22 February 2020
Saturday was the first auction weekend for 2020 with genuine volume. It was a mixed day, with a number of homes selling well above the quoted ranges and reserves, others passing in around or just above the range and selling after, and some with limited or no interest. However, with an overall reported clearance rate of around 80%, one couldn’t say the market was not in the sellers’ favour.
The media is now back on the ‘boom’ bandwagon.
Stock is still low and buyer numbers are continuing to grow. A number of agents have commented that there are many brand-new faces they haven’t seen before. Adding to local upgraders, they are seeing newcomers wanting to improve their location/lifestyle (suburb jumpers) and/or relocating back from overseas after working abroad.
Fear is the new market driver: fear of missing out and fear that the prices will jump another 10% this year (if you listen to the media) and maybe make your chosen suburb no longer affordable.
A number of vendors, however, are still well above the market. Looking at the weekend results this morning by price (in our key focus area), eight of the first 20 homes were passed in over $2.5 million.
Expression of interest, private sale and off-market sales seem to be popular ways for agents to sell at the moment. Fear of missing out is helping this popularity and the process provides an opportunity to sell with less transparency than a public auction.
So far this year, we have seen some homes sell for record prices, well above what may have been achieved 12 months ago and possibly above the height of 2017 prices.
Enticing quotes, however, can do the same thing as they increase the ‘real’ amount of interest by encouraging those who ‘hope’ they can afford the property to attend the inspections, providing social proof that it’s a great home.
The combination of media and quotes installs confidence for buyers that competition is going to be fierce and good selling agents are using the fear of missing out as a strategy to get buyers to pay top dollar because ‘someone else will offer it if they don’t’.
This is true in many instances. There are properties where record prices need to be paid to be the successful buyer. A more prudent question may be ‘which ones are those and why?’
Many homes are staged now and look good, but how do they really work? Understanding what you/your family needs and what the property offers is key. For example, a home has five bedrooms but the only meals area big enough for a table of six doesn’t work. Where do you plan to sit and eat when visitors come over? Or maybe you just stop having people over …
There are many components that contribute to a property being a ‘good’ property, including position, orientation, zoning, positioning on the block, layout, façade, size, improvement options, car options, to name a few. Research is the key.
Research isn’t just about the property. It can include vendor motivations, buyer interest, other properties on the market, development in the area and relevant comparable sales (often different to the agent SOI) and all of this leads back to price.
It is possible that more buyers plan to buy for longer periods before they sell again now, but the number of homes that re-present for sale after only 2-3 years is high. Life can change quickly, whether it be a work relocation, finance change, marital status change etc. and knowing what you’re buying, why you’re buying it and how much you’re paying may be helpful to avoid stressful situations down the track.
Homes that have struggled in the past don’t suddenly become good homes just because the market has improved. Sometimes good homes struggle because the vendor expectations or motivations aren’t aligned with the market at the time. Some have been improved and past issues resolved. Some have the same issues and a better market won’t change them.
In a market with limited stock and plenty of hype, it can sometimes be harder to make a good decision as it’s easy to get caught up in the emotion of it all. Agents are counting on it and using it to get record prices.
- 108 Sackville Street Kew (James & Charlie Tostevin, Marshall White) – renovated ’70s split level home on south rear 921sqm (approx.), initially quoted $4.1-4.5m, sold for an undisclosed amount over $5m
- 9 Spring Street Sandringham (Nick Jones/Amanda Thomson, Hodges) – a modern home on 846sqm (approx.) in a weaker part of Sandringham, quoted $2.2-2.3m, sold for $2.68m
Properties we like going to auction this weekend:
9 Talbot Avenue St Kilda East – Limor Herskovitz/Nikki Hanover, Garry Peer
8 Lawes Street Hawthorn – Sam Wilkinson/Garrick Lim, Kay & Burton
“Off Market” Properties:
- Two storey family home with pool, Glen Iris – circa high $2m
- Period home, Central Park district, Malvern East – circa $4.5m
- Single level Edwardian with north rear, Malvern East – circa $3m
- Large family home on approx. 827sqm, Canterbury – circa $3.7m
- Edwardian style, newer build, family home, Sandringham – circa mid $3m
- Family home on large land approx. 1,020sqm, north rear, Glen Iris – circa $4m
- Victorian home, approx. 702qm, west rear, Hawthorn – circa high $4m
- Timber Edwardian on approx. 430sqm, Hawthorn – circa high $2m
- Family home/land, walk to beach, approx. 651sqm, Brighton – circa early $3m
- Family home on good land size, Malvern – early $4m’s
19 Myrtle Road Hampton
The home at 19 Myrtle Road Hampton delivers a great lifestyle location for families with a north rear. The home itself is a little quirky in its layout, with the original timber home extended out and down at the rear for added living, plus a master suite upstairs. Perhaps these aspects, plus a quote range of $1.85-1.95m had people spooked when it originally went to market April/May 2019. At that time, the auction resulted in a pass in, with nothing but a vendor bid placed. Less than a year later with a quoted price of $1.7-1.8m, there was a much stronger level of interest in the property. A young family opened the bidding at $1.7m, followed by a second party and the two traded offers to swiftly take the property on the market at $1.85m. Increments slowed to $5k, but came so fast that a third bidder entering at $1.93m was soon left behind again. Both bidders were now clearly trying to slow things down, dropping to $1k offers, but not prepared to give up the home for their families. The second bidder eventually outlasted the competition with a solid price for the offering of $2.00m.
108 Sackville Street Kew
Interesting property this one with plenty of questions marks…..south rear, no car garaging, end of T-intersection…But it is a ’70s modern home of some regard – The Buckle House, by Architect Kenneth Edelstein, which has been tastefully updated inside and has a great feel.
Word in the industry was this was going to be well supported by the market on auction day, and the rise of the quote during the campaign supported that. In front of about 100 people, auctioneer James Tostevin looked for an opening bid of $4.2m but was ‘upped’ by the first bidder who confidently bid $4.3m. Then the auction was off and running with another bidder joining in and the property was announced on the market at $4.6m. A third bidder joined in around the $5m mark but didn’t have enough steam to continue much of a fight, and the property sold under the hammer for a very healthy $5.06m, to the starting bidder. Vendor would have to be very happy here who last bought the property back in 2013 for just over $3.3m.