Buying good homes in Melbourne is about to become even harder.
Why do we say that?
We think the market we are currently in (whether prices are up or down) is the new normal and will be for at least the next few years while interest rates are low.
Stock levels are unlikely to increase significantly. A lot of what is out there is now very different to five years ago. Apartments and townhouses are making up a larger percentage of the offering. The roads are getting busier and lives are getting busier.
Traditionally, the market in Melbourne was a local one. There were more seller/buyers. That proportion has dropped significantly. More buyers are now coming from overseas and interstate or are first home buyers or are buying investment properties – hence they do not have anything to put back into the market.
If we compare the same weekend five years ago, there were 189 reported sales in the Bayside, Port Phillip, Stonnington, Glen Eira and Boroondara council areas, with 91 apartments/townhouses sold, or 48% of the overall offering.
Last weekend, there were 95 reported sales (half the amount of five years ago) of which 55 were apartments/townhouses, making up 57% of the overall offering and nearly 10% more than five years ago.
For families wanting the traditional family home and a backyard for the kids, the options are decreasing.
As a vendor lucky enough to own one of these properties, unless you need a better/different location, bigger or smaller home/land and can’t renovate, the desire to move is unlikely to be strong.
As a buyer, fewer good options is likely to result in continuing increased competition.
We are also seeing buyer frustration around quoting.
Many homes are now selling well above the quote range. Even if the vendor is a seller in the range, most buyers (for the good ones) are now prepared to bid comfortably beyond the advertised prices if they want to out-bid their competition.
We do not think that means you should just keep bidding because you can. In 2016 and particularly 2017, many buyers used this tactic; however, the recent slump saw a number of those buyers become sellers for a lot less than they had paid.
The property has to tick the right boxes, due diligence needs to be thorough and we believe there are stop limits for most properties.
We understand quoting can be harder to manage in a rising market; however, there are a number of more recent homes that could be included in Statement of Information quotes and yet are not because agents have more recently chosen to not disclose the amount at all when reporting the property sold.
While eventually the property prices will become public, usually once the transfer has been registered through the Titles Office, it is often too late by the time they are released post-settlement. A lot of this information is known within the industry but not outside it.
In the meantime, the frustration continues to build, and the importance of making good decisions through accurate information and intel as a buyer is greater than ever.
One of the better properties scheduled for Auction on 26 October; an architect’s view
44 McKinley Avenue Malvern – Darren Lewenberg/Grant Samuel, Kay & Burton
- Double fronted Edwardian looking for a freshen up, north rear, Malvern – circa $2.7m
- Modern two storey family home, Malvern – circa mid $4m
- Mediterranean inspired Townhouse, 3 bed, 3 bath, DLUG, Toorak – circa $4.75m
- Single fronted Victorian, renovated, 3 bed, 2 bath, OSP, Armadale – circa $2.4m
- Fully renovated & extended Edwardian, pool, approx. 577sqm, Malvern East – high $3m
- Edwardian brick home, extended some years back, pool, Elsternwick – early $2m
- Single fronted, two storey, renovated Edwardian, Elwood – early $2m
- Semi-attached brick Edwardian, 3 bed, 1 bath, Balaclava – circa $1.4m
- French provincial family home, automated, north rear, Brighton East – circa early $3m
The family sized Edwardian at 8 Heath Street Sandringham had gathered solid interest both during the campaign and at the auction on Saturday. The 45 feet frontage limited the stately nature of the front rooms to an extent, but the land’s depth (delivering approx. 792sqm) and extension, carried out quite some years ago, do deliver a solid family package. A good-sized studio in the rear offers further flexibility. While on the south side of the street, the street itself is regularly a popular choice for families.
The campaign had been headed up by Charles Darlow and Scott Hamilton from Buxton, quoted at $2.45-2.55m.
Following Mark Earle’s preamble, the auction swiftly got underway with a $2.45m bid. A second bidder entered and the two traded offers before bidder 1 stepped out and was replaced by a third party. The home was declared on the market at $2.59m. Bidder two occasionally tried to gain the upper hand with larger jumps in bids and was eventually successful, securing the home for $2.73m.
The third quarter Melbourne Market for 2019 has been anything but predictable.
We have seen consistently high clearance rates, above 70%, since July and very low increases in stock levels. Why? Because there are more people wanting to buy in Melbourne than people wanting to sell.
Many vendors of well-located homes (close to shops, schools, transport etc.) are choosing to renovate, update or extend rather than sell.
Stamp duty is also becoming more of a consideration for seller/buyers (5.5% in Victoria). A $2 million property will attract stamp duty of $110,000, therefore if the location works, why move? Often an updated kitchen and/or bathroom can be enough to satisfy any restless thoughts that it’s time for a change.
Combine this with low stock and the uncertainty that it may take a long time to find something to buy and it can make sense to remain where you are and improve what you have.
That is why we believe it is more important than ever to buy right first time, with a home that has the flexibility to grow with you over a number of stages of life, from starting out as a younger couple/family through to downsizing.
We think the current market is starting to feel more like the late 2016/2017 marketplace, where buyers were desperate to buy anything just to get into the market, although currently we still see properties with identifiable issues (internal and/or surrounding) finding this new market tough.
Quotes have become more confusing for buyers. Many of the current vendors selling signed up before the market was showing signs of improvement. Their motivations have been for genuine reasons (such as relocation, divorce, death etc.) and their quotes have been in line with past results, yet talk of underquoting has become the common topic of conversation again and we are seeing many buyers left disillusioned, spending money on building inspections and contract checks, as well as investing a lot of their time and emotion into properties to find they were never in the game in the first place.
For many properties selling at the moment, they are the only option available for buyers and some are achieving high prices as a result. If it meets your needs, that is great; however, we think it is equally important to consider how the property will stand up not only in the current competitive market, but also if the market were to change back again, just in case you have to sell unexpectedly.
14 Parnell Street Elsternwick (Daniel Ashton/Ben Gerrard, Biggin & Scott) – quote $2.6-2.86m, a renovated period home with north rear – sold for an undisclosed amount under $3.2m
1 Chavasse Street Brighton (James Paynter/Sam Paynter, RT Edgar) – quote $2.1-2.3m, fairly original but very clever home built in 1971, close to Church Street – $2.54m
7 Howitt Street South Yarra (Madeline Kennedy/Nicholas Brooks, MarshallWhite) – quote $2.75-2.95m, a renovated single fronted home – $3.6m
29 Bolton Street Beaumaris (Romana Altman/Jennifer Hine, Buxton) – quote $1.5-1.59m, fairly original 70s home (with mid-century features) on 791sqm – $2m
A property we like, coming up in October:
8 Heath Street Sandringham – Charlie Darlow/Scott Hamilton, Buxton
“Off Market” properties
- Fully renovated Edwardian family home, Malvern East – circa high $3m
- Single level/fronted Victorian, renovated, Armadale – circa $2.4m
- Double fronted, single level Edwardian, renovated, Malvern East – circa high $2m
- Double fronted Victorian, dated renovation, north rear, Armadale – circa mid $2m
- Edwardian weatherboard, original on approx. 498sqm, Elsternwick – circa $1.8m
- Single fronted Victorian, 3-2-0, approx. 253sqm, Malvern – circa $1.75m
- Family home on approx. 1,650sqm, Beaumaris – circa $4.5m
- Family home in the Castlefield Estate, approx. 900sqm, Hampton – circa mid $3m
- Conveniently positioned Townhouse, 3-2-2, Brighton – circa $1.75m
Only a few years ago, 14 Parnell Street was a little single-fronted weatherboard home with a dated extension at the rear. With its more recent full renovation and extension, it has become a well-thought-through family home. Children have their own zone with two bedrooms, bathroom and retreat upstairs. The master suite, a study and two further living zones make up the ground floor, plus a bonus studio at the end of the north-facing rear garden, behind the pool. The spacious laundry/mud room and butler’s pantry are ideal for families, as is the BBQ area flowing off the informal living at rear. Perhaps its only shortcoming is the lack of covered car parking at front, which would ruin the pretty façade.
A large crowd was spread around the rear open plan kitchen and living zone for the Bill Stavrakis-led Biggin & Scott auction. After the customary delay to build anticipation, Bill got things started, but was made to wait by potential bidders in return. Just when it seemed like there may be no bidding on the home, a lady came forth with an offer of $2.55m. As is often the case, the second bidder was standing almost beside her and the two traded swift $50k bids to reach $2.9m in a blink. Daniel Ashton quickly dashed off to confer with the vendors while the auction continued, coming back at $2.95m to declare the home on the market. The announcement certainly didn’t have the desired effect, as bidding almost stopped, then crept up in painful $5k amounts. At $2.985m bidder 1 declared she was out and bidder 2 looked to have it in the bag. At the last gasp, a relative of bidder 1 jumped in, clearly not willing to let the home go for her family. She was determined to win the property, but so was bidder 2. With bids of $1k or $4k the two traded blows, hoping to outlast the other. Often it looked like one was giving up (mainly bidder 2), but Bill cajoled and prodded until another bid was placed to restart the process. The first party was getting extremely frustrated with this, threatening to stop bidding, but then again not wishing to give up the home. She eventually outlasted the opposition, securing the property for $3.175m. Around 100 bids were placed throughout the auction. A very strong end result for this part of Elsternwick.
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 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.
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. Too often we see buyers purchase a property, only to find it up on ‘realestate.com’ within two years, usually for a lot lower price.
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.
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