Buyer demand driving stronger than expected market.
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.
Two properties recently purchased in Brighton East were back up for auction this month:
- 14 Regent Street Brighton East sold on 1/7/18 for $3 million. Approx. 923sqm, south rear with dated 70s home. Approximately one year later, a competitive auction saw the property sell for well over $100,000 less
- 17 Plantation Avenue Brighton East sold on 24/2/18 for $2,420,000. Approx 652sqm, north rear, basic cream brick home. Approximately 18 months later, it has sold for an undisclosed amount, but a loss of more than $100,000
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
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.