroom Victorian Terrace with a north-facing courtyard, well located to shops, transport and amenities.  After a slow opening, the auction eventually opened with a bid of $1.5m. From here, it then quickly moved, with two bidders pushing it to $1.7m when the property was announced on the market. The eventual purchaser came in late and it sold for $1.720m. We have recently been seeing properties that start off as an ‘off-market’ opportunity, and if they then don’t sell within a few weeks, they are converted to a campaign (as was the case here). This can sometimes have an adverse effect on a result as the off-market price is normally higher than an advertised campaign price and buyers can get confused.