28 April 2018
Clearance rates are still good but the method of selling is shifting. The REIV reported a 68% clearance rate at 6pm on Saturday. While not the 70% and 80% clearances we have become used to seeing over the past two years, this is still healthy, suggesting that the auction process is still delivering desirable outcomes.
The method in which the transactions are completing, however, is becoming more varied: ie bought beforehand, sold under the hammer, bought in post-auction negotiations or even a few days later.
Some vendors’ price expectations are too high, quoting laws are tricky to interpret, and banks are tightening lending criteria, which adds up to an environment where alternatives to the auction system are attractive.
Whichever way the property is sold, the opportunity is there for buyers and sellers to achieve their objectives.
For buyers, this means more research to obtain a greater understanding of the process, prices and strategies. For some, this may mean inspecting many more homes in varying suburbs and price ranges to get a better understanding of what their money can buy, interpreting the quotes, interpreting the volume of other buyers (working out the serious buyers from the neighbours, serial inspectors, family etc) and knowing how many buyer groups the property may appeal to and why, to name a few.
We are noticing an increasing divide in the number of properties selling above expectations and those selling below, and this isn’t taking into account the quote. The quote doesn’t determine whether the property is a good one. The fundamentals do: position, size, orientation, style, flow and quality. If one or more of these isn’t quite right, the price can vary significantly.
Of the auctions we attended on the weekend, we saw competition at all of them. They were good properties, however, they didn’t all sell under the hammer and some are still for sale.
- Hawthorn East – single-fronter on good land, but needing work (major renovation down the track) – sold under the hammer, 2 bidders
- Hawthorn – fully renovated, well located, single-storey two-bedroom home – sold strongly, 2 bidders
- Malvern East – renovated period home on good land, sold afterwards, 3 bidders
- Brighton East – modern home (as new) on good land, passed in, 2 bidders
- Glen Iris – large renovated period home, sold under the hammer, 3 bidders
- Bentleigh – modern home (as new), sold under the hammer, 3 bidders
The ‘done’ properties – the ones buyers can move into and don’t need to do anything else to seem to be attracting stronger interest than those needing work. In terms of houses that suit downsizers, that market hasn’t really changed since this time last year. In fact, it may have even strengthened.
We have noticed, with the banks tightening their lending, properties needing unquantified additional spending above the purchase price have lost a little bit of intensity in recent months.
That being said, if the vendors are holding strong on a figure, rather than an outcome, they may well be owners for a bit longer yet.
Some of the bigger pass-ins:
- Brighton – well-located modern home, good land, flexible floorplan and triple garage
- Toorak – dated home, predominantly land (approx. 429sqm)
- Parkville – two-storey terrace, 3-4 bedroom, good living spaces, no off-street parking
- Kew – renovated family home with pool, court location
- Canterbury – period home (with heritage overlay), ready for next update, good land
Properties we like:
Buyers will no doubt be offered many off-markets right now, and we have inspected dozens in the past month. Here is a small sample of the better ones:
- Single-storey townhouse, Brighton East – $2m
- Family home with court, Brighton – over $7m
- Period family home, Brighton – $3.6m
- Two-storey terrace requiring work, Prahran – circa $2m
- Family home with pool, could be further improved, Camberwell – $3m
43 Plantation Avenue Brighton East
The sun was shining on the large crowd spread along the reserve on the south side of the street to see Peter Kennett and the rest of the Hocking Stuart team in action. This modern home gained a lot of interest for the indoor-outdoor lifestyle and entertaining zones it offered. The north rear orientation was another plus. Dramatic two-storey windows spread light in the southern zones of the home. Once the preamble was complete and the call went out for bids, an opening offer of $4.2m was quickly received. A second bidder made one $50k offer, which was countered by the first bidder. Here the action slowed and a vendor bid of $4.35m was placed to move things along. Eventually the first bidder replied with an offer of $4.375m and the property was passed in at this level. It sold after for an undisclosed amount. Perhaps the lack of a downstairs bedroom-bathroom combination and the vendor’s price expectations deterred some potential buyers.
2 Irymple Avenue Glen Iris
A compact two-storey builder-spec home was on offer here, and a reasonable crowd of about 40 were keen to see how the market would receive it. Located not far from Central Park, this is not a typical offering of the area, but that didn’t deter many Chinese groups who clearly saw interest in a home they traditionally fight very hard for, particularly in suburbs such as Kew and Balwyn. Opening with a vendor bid of $2.4m, auctioneer John Morrisby had a bit of work to do get some crowd participation, but that eventually came with a $25k offering. Not long after, another party joined in. Soon after the half-time break, another party got involved, and the property was announced on the market at $2.7m, selling not long after for $2.75m. Good result for the vendor and well run campaign by local agents Ian McLennan and Danielle Waterton.