With mid-year school holidays over and Spring on the horizon, the Melbourne property market becomes all the more topical. The ‘Confidence Swing’ after the election appears to have been very positive, with buyers far more confident to transact now.
Inspection numbers have increased, while stock levels have remained low. This has ultimately led to stronger auction clearance rates (over 70%) than we have seen for most of 2019. At this stage it appears unlikely, but, if stock were to increase, it will be interesting to see whether clearance levels will be able to remain at these levels.
24 Raleigh Street Thornbury was a good example of a recent hot auction. Listed and sold by Robert Enes from Nelson Alexander, this was a neat single-level home with a functional plan and good car parking. The position and price point were key factors here and the property sold very strongly for $1.46m (after being declared on the market at $1.2m).
- Many transactions are happening off-market or as private sales enabling offers to be made subject to conditions such as finance. We note a number of these contracts are also falling over if conditions are not met.
- Finance is still a problem for many buyers, particularly for those wanting extra-long settlements.
- Loans for renovation work are also becoming harder to obtain.
- Lack of stock is still driving prices for the better properties up or well above quoted ranges.
- Investor vendors are starting to sell as land tax bills (particularly for those owning multiple properties) grow as a result of updated property valuations.
- Independent due diligence (more than ever) is important – please note this is not the agent’s job. We have noticed recently that many ‘new’ renovations are being done without the required warranty insurance which could pose a big risk to the future buyer. Understanding zoning is also important as development continues to play a big part in our neighbourhoods.
We usually expect to see high-volume auction weekends the third and fourth weekend post-school holidays; however, that is not looking likely in the near future and it leads to the question ‘will we see any more of the 1,000+ property auction weekends for the remainder of 2019?’ At this stage, it is not looking likely.
For buyers, this could mean longer waits for the ‘right’ property and, for those selling the ‘right’ property, potentially inflated prices as they sell with less competition than usually expected.
“Off Market” Properties
- Large Victorian home on land over 1,100sqm, north rear, Hawthorn – circa $6.5m
- ’90s town residence, 3 bed, 2 bath, 1 garage, 1 OSP, Hawthorn East – circa high $1m
- High-end architectural TH, 2 bed, 2 bath, 2 car stacker garage, Prahran – high $2m
- Timber home, approx. 234sqm, 9m frontage, likely new home site, South Yarra – circa $1.8m
- Double-fronted brick Victorian with dated extension, approx. 460sqm, South Yarra – circa high $2m
- Modern TH, 4 bed, 3 bath, DLUG, Malvern – early $2m
- Double-fronted Edwardian on 510sqm, renovated, Caulfield North – circa $2.5m
- Single-level period style home, Black Rock – circa $1.7m
- Victorian Terrace over 3.5 levels with views, East Melbourne – circa high $5m
One of the better properties coming up for Auction: an architect’s view
48 Asling Street Brighton – Nick Johnstone/Russ Enticott, Nick Johnstone RE
The home at 2 Scott St Caulfield South offers a pretty package for young families. Renovated and extended some time ago, the main house delivers three bedrooms and a study, as well as two living zones. The studio in the rear with bathroom and kitchenette is a definite bonus. Proximity to Ormond Station and the North Rd shopping precinct are further pluses, which attracted the large crowd of over 70 people at the auction on Saturday. With a price guide of $1.35-1.45m, an opening bid of $1.45m was immediately made by a young couple. Another couple joined in and swift $25k bids saw the home brought onto the market at $1.6m. Slowing things down to $5 and $10k bids, first bidder 1, then bidder 2 stepped out as a third and fourth entered the competition. These bidders very clearly wanted the property and were unwilling to give up the chance for the keys. Trading bids tirelessly with a mix of larger and increasingly smaller increments, bidder three eventually outlasted all, securing the home for $1.79m. Surely a result the vendors will be celebrating.
We have seen a steady rise in auction clearance rates in May and June. Low stock levels, the election result certainty and the more recent interest rate reduction has installed some confidence back into Melbourne buyers.
Buyers also seem to be more prepared when it comes to finance. They have factored in the length of time it takes to secure finance approval and they are now ready to bid when the right home comes along.
Staying on top of finance is probably still the most important thing a buyer can do for themselves at the moment. It is worth keeping in mind the renewal dates for finance, particularly when negotiating long settlements, so you don’t get caught out if the market or your financial situation changes.
Many vendors have also had the luxury of selling in isolation (ie without similar homes competing for the same buyers), which has resulted in some solid results and healthy bidding at auction.
With so many varying results, many buyers are becoming confused again by property quotes. Many buyers are finding it hard to understand why some homes sell within their quoted range, others sell for 10 or 20 per cent (plus) more and some don’t even get a bid. Knowing this information before the auction has enabled our clients to make good decisions about the properties they wish to purchase and the price they are prepared to pay.
There are sectors of the Melbourne market, however, where low volume isn’t a concern. Apartments and townhouses (including off the plan) dominate the property sites on the net, providing plenty of choice if these are on the shopping list.
Slowly, the old stock, some of it hanging around since last year, is now getting mopped up as property-starved buyers troll through the limited listings.
Over the next fortnight, many agents will be heading away for holidays. Sentiment among the agents has been buoyed by increased buyer interest; however, many have said they don’t have the same number of homes starting campaigns upon their return as they have had in previous years. At this stage, September looks like it is going to be a bigger month than August, with talk of a late Spring run through to Christmas.
15 Berwick Street Brighton (J Clarkson/S Whiting, Buxton)
Approx. 447sqm with dual street frontage and a well maintained original ’80s home, very conveniently located to Bay Street shops, beach, schools and transport. Opened with a genuine bid of $1.6 million, followed by a vendor bid of $1,625,000. Slowly other bidders raised their hands, six in total. On the market at $1.8 million, it eventually sold for $2,118,000 or $4,738sqm.
4/120 Queens Parade Fitzroy North (J Pillisner/S Kyle, Nelson Alexander)
A generous sized, 3 bedroom, 2 bathroom warehouse conversion on the fringe of the city. Opened at $1.2 million, on the market for $1,210,000 and sold, also with six bidders, for $1,575,000.
With the election and most other distractions out of the way, buyers and sellers can now focus on the remainder of 2019, although not until after the mid-year holidays.
It was interesting to witness the difference one weekend made to change the sentiment in the market place. On Monday, doom and gloom had definitely been replaced by optimism and positivity.
Of the agents we spoke to, they were consistent, commenting on the increased number of homes they had been invited into to appraise. Buyers will be hoping a number of these will turn into homes for sale when the market resumes in late July after the Winter school holidays.
Saturday also fared well. It was one of the larger auction weekends for the year, with 700 auctions reported and the clearance rate came in at a respectable 64%, which suggests we are heading into a more normal market. Actually, each weekend in May has been over 60%, albeit on small volume.
Buyers inspecting homes remains consistently steady. For the time being, they may need to focus on the remaining stale stock, much of which could still provide good opportunities for buyers if vendors have adjusted their price expectations.
- 3/30 Douglas Street Toorak (James Paull/Mark Wridgway, RT Edgar) – the downsizer market is alive and well, with this large single-storey apartment selling via EOI during the week for an undisclosed amount over $4.5 million
- 27 Beaconsfield Road Hawthorn East (Mike Beardsley/Andrew Hayne, MarshallWhite) – renovated and extended Victorian home on approx. 796sqm with pool, also undisclosed and selling for a very similar price to Douglas, over $4.5 million
- 21 Moorhouse Street Armadale (Justin Krongold/James Redfern, MarshallWhite) – another single-level downsizer option, liveable as is but starting to show its age on approx. 472sqm – undisclosed but over $3 million
- 58 Holyrood Street Hampton (Richard Slade/Sally Pickering, Buxton) – predominantly land of approx. 557sqm with a south-facing rear opposite a school – $1.53 million or $2,746sqm
Some of the better properties coming up for Auction before the holidays: an architect’s view
We often talk about turning a ‘B’ Grader into an ‘A’ Grader. The position and solid fundamentals at 37 St Georges Road Elsternwick present such an opportunity in our opinion. A concept worth considering, going to Auction 1 June 2019.
37 St Georges Road Elsternwick – Angelos Stefanis/Sven Fisher, Biggin & Scott
25 Wills Street Kew – Campbell Ward/Richard Winneke, Jellis Craig
14 Kintore Street Camberwell – Grayson Rayner/Doug McLauchlan, Marshall White
5 Berwick Street Brighton – Stefan Whiting/Danielle Harvey, Buxton
18 Wave Street Hampton – Robin Parker/Kate Fowler, Marshall White
- Period home, dated extension, opportunity to improve, Malvern East – high $3m
- Renovated single fronter in Domain Precinct, South Yarra – high $2m
- Renovated single level family home on approx. 780sqm, Malvern East – mid $2m
- Downsizer, 2 living zones, good north orientation, Armadale – circa $3.4m
- Period home with tennis court and pool, Brighton Beach – over $7m
- Updated Californian Bungalow, single level, Hampton – circa mid $2m
- Dated family home, ROW garage & studio above, Sandringham – circa mid $2m
- Original brick home on good sized land of approx. 700sqm, Brighton East – early $2m
- Large renovated Edwardian home on approx 680sqm, Middle Park – over $8m
- Renovated 3 bed, period home, north rear, OSP, Hawthorn East – over mid $1m
12 Royal Crescent Armadale
The sun was shining on the offering at 12 Royal Cres Armadale – a brick Victorian on a little under 600sqm in comfortable condition, yet offering excellent scope to improve. This is an example of how a home with solid credentials, including its prime position to Armadale amenities, is able to attract a good depth of buyers. The auction attracted a large crowd on both sides of the street, with the Tomlinson family and John Bongiorno heading up the Marshall White team. Opening with a vendor bid of $3m, two bidders slowly took the offering to $3.15m. After a short break to chat to the vendors, the home was not yet on the market. A new bidder entered the action, reducing bids to $10,000. Just when it seemed like the property would be passed in $3.22m, an offer scraped in at the last second. Suddenly there was a new lease on life as two of the now four bidders went back and forth in rapid fire with hardly a breath. John could only state the home was now definitely on the market when a slight pause occurred at $3.46m. The home sold under the hammer, undisclosed, slightly above this level.
14 Long Street Elsternwick
A Sunday auction in Elsternwick, the coffee van out front and a good scattering of neighbours and interested parties, set the stage for Phillip Kingston to head up the Gary Peer team at 14 Long Street. A pretty Victorian façade, north rear and an extension done some time ago, deliver a solid family home ready for the next generation. Proximity to Glen Huntly and Glen Eira Road shops, trams and stations further enhance the offering.
Following his customary vivacious pre-amble, Phillip needed to place a $2.4m vendor bid after he was greeted with silence. Eventually one of his boxes of chocolates could be handed over when a bid of $2.45m was placed. When nothing further was forthcoming, Phillip countered with another vendor bid of $2.5m, stating it would be his last if the next bid was $50k. Bidder 1 tried for $25k, but was pressured to go the full $50k to avoid another vendor bid. A break in proceedings did not inspire further parties to join in, so the home was passed in at $2.55m. The property sold afterwards for an undisclosed amount.
With the second quarter for 2019 now well underway, it feels like we are entering a two-tiered market.
What do we mean by that?
There’s the old stock that has been around, some of it since 2018, which is either over-priced, has issues, or possibly a combination of both.
Then there’s the new stock. If it is a property in short supply and it has been correctly priced, then the numbers through opens have been very solid.
Over the past fortnight, two properties come to mind where inspection attendance has been particularly strong. The key: both properties had scarcity factor.
- 1/95 Roslyn Street Brighton – a fairly original, single-storey home within easy walking distance to schools, Church Street shops and the station, quoting $1-1.1 million. Offering three well separated bedrooms, two bathrooms and a separate living area to the meals/kitchen area, the home has enough space to suit multiple buyer groups, including downsizers, younger couples/singles, and smaller families.
- 56 Cloris Avenue Beaumaris – a ‘mid-century’ Beaumaris home that has been sympathetically updated to retain original features and feel. Over the space of two scheduled opens on Saturday, the property saw more than 100 groups through the home.
What are the properties that we think are in short supply at the moment?
- Single-level townhouses close to shops/transport
- Fully renovated family homes close to schools and other amenities
- Liveable entry level homes close to shops/station
There are, however, still some good properties that have been around all year (some even longer). We think, in many cases, price has been the problem. The original hope of an above-market price has set up the opportunity to buy these properties below market value if/when the vendors become more motivated to sell.
Some vendors who are prepared to accept the market have been pleasantly rewarded with fierce competition from buyers and above reserve results.
We are, however, heading into another area of uncertainty with a looming election later this month.
If numbers through the doors can provide a guide for the future, while some may be only looking or wanting to take advantage of the current market, there are also a growing number of genuine buyers needing to relocate, upgrade or downsize regardless of the market sentiment.
Some of the better properties scheduled for Auction on 18 May; an architect’s view
75 Repton Rd Malvern East – John Morrisby/Matthew Coombs, Jellis Craig
19 Sargood St Toorak – Justin Long/Fiona Counsel, Marshall White
17 Eleanor St Ashburton – Zali Reynolds/Antony Woodley, Marshall White
145 Male St Brighton – Ross Walker, Buxton
- Renovated two-storey 4 bed, 3 bath Edwardian, North Brighton – circa $2.3m
- Single level brick Edwardian on approx 400sqm, Malvern East – circa $1.4m
- Brick Edwardian, single level, approx. 606sqm, Malvern East – circa $3.2m
- Victorian double fronter looking for renovation, Balaclava – circa $1.7m
- Two-storey brick family home on approx. 331sqm, Glen Iris – circa $2.2m
- Dated family home on approx. 924sqm with 22m frontage, Brighton East – circa $2.6m
- Renovated semi-attached two-storey, backs onto park, Armadale – circa mid $2m
- Edwardian double fronter, neat with opportunity to value add, Ascot Vale – early $1m
- Freestanding, townhouse-style home, near shops and trains, Hawthorn – high $1m
38 Service St Hampton offered comfortable living in a well maintained, relatively original blonde brick home, but could be seen as a land opportunity as well (approx. 577sqm).
Although having a south rear, the main living areas soak up the sunlight on the northern side of the home. Position was the key for this home, only 600m from the bustling Hampton St shopping precinct and a minute more to trains. The home is situated in Neighbourhood Residential Zone 3, three homes beyond General Residential Zone (more suited to development).
With the limited number of auctions on offer over the weekend, plus its prime position, a reasonable crowd of around 40 came to see Nick Renna and the Jellis Craig team in action, despite the average weather conditions.
Nick opened proceedings with a $1.5m vendor bid, bringing three bidders in throughout the course of the auction. While needing to work the crowd for the outcome, the auction did see good competitive bidding. The home eventually sold to bidder one for $1.731m, delivering a $3,000 per square metre result – which we think is about right.
The current market conditions are testament to why we always encourage people to buy well and buy an ‘A’ grader. In a flatter, or lower, market, these are the properties that will hold their price or value.
In addition, we are observing that, more often than not, the properties selling at auction are being sold within the quote range declared in the Statement of Information.
However, if the agent doesn’t get the quote right, it could lead to trouble for the vendor with low (or no) buyer inspections at the property.
The good properties with good fundamentals that are priced right are also seeing multiple bidders. Perhaps not the 4 and 5 bidders of 2016/2017, but often 2 or 3. Some of this is a result of fewer buyers in the market place; however, another key driver is the more accurate quote range, which has reduced the number of hopefuls bidding when they were unlikely to ever be in the race.
We believe due diligence, and buying an ‘A’ grader, proves invaluable at the moment for buyers.
Although stock levels are low, there are a number of good opportunities if you’re looking to buy a home for the longer term, including in the ‘off market’ sector. There are currently a number of homes presenting for re-sale within only one or two years of purchase. While sometimes this cannot be helped (death/divorce), some due diligence may otherwise reduce the need to resell quickly.
If you had bought an ‘A’ grader in the peak, if you have to sell it now, the result is likely to be more favourable than if you are needing to sell a ‘B’ or ‘C’ grader.
We also recommend buyers seek independent advice from experts if they have queries, as the selling agent is engaged and paid by the vendor to achieve an outcome for the vendor. When it comes to property restrictions, surrounds, renovation options, understanding precincts and price, such advice may help reduce the need to sell again in the short term.
For consideration, recent growth and development has resulted in councils re-assessing current overlays, such as flood and heritage. Some examples include:
Stock levels so far this year have been low and we are about to see another reduction in stock as we pause for the school holidays, Easter and Anzac Day public holiday. It is important in this market to ensure you are buying the right house. The good ones are few and far between at the moment. Without a plan and the right information, it could be easy to buy the wrong property.
While there is constant suggestion that the market could be flat or even fall further and possibly for several years to come, our lives don’t stop. We will continue to age, we may have children and they will grow up, they won’t leave home, then they will, we will grow old, we will move away or return for work or family and none of these things will wait for the market. If the house is right, it is a good time to buy.
We always talk about buying an ‘A’ grader or something that could be an ‘A’ grader with the right work because ‘B’ and ‘C’ graders really do struggle in a declining market.
- 9 Weybridge Street Surrey Hills (David Banks/Simon Lord, Jellis Craig) – single figure quote $1.8m – approximately 797sqm land with north rear and no heritage – sold for $2.35m
- 62 Essex Street Surrey Hills (Belinda Anderson/Mark Salvati, Jellis Craig) – quote $2.5-2.75m – a quirky modern home on approximately 1,000sqm land – sold for an undisclosed amount toward the mid $3m mark.
- 12 Caroline Street Sth South Yarra (Charlotte Broussard/Grant Wallace, HockingStuart) – quote $1.3-1.4m – smaller updated period home with OSP, A grade location – sold for $1.642m
- 4 Embling Road Malvern (Madeline Kennedy/James Redfern, Marshall White) – quote $4.4-4.8m – a nicely updated Federation Queen Anne home on approximately 900sqm, passed in for $4.64m and sold for an undisclosed amount slightly more than the pass in price
- 36 Imbros Street Hampton (Marl Earle/Sally Pickering, Buxton) – quote $2.8-3m – a ‘newer build’ among Castlefield’s heritage estate with double garaging and north rear, passed in on a vendor bid of $2.85m and sold over the weekend for $3m
- 30 Alfred Street Kew (Scott Patterson/Sophie Su, Kay & Burton) – quote $3.5-3.7m – approximately 781sqm land with original home and south rear – sold for an undisclosed amount mid-range
Some of the better properties scheduled for Auction on 6 April: an architect’s view
9 Kintore Street Camberwell – Mark Josem/Alastair Craig, Jellis Craig
39 Hawthorn Grove Hawthorn – Doug McLauchlan/Hamish Tostevin, Marshall White
21 Moama Road Malvern East – Fiona Ansell-Jones/John Manton, Marshall White
7 Retreat Road Hampton – Perter Hickey/Mark Earle, Buxton
- Art Deco over 3 levels, pool, approx. 460sqm, Toorak – circa $4m
- Brick Edwardian, dated renovation, Malvern – circa mid $1m
- Fully renovated, high tech, modern home, approx. 790sqm, Camberwell – circa early $3m
- Fully renovated Victorian single fronter, SLUG, approx. 292sqm, South Yarra – circa mic $2m
- Extended Art Deco, dated renovation, pool, approx. 650sqm, Brighton – circa mid $3m
- Modern upside-down home, expansive water views, Black Rock – circa $5m
- New large family home on approx. 540sqm, pool, Brighton – circa early $4m
- Dated single level home on approx. 600sqm, west rear, Brighton – circa early $2m
- Renovated, semi-attached Edwardian on approx. 400sqm, Ripponlea – circa mid $1m
- Brick Victorian looking for upgrade/new home site, approx. 750sqm, Caulfield South – circa $2m
- Brick Edwardian, partially renovated, approx. 750sqm, north rear, Elwood – circa early $3m
- Fully renovated brick Edwardian on approx. 250sqm, Elwood – circa early $2m
- Blond brick home with scope to improve, approx. 528sqm, Elsternwick – circa early $2m
- Restored Edwardian, DLUG, studio, approx. 374sqm, Richmond – circa mid $2m
12 Caroline St South Yarra offers a neat and tidy single fronter with the benefit of OSP (albeit for a smaller car). The home has been renovated over time, delivering excellent natural light in an ‘A’ Grade location, quoting $1.3-1.4m.
A large crowd had gathered as the clouds cleared from the morning showers, giving Grant Wallace and the Hocking Stuart team plenty of interest to work with. Starting with a vendor bid of $1.3m, three bidders swiftly took the offers up to $1.46m at which the agents took a break to chat with the vendors. Declared on the market a little later at $1.49m, bidder one remained keen and was now joined by a fourth. Both were obviously very keen to gain access to the keys, steadily trading bids, before bidder one slowed considerably, eventually allowing bidder four to secure the home for $1.642m. A solid outcome for the vendors.
With light rain falling, this auction took place indoors and a reasonable crowd of about 40 people gathered in the rear family room to watch proceedings. A solid, free-standing double-fronted brick Victorian was on offer and we liked its potential, as there is room for a modern extension (stca) and the position is a conveniently central one, albeit the street is a little narrow. Auctioneer Justin Long gave a warm spiel about the home and the immediate environs and didn’t look for an opening crowd bid, but rather promptly announced a vendor bid of $2.8m. This did little to encourage any active bidding and the property passed in at this figure. At time of writing, the property remains for private sale for $3.1m.
The first big test weekend for 2019 has passed somewhat smoothly, albeit a far cry from the start of 2017 and even 2018. Most of the properties we attended had bidding, even if it was from only one party, with the property more often than not selling after in private negotiations.
The quote has become an important part of the process. Many of the homes we reviewed over the weekend sold within their respective quote ranges. Moving forward, however, this may be more difficult for agents to predict, as an increasing number of homes are being reported sold with no prices recorded.
If buyers and sellers were waiting for some additional guidance after this weekend, the results suggest there are good opportunities to buy or sell at the moment. If buyers are only searching for bargains, or sellers are waiting for a dream price, they might be better to wait. For those wanting to move onto various stages of their lives, whether it is buying, selling or both, there is still a market there.
For those thinking of upgrading, now can be an even better time to make the move, particularly if you are willing to buy something a little ‘daggy’ that you can fix up over time.
We believe there are still a number of well-located properties that can become ‘A’ graders out there to buy. The key is being able to identify the level of work required and cost involved to assess whether the end product would be over-capitalising for the suburb. A basic understanding of what can and cannot be done in a town planning and building permit sense is also a very important consideration. Adam, a registered and practising architect, has helped many of our clients buy into suburbs otherwise unachievable had they been searching for completed products.
Highlights (sold within the range):
- 17 Bamfield Street Sandringham (Sally Pickering/Richard Slade, Buxton) – quote $1.98-2.17m, sold undisclosed over $2m
- 14 Pine Grove Malvern (Carla Fetter/Andrew McCann, Jellis Craig) – quote $2.5-2.65m, sold undisclosed top end of quote
- 27 Manningtree Road Hawthorn (James Tostevin/Michael Wood, Marshall White) – quote $2.2-2.4m, sold $2.325m
- 7 Bolton Avenue Hampton (Elizabeth Lopez, Biggin & Scott) – quote $2.8-3.08m, sold $3.02m
Some of the better properties scheduled for Auction on 2 March; an architect’s view
10 Willansby Avenue Brighton – Sarah Korbel/Russ Enticott, Nick Johnstone
128 Harcourt Street Hawthorn East – Chris Daly/Danielle Balloch, Jellis Craig
25 Woodside Crescent Toorak – James McCormack/Andrew Hayne, Marshall White
18 Staniland Avenue Malvern – John Morrisby/Matthew Coombs, Jellis Craig
- Fully renovated & landscaped family home, Toorak – circa $9m
- Pretty Victorian double-fronter, Hawthorn – circa $2.65m
- Two storey, Art-Deco duplex, 3-2-1, Elwood – around $2m
- Modern Townhouse with lift, school zone, Beaumaris – circa $2.4m
- Single level family home on over 850sqm, Malvern East – circa early $2m
- Timber Victorian family home, 2 storey with West rear, Armadale – circa $3m
- Californian Bungalow on good land, Balaclava – circa $2.6m
Well positioned to the Bay Street shopping precinct, 55 Durrant St Brighton offers a family home with multiple living options and good bedroom separation, as well as an easy-flowing entertainer’s deck and pool off the rear lounge. Comfortable now, but the home would benefit from a freshen up. A sizeable crowd gathered in the garden for the Nick Johnstone auction, quoted at $1.8-1.85m. Following the preamble, Nick was faced with a silent crowd, even after he placed his one and only vendor bid of $1.75m. Eager to entice a bid, he offered to jump into the pool fully clothed for any bid that was placed! It took a while for this strategy to work, with a young couple eventually taking the plunge with a $1.755m offer. There was almost another bid placed, although quickly corrected. No further action was to be gained from the crowd, so the property was passed in for further negotiations with the bidder. The home sold shortly after for an undisclosed amount close to $1.9m. Nick Johnstone kept his promise and took a leap into the pool after the deal was done.
In vast contrast to last weekend’s sweltering conditions, the temperature on Saturday hovered around 15 degrees for most of the day with heavy showers and intermittent squalls … but that’s Melbourne!
What was the same, surprisingly, was the number of buyers out at opens, braving the weather and checking out the stream of new properties open for inspection.
There was also a spattering of auctions across inner Melbourne. The five key councils (Boroondara, Stonnington, Glen Eira, Port Phillip and Bayside) saw 20 reported auction results. Collectively the suburbs within these councils cleared 70%. Interestingly, all but two sales were under $2million and the two that were over that figure passed in.
Such few results really don’t provide an indication on market direction. We are more likely to get a better feel after the auctions on Saturday 23rd February, where there should be more volume.
A lot of time has been spent worrying about whether the Banking Royal Commission Report would further impact market conditions. Immediate downward changes to the market were seen at the commencement of the enquiry, with banks tightening lending criteria, introducing new checks and measures before making funds available and restricting interest only/investment loans. This, however, has been done and the market has adjusted accordingly.
Among the recommendations there was much focus on changing the rules regarding mortgage broker remuneration. We believe good mortgage brokers play an important role in the property market. They are often able to assist small business owner buyers into the market, taking the time to consider their needs and explore the plethora of options available from all banks and financial organisations to find the right package. Many are small business owners themselves. Whether this will impact the market further, only time will tell.
As quickly as the market has started, it will soon be school holidays and Easter and the new stock will dry up again. With ‘Labour Day’ long weekend looming, some agents have mentioned longer campaigns to ensure buyers absent over that weekend have time to view properties before they are auctioned. This may also be a strategy to try and sell a few homes before auction if they feel there may be only one standout buyer.
- Renovated single fronter with OSP on approx. 190sqm, Prahran – circa $1.55m
- Pretty period home on large land, Hawthorn – $5.5m-6m
- Single level Victorian with large courtyard, Hawthorn – circa mid $1m
- 3 bed single fronter with 2 bath, 2 OSP, Kew – circa $1.7m
- Family home on approx 579sqm, Malvern – circa early $2m
The 2019 property market started positively on Saturday. Perfect weather, some good choices among the new listings and plenty of interested buyers inspecting homes. While we saw many new faces, there were also a number of more familiar faces out and about again, still looking for their perfect home.
Saturday, in reality, was vastly different to the anticipated doom and gloom we had expected to see after reading the ‘House price plunge hits GFC levels’ article in Saturday’s Age before heading out to our inspections.
Of the homes we inspected today, most had a positive vibe and good numbers through the doors. (Note that we generally only inspect the better homes on offer, after ruling out a large portion from review). Some homes, such as 8 Henrietta Street Hawthorn, 64 Paxton Street Malvern East and 22a Ferguson Street Brighton East, were overwhelmingly busy with more than 30 groups through each, reminding us of the more recent buoyant markets.
There’s still a fair bit of water to go under the bridge before we can determine the accuracy (or inaccuracy) of the negative summer media market headlines. However, if numbers are anything to go by, it was a resounding tick for success. With such beautiful weather, we are sure there were better options than looking at homes just for fun!
Questions still loom, however, as to whether the Banking Royal Commission findings report, to be handed down today, will further impact the market. Maybe next weekend there will be no buyers?! Although we can’t see that happening. Looking at the number of families searching on the weekend, they need homes to live in now and really can’t wait until times may be more suitable – the children are growing now.
We see the current market providing good opportunities for buyers. Prices are more achievable than 12-24 months ago, particularly as many vendors have now adjusted to the changing conditions.
Of most importance is the need for buyers to be ‘Buy-Fit’ before embarking on the search. What do we mean by ‘Buy-Fit’? We mean completing some due diligence before starting physical inspections.
- Ensuring finance is in place. This can now be a lengthy process, often longer than the three weeks a sales campaign usually runs. Regularly checking it to ensure its currency is also important.
- Familiarise yourself with the updated prices within the precincts of suburbs. Some areas have not changed, others have seen significant change. Knowing this can help with negotiations. As fewer homes are being sold under auction conditions, the social proof re price is no longer easily visible
- Determine your non-negotiables in advance and stick firm on them. While it is unlikely you will find a home that ticks 10/10, stamp duty is an additional cost of 5.5% on top of the purchase price. It can be an expensive exercise if you need to sell again quickly.
Many agents reported an increase in the number of homes sold in January compared to previous years. While positives can be taken from this, the last few years often saw little stock left unsold leading into the holidays (ie. nothing or very little to sell in January). It does, however, demonstrate that buyers are around and willing to transact at the right price and vendors are becoming more commercial as time goes by.
New stock levels are still fairly low as we start the year. In among the choices are some quality homes. Early indications would suggest that the well-priced, well-located homes should receive solid competition; however, for vendors who haven’t yet adjusted to the new market it may be a little harder to achieve a sold sticker on their board.
Some of the better properties scheduled for Auction on 23 February; an architect’s view
1a Bayview Rd Beaumaris – Amanda Thomson/Nick Jones, Chisholm & Gamon
64 Paxton Street Malvern East – Fiona Ansell-Jones/Andrew Hayne, Marshall White
19 Spencer Road Camberwell – Geordie Dixon/Michael Hingston, Jellis Craig
4 Silver Street Malvern – Tim Derham/Michael Derham, Abercromby’s
- Two storey period home on ~500sqm, brick, Nth rear, Armadale – circa $5m+
- Double fronted brick Edwardian, North rear, St Kilda – early $2m
- Large period home on over 1,000sqm, Hawthorn – circa $6m
- 4 bed family home with pool, Malvern – circa high $4m
- Modern two storey home, 4 bed, DLUG, pool, Canterbury – circa $3.5m
- Family home, high tech, pool on approx 930sqm, Malvern East – circa $6m
- Close to beach, 899sqm, dated home, Beaumaris – circa early $2m
- Large townhouse with lift, school zone, Beaumaris – circa $2.4m
- Renovated period, two storey home, approx. 775sqm, Brighton – circa $4.2m
- Basic home, good land with tennis court, prime beach location, Brighton – circa $8m+
- Good land, 650sqm, well positioned, Hampton – early $2m
- Renovated period home on large land, Brighton – circa $6m
Saturday was the last of the ‘big volume’ auction weekends, as the 2018 property market winds up for Christmas. While the general clearance rate was under 50% again (for the reported properties), we thought we would focus on some stats, as there were some standout suburbs with solid results.
- Middle Park – 4 reported results 75%
- Hampton – 4 reported results 75%
- Sandringham – 4 reported results 75%
- Brighton – 8 reported results 62%
- Balwyn – 3 reported results 100%
- Camberwell – 7 reported results 71%
- Glen Iris – 9 reported results 67%
- Malvern East – 10 reported results 60%
Malvern East has also seen a number of unreported off-market results over the past few weeks.
- Port Melbourne – 8 reported results 12.5%
- Brighton East – 5 reported results 20%
- Armadale – 4 reported results no sale
- Ashburton – 4 reported results no sale
While a week in real estate doesn’t say much, we think the results demonstrate that buyers are prepared to compete for the properties where there is a combination of good-quality, right-priced stock and vendors with realistic expectations.
We also thought it was worth considering the positives associated with the current market and bank changes, particularly if the property meets most of the key requirements you have been searching for:
- It’s a great time to upgrade as the gap is closer (ie 5% drop on a lower-priced home is less than a 5% drop on a more expensive one, reducing the extra money to upgrade).
- Competition is more tempered, so there’s a greater chance of success if you are prepared.
- As loans revert from interest only to principal and interest, there are a number of investment properties in blue-chip areas coming onto the market that may otherwise have been held indefinitely.
- Current and future vendors are now aware of the market we are in and more comfortable to sell for market value.
- Thinking outside the box a little and being prepared to do some work, such as buying a ‘B’ grader that can become an ‘A’ grader. With the right advice, this can be a great way to secure your next family home and certainly some of our clients will be enjoying their new homes for Christmas.
With only a couple more weekends before Christmas, most agents will now be focusing on trying to sell existing stock before taking time off for the summer holidays and get ready for a new auction year, which tends to commence after Australia Day.
We would like to take this opportunity to thank you for your support this year and wish you a Merry Christmas and a safe New Year. We look forward to resuming our reports once the auctions return in February.
Hawthorn/Hawthorn East also had a good weekend of results selling 6 from 8 reported properties. Four of the bigger sales below:
- 53 Leura Grove Hawthorn East (Stuart Evans/Duane Wolowiec – a modern family home with pool on smaller (approx. 596sqm) land – $3,920,000
- 46 Leura Grove Hawthorn East (Tim Picken/Rebecca Edward, Kay & Burton) – approx. 915sqm with a single storey renovated home sold well; the power of a good architect/interior designer working with an old home and a south facing rear – $4,150,000
- 31 Berkeley Street Hawthorn (Karen Chung/Caroline Hammill, Woodards) – well-presented 1930s home on approx. 700sqm, live in, renovate/extend, or perhaps even replace (stca) on Scotch Hill – $3,460,000
- 52 Mary Street Hawthorn (Richard Winneke/Cambell Ward, JellisCraig), renovated period home in Grace Park Estate – undisclosed over $6,000,000
11 Wheatland Road Malvern
The home at 11 Wheatland Rd Malvern offers a combination of Federation features at the front, combined with a light and modern extension to the north rear. Off-street parking for one car at the front, with a second one, perhaps a little tight, in the rear carport. The home would suit downsizers or smaller/younger families.
Ian Carmichael opened proceedings with a vender bid of $3.8m before receiving a genuine bid of $3.82m. The crowd was given some thinking time with a break, but further silence from the 50 or so people in the crowd greeted him after. Ian placed a second vendor bid of $3.9m before receiving another bid of $3.91m from the only bidder to secure negotiation rights. The property was passed in on the street, but sold shortly after for $4.01m.
4 Montrose Avenue Brighton
Situated opposite the well-regarded Elsternwick Primary School and an easy walk to the Martin Street shops and cafes, this home was always going to appeal to young families. Although a south rear, a good-sized decked area wrapped around for north-east light access. The home has been renovated, with a spacious family bathroom serving the three bedrooms, on approximately 381sqm of land.
Peter Kennett and Tamara Penno from Hocking Stuart had run the busy campaign and headed up the auction. A bid of $1.68m started the auction, swiftly followed by another young family, trading bids to take the property to $1.82m and onto the market. A third bidder entered the action, before bidder two stepped out. Both couples were clearly keen to get the keys, trying to stretch as much as possible. Bidder three was eventually successful, securing the home for $2.0m.
It was another mixed round of results on the weekend. Vendors with sold stickers were likely to be feeling relief after the clearance rate statistics (47%) were posted on Saturday evening.
More than ever, buyers need to be aware that an auction has three parts to it: pre-auction, at auction and post-auction. A property can be bought in any of these timeframes. At the moment, of the properties that are being bought, it feels like they are falling equally into these sections. When the market was at its highest a few years back, this breakdown was more like about 15% pre-auction, 70% at auction and 15% post-auction. Why is this? We think predominantly because there are less ‘eligible’ buyers right now, mainly due to recent APRA loan crackdowns and money becoming less available. The media has also done its share of scare-mongering and buyers are more wary now and uncertain as to acceptable buyer behaviour.
Scarcity is still providing solid results for quality, well located properties, although offerings were pretty slim on the weekend, particularly in Stonnington.
For buyers, there are some good opportunities to buy if the offering meets your needs. While media reports of doom and gloom are influencing buyers, many of whom are missing out on buying suitable homes because they think they should wait, there are opportunities available that we haven’t seen before.
Interestingly, we have been involved in a number of transactions this year where vendors are selling their investment properties, often to reduce their land tax commitments. As property valuations have increased, so have the taxes payable. This has opened up a number of opportunities for buyers to purchase homes that have been otherwise tightly held. For a number of these vendors, the properties have seen large gains over many decades and they’re more prepared to sell in the current market at the market price.
For buyers, opportunities are opening up in areas where they may have been outpriced 12 months ago, such as Albert Park, South Yarra and Hawthorn, where many smaller homes are now available at slightly lower prices. The trade-off for the position and opportunity is that many of the homes have seen little change since purchase, therefore buyers will need to be prepared to undertake renovations, some extensive and costly. Due diligence regarding overlays, setbacks, costs etc. is very important to ensure you buy a home that can be what you want it to be.
The plus, if you’re prepared to do the work (perhaps over time), is the ability to buy in some of Melbourne’s premium suburbs, where last year buyers may have been outpriced.
22 Sussex Street Brighton – Stefan Whiting / Gary Yue, Buxton. Large, yet original home on 970sqm, located between Church Street shops/station and the beach sold for $5m or $5,154sqm.
19 Sunnyside Avenue Camberwell – Michael Hingston/Chris Hingston, Jellis Craig. Fairly original brick Californian Bungalow, 900m2 approx. north rear, blue-chip Camberwell property. Sold for $3.46m.
159 Prospect Hill Road Canterbury – Doug McLauchlan/Stephen Gough, Marshall White. Well built and designed 20-year-old single-level three-bedroom townhouse, perfect for a downsizer. Sold for $2.520m.
Some of the better properties scheduled for Auction on 1 December; an architect’s view
20 Ryeburne Avenue Hawthorn East – James Tostevin/Michael Wood, Marshall White
11 Wheatland Road Malvern – Iain Carmichael/Tim Bennison, Jellis Craig
23 Albert Street Brighton – Kate Strickland / Andrew Campbell, Marshall White
14b Dunraven Avenue Toorak – Robyn Feigen / Robert Fletcher, Kay & Burton
4 Leopold Street Glen Iris
Plenty of activity in this street, with three properties currently on the market.
We were at the auction of No. 4 – a modern semi-detached townhouse that appeals to a wide buyer group and has been tastefully designed and built. Smart to have a master bedroom suite upstairs and downstairs so that stairs are somewhat eliminated. Such a consideration would not have been taken in to account 10 to 20 years ago.
In front of around 40 people, auctioneer John Morrisby opened with a vendor bid of $1.850m and it didn’t take too long for this to be advanced by a young couple.
Enter bidder 2 (another young couple) not long after and the auction wasunderway. Original bidder looked weak and pulled out, then entered bidder 3 (probably the parent of bidder 1) to do the heavy lifting. Not an uncommon strategy these days. The property was announced on the market at $1.970m and sold not long after for $2.009m to the original bidder.
Quick-fire auction, all over in about five minutes. As a point of interest, the original full block last sold in 2000 for $450K.
8 Talbot Street Hampton
It was the perfect spring day for an auction in this well positioned part of Hampton. On offer was a period home extended some time ago, on a well sized 860sqm block. The home sits within a neighbourhood zone without a heritage overlay. Sold only 18 months ago for $2.926m under spirited competition for well over its then reserve, the current market was going to be a test for such a swift turnaround. Jack Johnstone headed up the Marshall White team, asking for $2.65m opening offers. A cheeky $2.2m was instead called out and reluctantly accepted. Another family entered proceedings with a $2.3m counteroffer. When the first bidder tried to reduce bids to $20k at this point, Jack rejected the offer, instead placing a vendor bid of $2.65m to move towards the quoted range. Bidder two offered $2.67m, at which pointed activity stalled, a discussion with the vendors followed, but no further bids could be extracted. While the family went inside for post-auction negotiations, it seems agreement could not be reached and the home remains on the market at time of writing, with an advertised price of $2.95m.