Stock quality remains low even though stock levels have increased

The second term for the 2024 property market has well and truly settled in. Stock levels have increased (as expected) but stock quality remains low. Auction clearance rates have remained steady (in the 60-70% mark), giving vendors the confidence to sell.

This is perhaps a generalisation, but it appears vendor expectations have risen along with the stock levels.

The Melbourne property market is very topical and sells newspapers. Depending on where you sit, there is bound to be an article buyers and sellers can latch onto that supports the narrative that suits their goals.

For a property to change hands, a transaction needs two willing participants to agree on price and terms.

Ultimately, it is the vendor’s property to sell and they hold the final decision. Buyers can make it easier or harder for the vendor to make a decision, depending on the price they offer. Vendors do run the risk, however, of asking too much and damaging a campaign. Even with a price reduction the product can look damaged in the mind of the buyer, who wonders ‘what is wrong with it?’

To us, there appears to be many vendors at the moment who don’t really need to sell their properties. They can clearly afford to spend money on staging and advertising the property but at the same time are very happy to remain owners if they don’t achieve their dream price.

Take, as an example, one postcode (3193 – Beaumaris/Black Rock). Below are just a few of the properties that have been for sale since the start of the year and remain unsold.

There are just as many homes that have been removed from the internet after failing to sell.

Other areas are defying the market. For example, quality period homes in Armadale and East Prahran are in strong demand and the supply is struggling to keep up with the demand.

As an example, only a couple of weeks ago, 34 Northcote Road Armadale sold very strongly under auction for just over $5 million – about 20% over the quoted price. Why? Good location, north rear, great building bones and prized garaging – a scarce offering….

There are several other offerings in Northcote Road at the moment, but, although located in the same street, will they attract the same interest?

Knowing your product is important.

As robust as the media loves to say the market is, there are many micro markets within the market. It could benefit both buyers and sellers to know where they sit, to ensure they approach their property sale/purchase with the best available information to make the right/best decision for them.

There have been other strong results throughout Melbourne over the past month, and these include:

3 Meek Street Brighton – dated ‘modern’ home with volume and pool, quoting $4.4-4.7m, sold before auction in excess of $5.7m

65 Ruskin Street Elwood – renovated semi-detached period home with good garaging, quoted $2.9-3.15m, sold before auction for an undisclosed amount close to $3.5m

21 Kerr Street Camberwell – dated ‘modern’ home with 4 car garage, quoted $3.8-4.15m, sold for $4.65m

24 Villeroy Street Hampton – updated family home in Castlefield estate, quoted $2.8-2.9m, sold for $3.25m

6 Meadow Grove Deepdene – dated ‘modern’ home with volume, quoted $3.3-3.6m, sold for $4.4m

88 Mont Albert Road – dated Art Deco two-storey home – quoted $4.6m plus, sold just under $6.0m.

Well-located homes with volume and a functional floorplan (even if they have aged internally) appear to be in strong demand and being sold with limited competition.

Land is still going quite well – yet it needs to be good land – and, more often than not, width is the key here. Take 21 Madden Street in Balwyn North – 21m frontage, north rear – selling for $3.6 million on the weekend (just over 10% above the top of the quoted range). Not everything in Balwyn North is selling that well….

Another area of the market that is increasing in supply is the apartment market. With the number of new apartments increasing, this is adding to supply where many vendors (who have previously been landlords in this area) are exiting the market as the cost of maintenance, compliance and other taxes eat into their profits while growth remains low.

Quoting from an article in Sunday’s Age by Melissa Cunningham, ‘up to 60% of new apartments are riddled with construction flaws including cracked foundations, leaks, balcony defects and flammable cladding’.

Many buyers still do not wish to purchase apartments, and many who have are no doubt wishing they hadn’t.

We do not suggest that there isn’t an apartment market in Melbourne; however, we believe that, for younger buyers in particular (where it may be their first time buying), the opportunity to make a mistake has never been higher. Would you not be better to buy a less fashionable ‘villa unit’ for example (limited shared walls, minimal body corporate, arguably built better (for their time)?

Looking ahead, a few auction weeks (and EOI deadlines) remain now until the mid-year break – which essentially lines up with school holidays. The run to June 22 is on, but most of the better homes are likely to come on the market in September / October, when spring weather arrives – the traditional Melbourne ‘selling season’.

 

Some of the better properties currently on the market; an architect’s view

8 Glendearg Grove Malvern – Gary Ormrod/Tom Staughton, Kay & Burton

41 Chrystobel Crecent Hawthorn – Désirée Wakim/Nikki McCarthy, Marshall White

4 Holmwood Avenue Brighton – Kate Strickland/Campbell Butterss, Marshall White

 

‘Off-market’ Properties:

  • Single level period family home, 4-2-1, Canterbury – circa $4.1m
  • Renovated 2 storey Victorian, 4-2-1, Hawthorn – circa $2.9m
  • Renovated Edwardian, 4-2-2, pool, Canterbury – circa $4.2m
  • Brick Victorian, renovated, single level, 4 bed, Deepdene – circa $6.75m
  • Brick Edwardian single fronter, 2-1-0, South Yarra – circa $1.8m+
  • Brick Edwardian single fronter, 3-1-0, Prahran – circa $1.85m
  • Contemporary 4-2-3 w pool & court ~930sqm, Brighton – circa $4.2m
  • Edwardian single level, 4-3-2, pool & studio, Hampton – circa $3.7m
  • Fully renovated single level 4-2-2, ~595sqm, Black Rock – circa $2.7m
  • Modern TH, 4-3-1, north one of pair, Elwood – circa $2.3m
  • Art Deco renovated semi-attached, 3-2-2, Elwood – circa $2.35m
  • Family home w granny flat, pool, 4-3-4, Ormond – circa $2.9m

 

Auction Spotlights:

54 Arkaringa Crescent Black Rock – Samuel Jay heading up the Marshall White auction

Having been in the one family’s hands since it was built, it is time for new owners to make this location their own.  A large block just under 800sqm sits elevated with Bay Views from upstairs. The position and land size give ample opportunity to build new stca. The campaign had first been quoting $2.3-2.4m. Early interest suggested this was high and the quote was subsequently lowered to $2.0-2.2m.

A good sized crowd came to watch and participate as three bidders quickly took the offers over $2.2m.  A fourth party entered the action against bidder three, as bidding slowed and settled on $2.3m.  The auctioneer called for a break, coming back out with the property stated to still not be on the market – perhaps the vendor was hoping to get closer to the top of their original range?  The home was passed in and sold straight after at the price it was passed in at.

 

38 Connell Street Hawthorn – Campbell Ward calling the auction for Jellis Craig

A clear sky presented yet the weather was cool for this auction and a good crowd of around about 50 people gathered on the footpaths and the fringes of Connell Street to watch this auction unfold. What was on offer was a dated single level period reproduction home on south rear allotment, with low ceilings, basic quality and dated finishes – it’s advantages were off-street car parking, single level living and a functional plan. Yet there would be money to be spent here and such offerings are getting a lukewarm response from buyers at the moment. Auctioneer Campbell Ward opened the bidding with a vendor bid of $1.65 million which he eventually advanced by $25,000 to get things moving. After the halftime break 1 bidder came in at $1.7m and that is where the property passed in at, selling afterwards for $1.74 million –  a fairly expected outcome.

 

The market returns: our thoughts for the quarter ahead

The market returns this week for the second quarter of 2024. Many buyers have been frustrated that not many new listings have popped up in the past few weeks (due to Easter, school holidays and the upcoming Anzac Day long weekend), but that will change soon. In May, and possibly up to 22 June, there will be auction weekend activity and a good selection of properties to look at.

What do we expect? A pretty ‘normal’ market.

What we mean by that is there are buyers and sellers ready to transact.

In general, it seems balanced; however, among the stock, there are both properties that are performing well and many that are struggling.

A lot of the struggles appear to be from overzealous vendors who believe their properties are worth more than buyers are prepared to pay. These are often homes that have been renovated without addressing fundamental issues, or properties that need a renovation, extension or development. Or they have simply been quoted too high.

The move-in family home or single-storey downsizer is still in strong demand and in very limited supply.

There are numerous properties still for sale from the first quarter of the year (or last year). While that could suggest a weaker market, there have been buyers prepared to purchase, often within the quoted price range, yet the sale has not occurred.

The property is the vendor’s to sell.  They can ask whatever price they like, so long as they are happy to remain the owner of the property indefinitely while waiting for their ‘unicorn’ to appear.

The market down in the Peninsula areas has come off in a pretty big way, largely due to sizeable land tax bills sent to landlords.

We are seeing an increase in buyers using the bank of ‘mum and dad’ to help get into the property market.

While this isn’t unusual, the form of help is changing. It’s not just ‘stumping up the deposit’ anymore. There is lot more creativity among families to make it work.

In the last census, the Australian Bureau of Statistics revealed an increase of just over 20% in the number of three-generational households between 2016 and 2021, and that was before the newer and higher cost of living increases we have experienced over the past couple of years.

Children are staying at home longer or returning home with partners and/or children. In some instances, members of families are selling their homes, amalgamating their assets and buying one larger home to accommodate everyone into the future.

Over the past 25 years in particular, larger family homes on big blocks have been divided and replaced with new townhouses, often over two levels, to retain the internal spaces required for a family.

For those looking for a larger home again, often with 4-5 bedrooms and at least 2-3 bathrooms to accommodate sleeping arrangements and working from home needs, stock is limited and demand is increasing.

There is still also a desire to buy something ‘turn key’, with many buyers still unwilling to take on the ‘risks’ associated with renovating or extending a property to make it work for them.

There is a great opportunity for buyers at the moment if they are prepared to improve a property. For our clients, we advocate this strongly.

Yes, it takes time and planning; however, the rewards include remaining in a preferred location, creating a floorplan that is bespoke to your family needs and offering the opportunity to improve the property over time as cashflow allows. If you design smart, chances of over-capitalising are minimised.

Building new is another area of the market buyers are looking to again and we have seen some strong ‘land sales’ in the Boroondara Council, which often leads the way to recovery.

  • 18 Cremorne Street Balwyn, quoted $2.3-2.5m, ~670sqm – sold $3.06m
  • 44 Rowell Avenue Camberwell, quoted $2.5-2.7m, ~693sqm – sold over $2.9m
  • 33 Fairview Street Hawthorn, quoted $3.4-3.7m, ~695sqm – sold over $4.05m
  • 10 Doonkuna Avenue Camberwell, quoted $2.1-2.3m, ~697sqm – sold $2.71m
  • 14 Nungerner Street Balwyn, quoted $2.3-2.5m, ~678sqm – sold $2.751m

Where last year, these properties were almost off the menu completely for buyers, savvy buyers realise that they can purchase at a more affordable level into some of Melbourne’s blue-chip suburbs, particularly if they are prepared to live in a home that is less than perfect in the short term.

Success, however, is dependent on knowledge and research to ensure buyers are cognisant of all that is involved in the process, including planning, design, building, costs and time.

Building costs are similar no matter where the property is located (one could argue it costs more to renovate a home with a south-facing rear than one that has a north-facing rear, due to the benefits of passive solar gain – but that is a discussion for another time). Due diligence and support to ensure all the boxes are ticked before purchasing a property that needs work is the key. We are seeing a number of our clients taking advantage of Adam’s skills (as a registered architect with 25 years of experience) in this area so they can maximise their future property outcomes, both emotionally and financially.

 

Renovate or relocate? 

This is a question we are often asked. We feel fortunate to be in a position where we can give a more balanced advisory view. We see the homes that have been renovated well or ‘smartly’ – and those that have not been. Sometimes it is just better to move on and buy again.

There are many factors to consider here, including –

  • orientation
  • strength /quality of the facade
  • car access
  • what regulations will/will not allow
  • quality of original house bones/features

A selling agent will often say ‘sell’. An architect will often say ‘renovate’. What is in your best interests? That is the real question. Understanding the nuances of precinct and what the market often calls for in that precinct is another thing to consider. What is important though in all of this is when you do decide to buy, what is your ultimate plan for that property and what are you really buying? That is the real question to ask when you are making, what is for many, the biggest financial decision you will ever make.

 

 

Some of the better properties currently on the market; an architect’s view

 

34 Northcote Road Armadale – Justin Long/Justin Krongold, Marshall White

4 Georgiana Street Sandringham – Stephen Tickell/Tanya Pickering, Belle Property

3 Edward Street Hawthorn – Mike Beardsley/Richard Winneke, Jellis Craig

 

‘Off-market’ Properties:

 

  • Renovated 2 storey townhouse, 3-2.5-1, Armadale – circa $1.75m
  • Top floor 90s apartment, 2-2-2, ~170sqm + balcony, South Yarra – circa $2.05m
  • Renovated townhouse, 3-3.5-1, ~165sqm, South Yarra – circa $2.1m
  • 1940s family home, 5-2-4, dated, ~970sqm, Canterbury – circa $6m+
  • Renovated mid-century, 5-3-4, ~810sqm, Balwyn North – circa $4.2m
  • Californian Bungalow, 5-2-2, ~705sqm, needing reno, Surrey Hills – circa $2.1m
  • Renovated 2 storey brick single fronter, 3-2-1, Hawthorn East – circa $1.9m
  • Contemporary townhouse, 3-2-1, near amenities, Middle Park – circa $2.15m
  • Victorian single fronter, 2-1-0, renovated, Albert Park – circa $1.45m
  • Updated single fronter, extra width w OSP, 2-1-2, St Kilda – circa $1.55m
  • Single level Edwardian 4-2-3, ~840sqm, Elsternwick – circa $4.0m+
  • Single level, renovated, 4-1-2, ~640sqm, Brighton East – circa $2.7m
  • Mediterranean style family home, 7-4.5-8, Brighton East – circa $4.2m
  • Timber Edwardian, 4-2-0, ~520sqm, North Brighton – circa $2.85m
  • Renovated contemporary 4-2.5-2 family home, Hampton – circa $3.4m
  • Renovated family home, 5-3-2, indoor pool, ~825sqm, Beaumaris – circa $2.85m

 

 

Market passes first real test of 2024

Four weeks into the Melbourne property market and there is definitely a pep in the step of both buyers and sellers. On the weekend just past, which was, we think, the first or second ‘real auction’ weekend of 2024 , the REIV recorded a clearance rate of 75% for the 746 auctions held, which is a healthy number. While buyers and sellers both have the confidence simultaneously to transact, it is still a mixed bag when it comes to results.

Key insights –
Large family homes in signature suburb streets are performing very well.
Land in Boroondara is popular (particularly land without restrictions or heritage overlays), with many buyers gaining confidence to again build new homes.
Generational period family homes with floor plans not suiting modern day living or requiring complicated renovations are losing favor with buyers.
The townhouse market is fickle, as buyers become more aware of build quality and the quality of spaces (i.e. outlook, light and space).

And:

The market is price sensitive.

In order to sell, vendors must get their price right, and it’s key that there’s a good understanding of what their property is and where it sits in the market. There are several components determining a vendor’s price.

Quote – the price set by agents to attract buyers to their home.
Reserve – the price they’re willing to sell for on auction day (most buyers expect this to be in the quote range).
Bottom price – the price willing/needing to sell if the home is still for sale in six month’s time.
Dream price – exactly that, vendors shouldn’t spend too much time thinking about it!

Buyers are becoming increasingly frustrated to see properties pass in (both within and above the quote range), with the vendors wanting a significantly higher price than the quote.

We understand, from a selling point of view, that the quote (along with photos) is one of the first things that attracts a buyer to a property and if it is quoted too high, they will not come through, making it very difficult to get a campaign back.

You may recall our comments around ‘listing’ in our December blog, where a number of agents appraised the same property with a variance of up to $1 million between the highest and lowest appraisal.

That property went to auction on the weekend and passed in on a vendor bid.

To keep things confidential, hypothetically let’s say the property was appraised for $2-3 million.

The agent who said they could get $3 million won the job.

They then advertised the property for sale for $2.4-2.6 million (well below the price they said they could get).

It passed in for $2.5 million on a vendor bid.

So, is the property worth $2m, $2.5m or $3m?

Were the vendors wrong to want to believe their house was worth more than the market? Maybe the agents really thought it was worth that much. The Statement of Information, however, wasn’t able to show any comparable homes. Of course, it hasn’t sold yet, so maybe they will still get it …

If the vendors are only willing to sell their home for their dream price, perhaps it is the agent who was dreaming or are they hoping that because the vendors have invested a lot of money and time to sell their home, that they will eventually come down to the market.

Either way, it leaves a lot of people (both buyers and sellers) frustrated and disheartened with the process.

On another note, we are seeing a number of downsizers struggling to find properties that may suit their needs after selling their larger family homes.

Downsizers want to believe the advice of their financial advisers, that they should sell their large family homes to move into a smaller home of lesser value, allowing them to reduce debt and/or put additional funds towards their retirement plans.

It sounds great and, for some, this works.

In reality, however, it can be a different story. Many buyers come to us after 20, 30 or more years in their family home, unaware that the home they have just sold may not even be enough money to buy something smaller and more suitable for their retirement.

It can be quite a shock to realise that they may no longer be able to live in the suburb they have always lived in, or that their only options are an apartment, villa unit or two storey town house (bedrooms upstairs!), often needing a cosmetic renovation, in their desired price range and location.

Downsizing the family home doesn’t necessarily mean downsizing your investment in the property market. It can actually sometimes require more money for the purchase than the amount the family home was sold for.

Downsizing is about reducing the often physical obligations that a larger property demands to ease the burden on vendors physically and emotionally, so they have less stress on their bodies and more time to do what they want to do after years of work.

It doesn’t mean that downsizers want to move into a ‘shoe box’. They still want family gatherings, often involving children and grandchildren, so they need more space than 70 to 100sqm apartments being built may offer, and that is why the downsize often isn’t downsizing financially.

There are options available for downsizers and we have helped many buy homes that work for both their current and future needs (and budget). But, before selling the family home, it is good to know what you may or may not be able to afford, as financial planning advice doesn’t always cover this.

The market will take a pause now for the Labour Day long weekend, then solid auction numbers come for the March 16 and 23 weekends How quickly the year goes – we are nearly at Easter!

Auction Highlights:

  • 24 The Ridge Canterbury (Peter Vigano, Jellis Craig) quoted $6-6.6m sold $7.5m – land sale?
  • 20 Madden Grove Kew (James Tostevin, Marshall White) quoted $3.0-3.3m sold for $4.0m – land sale?
  • 9 The Crofts Richmond (Ed Hobbs, Biggin & Scott) quoted $3.2-3.5m sold for $3.64m
  • 1 Chrystobel Crescent Hawthorn (Scott Patterson, Kay & Burton) quoted $7.0-7.5m sold in vicinity of $8.0m
  • 7 Clyde Street Surrey Hills (David Banks, Jellis Craig) quoted $2.2-2.35m sold for $2.635m
  • 17 Meek Street Brighton (John Clarkson, Buxton) quoted $5.0-5.5m sold for $5.6m
  • 10 Cowper Street Sandringham (Mark Earle, Buxton) quoted $2.3-2.53m, then $2.5-2.6m sold for $3.005m

 

Some of the better properties currently on the market; an architect’s view

5 Southey Street Sandringham – Christa Hilaris/Fran Harkin, Belle Property

9 Rose Street Armadale – Gowan Stubbings/Jodie Cocker, Kay & Burton

33 Victoria Road Camberwell – Mike Beardsley/Richard James, Jellis Craig

 

‘Off-market’ Properties:

  • Multi-generational home with sep. villa, 5-3-3, ~690sqm, pool, Beaumaris – circa $2.85m
  • Large 80s home w. views, 5-3-3, ~720sqm, pool, Beaumaris – circa $3.4m
  • Californian Bungalow, Castlefield Estate, 4-2-2, ~600sqm, Hampton – circa $2.6m
  • Modern 2 storey, 4-3-2, ~440sqm, key position, Hampton – circa $3.75m
  • Timber Edwardian, 4-2-2, ~760sqm, pool, North Brighton – circa $3.65m
  • Edwardian 2 storey family home, 4-2-1, ~650sqm, pool, North Brighton – circa $4.25m
  • Hamptons style family home, 4-3-2, pool, Sandringham – circa $4m
  • Secure Townhouse, 4-3-2, North Brighton – circa $2.7m
  • Contemporary family home, 5-3-3, ~650sqm, Brighton East – circa $3.7m
  • New home site ~720sqm, 18m frontage, walk to beach, Beaumaris – circa $2.2m
  • Edwardian family home, 4-2-0, ~390sqm, Elwood – circa $2.4m
  • Renovated period single level, 4 bed, ~660sqm, Camberwell – circa $2.4m
  • Family sized Townhouse, 4-3-2, master ground, Camberwell – circa $2.0m
  • Modern large family home, 5-4-6, ~900sqm, Camberwell – circa $7.0m
  • New home site, city views, ~640sqm, Kew – circa $3.4m
  • 60s single level 3-1-2, ~640sqm angled block, Kew – circa $2.4m
  • Fully renovated single level villa, 2-1-1, Glen Iris – circa $1.35m
  • Californian Bungalow style, 5-4-4+, ~860sqm, pool, Malvern East – circa $5.4m
  • Fully renovated single fronter, 3-2-0, ~300sqm, Armadale – circa $2.85m
  • Period brick 2/3-1-1, looking for update, ~290sqm, Prahran – circa $1.5m
  • Townhouse, 3-2-1, walk to amenities, South Yarra – circa $1.5m
  • Victorian brick single fronter, 3-2-1, two storey, Fitzroy North – circa $2.4m

 

 

Auction Spotlight:

9 Hughes Street Malvern East

A crowd of about 30 gathered in the family friendly street to witness this auction.

On offer was an original Spanish Mission brick home, that had been renovated and extended back and up around 20 years ago – so a little dated, but with good fundamentals of bedroom separation, easy front-to-back flow and generous volume.

Auctioneer David Sciola gave a concise preamble and looked for bids in the lower part of the quoted range, and while none were forthcoming, announced a vendor bid of $2.85m. It didn’t take long for two bidders to take part in measured bidding, with the property passing in at $2.91m and eventually sold after for an undisclosed result just over $3.0m. Pretty good result for buyer and seller alike here.

 

41 Vincent Street Sandringham

The secluded front garden provided a relaxed location for the crowd of neighbours and prospective buyers at the auction of this well presented single level home. Set within the beautiful Vincent Street, the home appealed to a mix of downsizers, smaller families or professional couples looking to enjoy an indoor-outdoor lifestyle near the amenities of Sandringham. The home had been quoted $2.4-2.5m, before being lowered to $2.2-2.35m during the campaign. The higher starting point was likely where the vendors really wanted to see the sale, with post auction negotiations unable to seal the deal after being passed in for $2.25m on a genuine bid. The home remains for sale at time of publishing, at the second SOI range.

2024 starts on positive note, will this last long?

Happy New Year and welcome to our first edition of the Market Pulse for 2024.

There were a reasonable number of auctions on the weekend, but these were predominately in coastal areas or outer suburbs of Melbourne. A clearance rate of 83% was reported through the REIV, with 797 auctions held (well up on the 364 held for the same week last year).

We believe the market has opened positively. The good number of open homes, talk of stabilised interest rates (and maybe cuts ahead) and plenty of new properties (as well as some old and/or rebranded properties) hitting the internet, support this.

People are flooding to the good homes – a busy open at 30 York Street Hawthorn.

 

With a good run now of four auction weeks until Labour Day Weekend, we should get a fair indication of just how positive things are.

From our discussions, the trend of ex-rental properties coming up for sale continues.

These are not necessarily ‘turn key’ with many of them displaying outdated kitchens and bathrooms. As a minimum, however, they could provide an opportunity for ‘first time buyers’ to get into the market and a slightly more affordable price as buyers are still less receptive toward taking on the ‘daggy’ homes needing any building works.

Although awaiting royal assent, a positive change to affect buyers of homes, commencing 1 January 2024, is they will no longer have to contribute a pro rata proportion of the land tax should the property not be the vendor’s permanent place of residence.

The Sale of Land Act 1962 and Property Law Act 1958 has been passed through Parliament and will be amended from 1 January 2024 to:

  • Prohibit land tax apportionment between a vendor and purchaser under a contract of sale of land, except for high-value property transactions (defined to be $10 million or greater for 2024, then indexed by CPI in future years)
  • Prohibit windfall gains tax from being passed on to a purchaser under a contract or option agreement entered into after the windfall gains tax liability has been assessed. 

This is likely to encourage vendors considering selling rental or second properties to place their properties on the market earlier enough in the year that the property settlement doesn’t carry over into the next calendar year, as they will now be liable for the full amount if it does.

This should also help improve some of the supply issues that plagued 2023.

Of more importance, however, with the expected increase in volume, is working through the volume to determine if any of them are suitable. More volume doesn’t necessarily make it easier for buyers to find and purchase the right home. It can actually become more confusing. Having a good plan and recognising if it has the ability to offer your non-negotiables will ensure your purchase works for you. It is a very expensive exercise if you get it wrong, both emotionally and financially.

For new buyers to the market, it can be helpful to remember that the agent is working to get the best price for their vendor, and while you may feel like they are your new best friend, if you aren’t the best option to purchase the property you are interested in, they will not hesitate in using you to help motivate the better option to pay to the price.

Is this unfair?  No. The agent is working for and being paid by the vendor to get the best outcome for the vendor.

 

Some of the better properties currently on the market; an architect’s view

30 York Street Hawthorn, quoting $2.3-2.5m – Tori McGregor/Duane Wolowiec, Marshall White

102 Cochrane Street Brighton, quoting $3.3-3.5m – Nick Johnstone/Katie Mactier, Nick Johnston Real Estate

15 Newry Street Prahran – Carla Fetter/Michael Armstrong, Jellis Craig

 

‘Off-market’ Properties:

  • Single level Victorian, 4-2-2, approx. 630sqm, Camberwell – circa $3.3m
  • Single fronter, 3-1-1, approx. 320sqm, Hawthorn – circa $1.8m
  • Renovate or new home site, Sackville Ward, ~780sqm, Kew – circa $5.5m
  • Updated single level, 3-2-2, Sackville Ward, ~600sqm, Kew – circa $4.1m
  • Brick art deco semi, 3-2-1, ~250sqm, Hawthorn East – circa $1.8m
  • Renovated 2-2-2 art deco townhouse, Malvern East – circa $1.45m
  • Two storey Edwardian, 4-2-1, approx. 390sqm, Malvern – circa $2.65m
  • Brick Victorian, 3-2-2, approx. 480sqm, Armadale – circa $3.0m
  • Victorian single frontier, 3-1-0, renovated, Port Melbourne – circa $1.65m
  • Family home, 4-2-2, pool, walk to beach/shops, Black Rock – circa $2.9m
  • Ready to reno or new home site, ~670sqm, Brighton – circa $3.0m
  • Modern 4-3-2 Townhouse, near schools, Brighton East – circa $2.6m
  • Castlefield Estate Californian Bungalow, 4-2-2, pool, Hampton – circa $2.5m
  • Single level Art Deco, 3-2-1, approx. 350sqm, St Kilda East – circa $2.15m
  • Renovated Art Deco semi, 2-1-1, Elsternwick – circa $1.2m
  • Contemporary 2-2-1 Townhouse, near village, Yarraville – circa $1.1m

Volatile and uncertain: the Melbourne property market in 2023

With only two weeks left until Christmas, there are two types of buyers in the market at the moment:

  • the buyers who have moved away from searching and packed up for the year in readiness for the market return after Australia Day in 2024; and
  • the buyers who are determined to be new home owners before the year is out, some with plans for two or three auctions in a day, with little or no thought about how or why they should buy it.

Next year sounds like it is going to start positively. Agents are suggesting the volume will be better and the media (at this stage) is confident prices will continue to rise.

Since the media has started spruiking that property prices will rise in 2024, however, it seems a number of vendors have become overly excited about how much their property is really worth.

We could argue that some of the hype is also being driven by excited agents, trying to win listings. Agents are very good at saying the words vendors want to hear, and vendors are very good at focusing on the highest price mentioned, rather than where their property really sits in the market.

We are hearing of properties being appraised for sale with discrepancies anywhere from $500,000 to $1 million in the suggested value – and we are not talking $10 million properties; these are homes that sit around the $2-4 million mark.

At $2 million, these appraisal variances, of up to $1 million difference, are fuelling many vendors’ unrealistic expectations.

With vendors committing a lot of money up front to sell their homes (eg advertising, staging costs etc), they can find themselves anywhere from $10-50,000 out of pocket and still without a sale if they are only focusing on their home selling for the highest appraisal price.

As a side issue, costs also have risen with advertising – to the tune of around 10% we believe – all due to ‘rising costs’ the portals are purporting.

It’s not just vendors who get caught up with the suggested sale price by agents.

Many purchasers, in the hands of a skilled sales agent, can pay hundreds of thousands of dollars above the advertised price to secure a property, without realising that they’ve paid much more than the market may have dictated had the property gone to auction. This was particularly so during the pandemic where the fear of missing out was at its peak.

We are seeing this firsthand (as we are purchasing some of the good ones), where some of the homes bought in 2020 and 2021 are re-selling now for less than they were purchased for (and this is excluding stamp duty and other associated purchase costs, so the losses can add up quite quickly for vendors who had not considered the implications of their purchasing decisions not working out).

This isn’t a carte blanche rule, however, as there are also a number of homes purchased in 2020 and 2021 that have sold for similar amounts and sometimes quite a bit more than they were purchased for. Certainly, if they were bought well, and/or good properties, this is the case.

We are seeing a few more partially renovated homes for sale.

The increased rate rises, combined with building costs and/or builder insolvencies, has also resulted in a few unfinished/semi-renovated homes starting to come onto the market.

While this can be an opportunity for buyers, we feel some compassion and empathy toward the vendors who find themselves in this situation.

We have also noticed a number of properties passing in, either within the range or with no bids. The properties are often selling after auction for considerably more than their quote.

Alternatively, they are then advertised for private sale with an asking price much higher than their original quote range. For example, quote for auction campaign $1.8-1.98 million, but post-auction private sale asking price $2.2 million.

We are aware of companies also being fined by Consumer Affairs because the comparable sales for the property are wrong/irrelevant on the SOI. Many agents also often have none.  Interestingly, we don’t seem to have the same difficulties when pricing properties for our clients.

As we wrap up our Market Pulse for the last time this year, we note some of the difficulties for all participants in the market and hope for a less tumultuous year in 2024.

  • Multiple rate rises in succession (last seen in the late ’80s)
  • Builder and building company insolvencies
  • Increased cost for building supplies
  • Media sensationalism at its best
  • Lack of stock leading to more lack of stock (affecting supply of family homes in particular as downsizers can’t find their next option)
  • Reduced borrowing capacity while market prices remained fairly steady or in some instances rose
  • Large migrant intake
  • Expats/migrants with greater buying capacity as a result of the low Australian dollar
  • Property tax increases
  • Rental increases
  • Fewer rental properties available (as a result of them being sold)

For buyers, this has added greater complexity to a property market that is already heavily weighted in the vendor’s favour.

If this year hasn’t resulted in the purchase success you were hoping for, consider engaging the services of a buyer advocate in the new year. We are independent and work exclusively for you, the buyer.

Thank you for reading and following us this year. Our offices will be closed from Tuesday 19 December 2023, re-opening on Tuesday 16 January 2024. Merry Christmas and we wish you all a happy and safe holiday with your family and friends.

 

Some of the better properties currently on the market; an architect’s view

11 Curral Road Elsternwick – Angelos Stefanis/Bill Stavrakis, Biggin & Scott

28 Derby Street Camberwell – Chris Barrett/Hamish Tostevin, Marshall White

 

‘Off-market’/Pre-market Properties:

  • Californian Bungalow, Castlefield Estate, 4-2-2, pool, Hampton – circa $3m
  • Family sized Victorian, 5-4-3, pool, ~1,260sqm, Brighton – circa $6.4m
  • Modern family home, 5-4-4, pool, Brighton – circa $5.75m
  • Edwardian single level, 5-2-2, pool, ~780sqm, Brighton – circa $3.7m
  • New home site near park/golf course, ~650sqm, Brighton East – circa $2.4m
  • Contemporary 3-2-2, pool, full bay views, Black Rock – circa $2.8m
  • Period single fronter, reno or rebuild (stca), Hampton – circa $1.65m
  • Contemporary 4 bed near beach, ~750sqm, Hampton – circa 3.7m
  • Californian Bungalow, needing update, 3-1-3, ~980sqm, Hampton – circa $3.5m
  • 1920’s Edwardian home, 3-1-2, ~718sqm, Malvern East – circa $2.6m
  • Three level Townhouse, 3-2-2, Armadale – circa $1.7m
  • Family home, 4-3-2, pool, ~683sqm, Balwyn North – circa $3.4m
  • 1930’s family home, 3-2-2, ~590sqm, Malvern East – circa $2.2m
  • C1995 single level home, 3-2-3, west rear, Glen Iris – circa $1.3m
  • Californian Bungalow, 4-2-5, ~734 sqm, Canterbury – circa $3.3m
  • Victorian timber cottage, unrenovated, 2-1-0, ~211sqm, Hawthorn – circa $1.6m
  • Edwardian family home, 3-2-1, ~394sqm, Malvern – circa $2.3m
  • Single level home, 3-2-2, ~200sqm, Toorak – circa $2.2m

 

Auction Spotlight:

9 Monaco Crescent Beaumaris offered a solid family package; good volume, large than average land, pool, north rear plus the bonus of backing onto Royal Melbourne Golf Course. The home itself has been renovated in parts to be overall totally comfortable, yet with scope to update the remaining parts when desired.  Clearly the offering had attracted plentiful interest. Starting the campaign with a quote of $2.3-2.4m, at least one early (unaccepted) offer pushed the pre-auction quote to $2.47m.  Proceeding through to auction certainly reaped rewards for the vendors. The property quickly pushed past reserve at $2.48m and 6 active bidders fought it out to settle on the eventual selling price of $2.825m.

 

92A Sutherland Road Armadale

On a wet, rainy summer Melbourne morning, 50 people, most with umbrellas, attended the Auction in one of Armadale’s best streets, close to transport, cafes and shops.\

The Auctioneer got started with a vendor bid of $2m and it was not long after that some crowd participation started. Before we knew it 4 bidders were contesting for a good solid family home. The bidding quickly rose to $2.130m where it was announced “on the market” and they were playing for keeps. Eventually the property was sold for a strong price of $2.420m.

 

Now may be the cheapest time to buy

Now may be the cheapest time to buy.

While there is still a strong sense of control, thoughtful buying and sensibility over emotion due to interest rate levels and the cost of living, there is a change in confidence around property and property prices.

The growing sentiment is that prices can only go one way over the next few years and this will be predominantly driven by the strong number of migrants coming to Australia over the next two years and beyond.  The AFR on Oct 24 reported ‘Australia’s annual migrant intake likely hit a record 500,000 people in September’ and there is talk of migration increasing a further 500,000 to 750,000 over the next two years.

Even with proposed planning regulations (designed to speed up the process), the costs of building remain high, companies are still becoming insolvent and the population growth is too fast for time to build to catch up.

Buyers are recognising that now may be the cheapest time to buy.

As those who have been waiting for the ‘crash’ realise it’s unlikely to come, or that we are at the bottom and start to re-enter the market, there could be even more buyers vying for the keys of each home for sale.

On the opposite side, fewer vendors are prepared to sell first, as they realise the difficulty to buy back into the market. So, many vendors are making a conscious decision to wait and buy first, exacerbating low stock levels.

There is also a growing trend around how Australians view and manage the properties they own. Although property has been considered part of people’s investment strategy for a long time, the majority of these homes provided accommodation via the rental market. For many newer investors to Melbourne, there is a growing trend to buy and hold property with the intention of letting it sit, uninhabited indefinitely.

We could see a number of properties being purchased now, never available for sale again (or not for a very long time).

This does not mean that vendors can get over excited and expect to sell their properties for ‘more’ than the market dictates.

There are many properties at the moment where vendor expectations are significantly higher than market expectations.

We are seeing vendors rely often on only one great result and sometimes even their own emotional attachment to the property to justify their asking price. While purchasing a property for many is (and should be) an emotional decision, the emotional attachment is something that grows over time.

There are many variables when it comes to selling a home and no two homes are the same. Realistically, a vendor could sell their home three times in a year and get a different result every time.

So while the market may be on the move, both buyers and sellers should keep their feet on the ground to ensure they are making good decisions to maximise the outcomes they are trying achieve.

 

Some of the better properties currently on the market; an architect’s view 

600 Malvern Road, Prahran – Tom McCarthy/Simon Dale, Biggin & Scott 

74 Littlewood Street Hampton – Jenny Dwyer/Sandra Michael, Belle Property

26 Essex Road Surrey Hills – Stuart Evans/Désirée Wakim, Marshall White

 

‘Off-market’/Pre-market Properties:

  • Brick 1930s home, 3-2-2, ~553sqm, north rear, Kew East – circa- $1.85m
  • Victorian, 3-3-0, turn key property,~285sqm, west rear , Armadale – circa $2.7m
  • Edwardian, free standing, 4-2-1, ~568sqm, east rear, Malvern – circa $3m
  • Family home, 4-4-9, lift, fully renovated, South Yarra – circa $6m
  • Contemporary family home, 5-5-4, north rear, Kew – circa $7m
  • Semi detached brick, 2-1-1, east rear, Hawthorn East – circa $1.8m
  • Modern brick home, 5-5-4, tennis court and pool, 1,483sqm, Kew – circa $9m
  • House sized TH, 5-3-4 with pool, walk to Dendy Beach, Brighton – circa $5.3m
  • French provincial 4-3-4 with pool, Brighton Beach – circa $7m
  • Pretty Edwardian single fronter, 3-1-1, near village, Hampton – circa $2.6m
  • Updated TH, 3-2-2, walk to schools/shops, Hampton – circa $1.6m
  • Single level Cal Bung, 4-2-2, pool, near beach/village, Sandringham – circa $3.2m
  • Art deco, prime location, 4-2-2, ~660sqm, Sandringham – circa $3m
  • Renovated period weatherboard, 4-2-1, North Brighton – circa $2.6m
  • Updated family home, 5-2-2, west rear ~650sqm, Hampton East – circa $2m
  • Modern 5-3-2 family home, McKinnon Sec. zone, Bentleigh East – circa $2.55m
  • Single level family home, 4-2-2 w pool, walk to beach/shops, Mentone – circa $2.4m
  • Single-fronted updated detached period home Hawthorn – circa $3m

 

Auction Spotlights:

9 Hilda Crescent Hawthorn

 

A lovely late spring day welcomed a solid crowd of well over 100 people in Hawthorn’s Grace Park to the auction of 9 Hilda Crescent. This property had a lot going for it; location, north facing rear, solid original building bones and a functional updated plan over a single level, with good car garaging at the rear. Auctioneer Gerald Delany wasted no time and gave his usual no-nonsense preamble – and looked for an opening vendor bid of $6.7m. This was advanced not long after at $7.3m and then two further bidders fought things out for several minutes to eventually see the property sell under the hammer for $8.065m. A strong auction result but no real surprise as this was a quality offering, and no doubt the new buyers will enjoy this home for many years to come.

 

 

15 Moorakyne Avenue Malvern

 

A small crowd was treated to some beautiful summer weather. Attended by many neighbours and only one bidder, the auction took some time to get going. Opened by the auctioneer with a vendor bid of $6.5m, which was the bottom of the quote range, the one and only live bid came in next at $6.55m and at that point the property was passed in. A strong negotiation saw the property eventually sell comfortably over $7.0m.

 

12 Tennyson Street Highett

 

A traditional family home on approx. 700sqm, looking for its next lease on life, was on offer at 12 Tennyson Street Highett. A large crowd of interested parties and neighbours came out to see Kevin Chokshi head up the Ray White team for auction day.  The home had been quoted at $1.05-1.15m throughout the campaign. An optimistic bidder opened proceedings with $900k, quickly receiving multiple counter offers to push past reserve at $1.15m.  While bid values gradually reduced, a total of seven parties ended up fighting for the property, eventually selling for $1.276m to the final group entering the auction.

 

How do you buy a good property in the current Melbourne market?

It was another strong weekend in the Melbourne property family home market, with a clearance rate in the 70% range. Some properties sold strongly, even after they passed in at auction – due to very good (and experienced) selling agent work. While many bought, many people didn’t, and the challenges for buyers continue. 

How do you buy a good property in the current Melbourne market?

For many buyers, the time has come to reset.

Despite what the media has been saying since the early Covid days, the market has not dropped, and, for the special properties, it continues to go up.

The government has a vested interest in the market remaining buoyant. Nearly half the state’s income comes from property taxes and this relies on increasing prices and turnover.

Turnover has dropped.  

Gone are the days where a buyer bought and sold, or sold and bought, taking a property out of the market but also replacing one back into the system. This we often referred to as a ‘local market’.

The number of buyers, however, has continued to increase and the days of a ‘local market’ have diminished. The market is made up from usual buyers in the cycle, such as first home buyers and families needing to upsize and downsizers, with now the added pressure of new buyers in the market such as migrants needing somewhere to live, ex-pats wanting to move back home, overseas investors seeking a safe investment and renters feeling pressure from rising rent rates.

The scales are not balanced, and, unless something changes, buyer demand will continue to outweigh the available homes for sale.

For as long as we have been working as advocates, there are three items for consideration to maximise your purchase outcome.

Budget:           for most buyers this is fairly fixed, which then impacts the next two items:

Location:         both the suburb and distance to amenities; and

Property:         including the building type, land size, orientation, style and condition.

Unless you have a strategy where you have the budget to be able to pay more than the rest (because you can) for the property that ticks all the boxes, how will you achieve your objective?

Most buyers don’t find themselves in this fortunate position. Therefore if the goal is to buy a house, it is important to work out the areas you are willing to compromise on and be prepared to be flexible.  One way to be flexible is to buy a B-grader that could be an A-grader. 

An example of a hot result this past week where buyers had deep pockets was 231 Kooyong Road Toorak, which went to auction and sold circa $12 million with five bidders. This was a comfortable (but not state-of-the-art) family home on approximately 970sqm, originally quoted $8-8.8million.

Vendors in good homes, unless there is a pressing need or desire, are not going to be selling their homes. They are sitting it out often because they cannot find what they want to move into, as it is not there.

Without a doubt, the quality of stock over the past 12 months has been average at best, with only a few gems for sale; however, that doesn’t mean that a number of these houses couldn’t become gems down the track. This is where there are opportunities for buyers to still achieve their goals.

Working out what you need or what is most important is paramount to the task.

  • Is it size?
  • Is it location?
  • Is it land?
  • Is it being on one level – ie single-storey?
  • Is it being close to the shops, or a school, or the station?

And then be prepared to make some compromises, because price is unlikely to be one of them.

If it ticks all the boxes, the flexibility is likely to be price – find more money to buy it.

Having said that, there are still opportunities.  

How do you recognise the opportunity though? 

At WoledgeHatt we look at properties through an architect’s eye. We are consistently out looking at houses and have bought many properties over the years where our clients have benefitted greatly (both financially and emotionally) from buying a B-grader and renovating or tweaking it (sometimes over time) to become an A-grader because the fundamentals were right – land size, location and orientation.

In addition, we have had many meetings with owners around the proposition of ‘Do we renovate or are we better to relocate?’ 

Sometimes it is better to stay where you are. Not all the stories of working with architects and builders are bad ones, but keep in mind not all the homes that need work are good ones to work on. Every situation is different.

Perhaps an extension down the track could turn that ‘B’ grader into an ‘A’ grader, but how do you identify if this can be done? Will it be an easy renovation or a money pit?

One such opportunity presented on the weekend – 1 Berwick Street Camberwell. This was a solid period home with lovely original period features and good block width within a quieter street with western rear orientation. While it did have lovely front formal rooms and bedrooms, it was lacking an informal living space at the rear and the kitchen and utility areas were dated. This property passed in at auction and sold afterwards for a bit over for $2 million.

1 Berwick Street Camberwell                                                            16 Broadway Camberwell

 

Meanwhile a few hours earlier, a stone’s thrown away at 16 Broadway (south rear, period re-production, dark inside, busier street) sold very strongly at auction for around the $3.5 million mark. Sure, the land was a little bigger and the property provided better covered car-parking; however, renovation costs are the same no matter where the house is located and we think ultimately the long-term opportunity lies with Berwick Street (if the renovation is done well). 

Below is a concept that we think could transform 1 Berwick Street (subject to council approval):

 

Some of the better properties currently on the market; an architect’s view

 

49 Claremont Avenue Malvern – John Morrisby/Andrew McCann, Jellis Craig

22 Laver Street Kew – Lloyd Lawton/Nick O’Halloran, Jellis Craig

 

 

‘Off-market’/Pre-market Properties:

 

  • Family home, 4-2-2, east rear, pool, ~639 sqm, Malvern – circa $5m
  • Family home, 4-3-2, renovated, over three levels, ~379sqm, Armadale – circa $6m
  • Cal Bungalow, 5-4-3, renovated home, west rear, ~750sqm, Glen Iris – circa $3.5m
  • Townhouse, 3-2, over two levels, north rear, ~135 sqm, Prahran – circa $1.85m
  • Edwardian home, renovate or rebuild (STCA), ~611sqm, Malvern – circa $3.5m
  • Victorian, 2-1, single fronted, north rear, ~172 sqm, Windsor – circa $1.35m
  • Art Deco, 2-1, apartment on top floor, South Yarra – circa $800,000
  • Double storey brick home, 4-2-2, ~1154 sqm, Ashburton, – circa $2.5m
  • Modern 4 level w lift, 4-3.5-2, water frontage, Docklands – circa $4.5m
  • Pretty, renovated, single fronter 2-2-2, Thornbury – circa $1.3m
  • Single fronted brick Victorian, 3-1-1, NE rear, Albert Park – circa $1.55m
  • Renovated ’50s home w pool & alfresco, 4-2-2, Brighton East – circa $2.7m
  • Californian Bungalow, 4-2-2, near amenities, Hampton – circa $3m
  • Edwardian single fronter, 3-1-1, well positioned, Sandringham – circa $1.7m+
  • Double fronted Victorian, 3-2-0, walk to shops, Brighton – circa $2.2m
  • Family sized TH, 4-2-2, near beach & train, Brighton – circa $2.5m
  • Large 6-6-6 multi-generational home, Beaumaris – circa $6m
  • Single level Californian Bungalow, 4-2-2, ~680sqm, Hampton – circa $2.8m

 

Auction Spotlights:

 

10 Auburn Grove Armadale

Set among Armadale’s beautiful treelined streets, a large crowd of approx. 150 people witnessed a competitive auction play out for this elegant Victorian family home. A slow start with a vendor bid of $4.5m quickly turned into a race between two when the property was announced on the market at $5.050m, eventually selling for $5.1m.

 

2 Glencairn Avenue Brighton East

The family home on offer at 2 Glencairn Avenue delivers on space and functionality. The near new, upscale volume builder home attracted a large pool of families keen to be near the schools and amenities of the area. Come auction day, however, only two families converted this interest into bidding. The home had been quoted $3.6-3.96m throughout the campaign. Stephen Smith headed up the Marshall White team, commencing the auction with a vendor bid of $3.6m. He was greeted with a long silence until one family asked to place a $5,000 bid. This was rejected and they eventually offered $50,000.  Again, a very long silence until a second family placed a strong $3.8m bid and things moved relatively swiftly to $4.05m. At this point, bidder two indicated they had no more and a break was called to chat to the vendors, who were not yet ready to call it on the market. No further bids were placed and the home was passed in to bidder 1. The home sold after for a considerable ‘lift’ above the buyer’s bid price.

Stock to rise but are there many super Saturdays left for 2023?

 

Stock levels. Very topical subject this time of year. Not much stock has come on the market in the last week or so due to school holidays (many agents and families are away on holiday), and this is causing frustration for some buyers. Traditionally we don’t see many auctions on AFL Grand Final day and Melbourne Cup weekend either, so that leaves only 6-8 good Saturday auction days remaining for the year. Many homeowners are feeling better with the idea of selling given recent good market results, but what do they buy?

Speaking with agents, there is confidence that volume will be steady as we head towards the end of the year; however, much of the future stock appears to be coming from the rental market.

While most people think ‘apartments’ when it comes to rental properties, many of the properties coming up, even in the $3-4 million housing market, are former rentals. Where in the past, buyers have seen good opportunities to buy a ‘B’ grader that can become an ‘A’ grader, most buyers are still erring away from properties that need work.

As a buyer, one question could be: do you buy ‘the best of an average bunch’ now just to get into the market, bearing in mind you could be living in it for the next however many years, or should you wait until better stock is available?

It seems many people are opting for the best of an average bunch and only time will tell whether the choice to buy now, rather than wait, was the right one.  We think wait – or at least buy a property that has good fundamentals that can’t be changed – ie position, land size, orientation etc – in other words a B-grader that can turn into A-grader.

 

Rebound buying and compromise

We witnessed a skilled agent on the weekend engage with the ‘underbidder’ of a property auctioning the same morning as a property he was selling half an hour later.

The ‘underbidder’ had not considered the property before the 5-10 minute inspection before it was due to go to auction. The ‘underbidder’ had not had the contract reviewed, knew nothing about the body corporate, had not had a building inspection, had done no research on price (or any other due diligence) and had not had time to reflect on the loss of their desired property only moments earlier.

So, did the property suit their needs? On paper it had the same details – two bedrooms, one bathroom, one car space and it was in the same suburb.

What was certain for the agent was the ‘underbidder’ was coming from bidding at a more expensive property to look at something he knew was unlikely to sell for the same price.

The agent had a good idea that the property he was selling was likely to be less than the other (with his knowledge of the property and the knowledge of the interested buyers he had on the property).

The most important thing was he knew that the ‘underbidder’ was a hot buyer with a good budget and hot buyers have money burning a hole in their pocket and their emotions were likely to take over and hopefully bid up to the level they had already bid to if pushed.

The ‘underbidder’ bought the property.

They may even think they had a win, as they bought it for less than they had bid earlier in the day.

The big winner, however, was the vendor. The agent advised afterwards that the auction would have stalled for around 5% less than the final purchase price, had he not convinced the ‘underbidder’ to participate.

Exceptional agent work and congratulations to the vendor for employing such a savvy agent.

Hopefully the buyer is happy too.

Hope in our minds, however, is not the best way to tackle what is, more often than not, the largest purchase you will ever make.

 

Strong sales of note:

6 Chrystobel Crescent Hawthorn (south rear, house needing serious work) quoted $4.5m plus, sold $5.025mm

14 Winter Street Malvern, quoted $4.7m plus, sold circa early $5m’s

And from the week before, an auction result that is still being talked about in the industry at

6 Payne Street Surrey Hills – quoted in the early $4ms and sold for $5.070m. A truly incredible result for modern home on good land yet south facing rear, no downstairs bedroom, no pool etc.  

 

 

Some of the better properties currently on the market; an architect’s view

7 Ashleigh Road Armadale – Walter Summons/Charmayne Dulley, Belle Property

10 Suffolk Road Surrey Hills – James Tostevin/Robert Le, Marshall White

15 Herbert Street Beaumaris – Andrew Solomon/Campbell Moore, Belle Property

  

‘Off-market’ Properties:

  • New home site (STCA), 2-1-2, ~838sqm, Camberwell – circa $3m
  • MCM home, 3-2-3, ~930sqm, Kew – circa $3m
  • Modern Apartment, 3-2-2, Port Melbourne – circa $1.85m
  • Original period home opposite parkland, 4-2-2, Glen Iris – circa $2.4m
  • Cal Bungalow, 4-3-5, pool, ~850sqm north rear, Malvern East – circa $5.3m
  • Victorian, 4-2-3, comfortable home, ~405sqm, Windsor – circa $3.3m
  • Victorian, 3-1-0, renovated, ~142 sqm, Windsor – circa $1.85m
  • Edwardian, 2-2-0, ~181sqm, south rear, Malvern – circa $2m
  • Victoria, 2 storey, 3-2-1, west rear, ~190sqm, Prahran – circa $2.6m
  • Edwardian, 2 storey, 4-2-1, north rear, ~567 sqm, Surrey Hills – circa $3.3m
  • Victorian, cottage, renovated, 3-2-1, ~250sqm, Prahran – circa $2.2m
  • Art Deco, 3-2-2 w pool & cabana, ~730sqm north rear, Brighton – circa $3.5m
  • Art Deco, 2-2-2, plus study, ~430sqm north rear Brighton East – circa $1.9m
  • New TH w pool, 4-3-2, north rear, Highett – circa $1.95m
  • Dated home/landsite ~780sqm (STCA), near Concourse, Beaumaris – circa $2.3m
  • Land ~650sqm with approved plans for 2 THs, Elwood – circa $2.8m
  • Fully renovated Victorian single fronter, 2-1-0, Albert Park – circa $1.5m
  • Californian Bungalow, renovated 4-2-2, ~600sqm, St Kilda East – circa $2.8m
  • Single level 70s, 4-2-1, ready for update, pool, St Kilda East – circa $2.5m

 

Auction Spotlights:

22 Percy Street Hawthorn

A strong crowd of around 100 witnessed this auction and it was a good one. Auctioneer David Lettieri and his team from Marshall White had around 90 through the home at its first open (and around 200m through during the campaign). According to the REA it was the most visited property nationally in August on realestate.com.au. The reason for the popularity; this was a well-balanced property in an A-grade location, with a pretty façade and good off-street parking – they don’t come up that often. Opening with a strong crowd bid of $3,000,000 ($100,000 over the top of the quote), the property skipped along with three bidders, being announced on the market at $3,140,000 and ultimately selling under the hammer for $3,270,000. The property last sold in 2015 for $2,550,000, and had some pretty basic upgrade works since then – it just shows that buying a property with good fundamentals can be a very good investment – but of course not everyone knows what a good property is.

 

3A Horace Street Malvern

On a warm Melbourne morning a small crowd of about 30 people witnessed a competitive Auction in the very sough after location of Malvern. 3A Horace St offered a flexible floorplan with 3 bedrooms, open plan kitchen, living and dining room looking out to a west facing courtyard that offered off street parking for one car via ROW. The solid brick Edwardian home also had a unique offering of a spa bath looking into the living room.

The Auction kicked off with a vendor bid at the bottom of the quote range, $1.4m which quickly enticed two bidders to enter the race to secure the home. A third bidder took the price to $1.56m when it was announced “on the market”. It eventually sold for $1.652m which was a strong result.

 

24 Grange Road Sandringham

A pretty single level weatherboard in a row of similar homes, on approximately 330sqm. The home has seen a few updates since the last sale, including the addition of a second bathroom. Positioned between both the Sandringham and Hampton Street shopping precinct and an easy walk to local schools, the home attracted both young couples and downsizers. Perhaps questions for potential buyers were the lack of covered parking and the south rear (although good west light access).

The home had been quoted at $1.5-1.6m, before being upped to $1.55-1.65m during the campaign.  Jesse Raeburn headed up the WhiteFox team for auction day, starting off proceedings with a $1.55m VB.  Three bidders quickly traded offers before a short break, after which a fourth party entered after, and the home was called on the market at $1.76m. Another party joined in as the early bidders stepped out. Bidder 4 and 5 continued to counter each other, the home eventually selling for a solid $1.88m.

 

Spring is here but it doesn’t feel like it in the Melbourne property market.

We’ve just had the first weekend of Spring. It was supposed to be a Super Saturday (with over 1100 homes advertised for auction), but it just didn’t feel like it. The clearance rate figure advertised was not totally accurate, with 200-300 properties being withdrawn from auction due to limited and/or no buyer interest (this happens most weeks, yet the number on the weekend we felt was a bit higher than normal).

If vendor expectations were realistic and/or the product good, properties did sell. 

A few strong auctions of note:

  • 9 Cowper Street Brighton – approx. 305sqm, corner block with (heritage listed) Victorian home, needing a full renovation, very close to the shops/station – quote $1.2-1.3m, sold for $2.02m
  • 4 Dominic Street Camberwell – large, comfortable (could move straight in) family home with flexible floorplan – quoted $3.5-3.8m, sold for $4.515m. Great single level renovated home and had a high scarcity factor. Multiple bedroom/bathroom options (which is prized for multi-generational living).

However, for many who sold on the weekend, the sales results were in (or not too far from) their quote prices:

  • 38 Hardy St South Yarra  quoted $1.25m-$1.35m, sold for $1.355m
  • 123 Leopold Street South Yarra  quoted $3-3.3m, sold for $3.040m
  • 1/39 Grandview Grove Prahran  quoted $1.75-$1.85m, sold $1.865m
  • 26 Studley Road Brighton East – quoted $3.2-3.42m, sold for $3.275m
  • 8 Elgin Street Hawthorn – quoted $2.5-2.75m, sold for undisclosed price, just over top of the quote.

 

Agent feedback and insights

 When questioning the volume of properties being auctioned on Saturday, many of the agents we spoke to in the southeastern suburbs had consistent feedback:

  • Stock remains tight – particularly for the A graders
  • There has been a slight improvement to stock levels
  • Many more investors selling (see below for more detail)
  • Quoting the property and realistic vendor expectations is all important – buyers are price sensitive for the B and C graders

 

Off-market properties

We note an increasing number of properties, originally available for sale as ‘off market’ homes, being realised at public auctions with results often 10-15% or more below their original ‘off market’ asking price. 

Maybe vendors are thinking ‘if you don’t ask, you don’t get’. The problem with this though is that it can diminish the effectiveness of an advertised campaign, as many key buyers have already been through the property and others get confused about what the vendor is actually trying to achieve.  Are they really sellers and what is the real price?

We feel a high number (although not all) of the off market homes are overpriced at the moment and, on occasion, a vendor may get lucky selling quietly at their inflated asking price. 

It is becoming apparent that the romance and excitement of buying a property ‘off market’ can often over-ride normal due diligence, including an understanding of where the property may sit ‘price wise’ in the market.

Where buyers are often far more considered when it comes to their spending on the general household, when it comes to the biggest purchase they may ever make, there is still a perception that the agent is ‘helping’ them secure the property for them. 

 Make no mistake, they’re working for the vendor and if they think you are their best option to achieve the vendor’s price, they are not going to be advising if the property is heavily inflated or not. They are relying on your desire to purchase something you think no one else knows about.  

With modern technology that can advise a full office database within seconds of a listing, you could be just entering a ‘smoke and mirrors’ process where the agent can more easily manipulate you into paying the price they want you to pay, rather than a price the property may be worth.

Having said all that, the good ones can sell well ‘on market’ or ‘off market’, as a  couple of recent results in Surrey Hills show, including one in Middlesex Road (just shy of $5m) and Guildford Road (in excess of $4m).

Of note, these were both good, well-presented properties and doubtless the agencies would have loved to have seen these being showcased in the public forum.

There are a number of ‘off market’ homes asking big prices that don’t have the same strengths that these properties offered.

As a buyer, who has your best interests at heart?

 

Changing vendor profile and landscape

A key change to the property market is the number of rental properties up for sale (and these are not just your typical $400-600K apartments). Some of the reasons for the increase in the sale of rental properties include:

  • increased interest rate payments and land tax payments.
  • greater tenancy rights (often to the detriment of vendors who own the properties).
  • increased council rates, insurance, management and renovation costs.
  • problematic council orders (mostly relating to cladding issues).
  • owners needing to liquidate money for business or personal reasons.
  • annual/bi-annual safety checks.
  • return on investment just not there, many people see greater value in shares.

There are perhaps two main reasons why ‘others’ don’t want investment properties to be sold:

  • it is going to place an increased pressure on the number of homes (or lack of homes) available for the rental market, making it even harder and more expensive to find somewhere to live for many people.
  • it is reducing the value of ‘rent rolls’ for agencies who rely on this to cover their regular office outgoings as well as its saleable value for the future – and this can be very valuable.

We think the number of rental properties coming on for sale will continue to increase as we head toward the end of the year, as many vendors won’t want to incur new or increased land tax bills come January 1, 2024. As a buyer you really need to do your homework  as always a good understanding of the due diligence required and understanding of price is key (rather than predicting the next best area and projected yields).

With the footy finals now upon us, the focus for many turns to post-Grand Final, when children are back from school holidays and there are less interruptions to the real estate program. Maybe then we will see the return of the Super Saturday.

 

Some of the better properties currently on the market; an architect’s view

 

33 Jordan Street Malvern – Will Bennison/Carla Fetter, Jellis Craig

139 Thomas Street Hampton – Robin Parker/Kate Fowler, Marshall White

 

 

‘Off-market’ Properties:

 

  • Modern newly built family home, 4-3-0, South Melbourne – circa $3.45m
  • Contemporary family home, 4-3-2, ~420sqm, Malvern East – circa $3.0m
  • Modern 3-3-2 over 3 levels, near amenities, South Yarra – circa 3.5m
  • Edwardian brick single fronted, 2-2-0, Malvern – circa $2.0m
  • Single level Victorian, 3-1-0, ~270sqm, Hawthorn – circa $2.5m
  • 1930s 2-storey semi attached, 2-1.5-2, ~500sqm, Camberwell – circa 2.5m
  • Edwardian family home, 4-2-1, ~560sqm, Surrey Hills – circa $3.3m
  • Art deco family home 4-2-2, ~850sqm, Ivanhoe – circa 2.75m
  • Californian Bungalow, 4-2-2, ~710sqm, Kew East – circa $3.8m
  • 2-storey Victorian, 3-2-1, ~190sqm, Prahran – circa $2.6m
  • Double fronted Victorian, 4-2-1, ~260sqm, Armadale – circa $2.2m
  • Brick Edwardian on ~900sqm, 3-2-2, needing update, Malvern East – circa $4.9m
  • Edwardian family home, 4-3-2, north rear, ~930sqm, Malvern East – circa $5.4m
  • Edwardian renovated 3-2-1 double fronted, Malvern – circa $2.4m
  • Hamptons style TH, 3-2-1, ~170sqm, Malvern – circa $2.0m
  • Californian Bungalow near amenities, ~400sqm, Hampton – circa $2.4m
  • Striking modern family home, 4 bed, ~890sqm, Hampton – circa $5m+
  • Contemporary 2-storey family home, 4-2-2, Beaumaris – circa $2.45m
  • Family/multi-generational home looking for update, 5-3-2, Beaumaris – circa $1.95m
  • Fully renovated Victorian, 2-1-0, Albert Park – circa $1.575m
  • Renovated contemporary family home, 4-2-2, Elsternwick – circa $1.9m

 

Auction Spotlight

Lachie Fraser-Smith heads up the Jellis Craig team at the auction of 3 St James Road Armadale.

 

On a beautiful spring sunny Melbourne morning witnessed by a small crowd of around 30 people, 3 St James Road Armadale went under the hammer with Jellis Craig. A well-presented single fronted 2-bedroom Victorian Terrace with a north-facing courtyard, well located to shops, transport and amenities.  After a slow opening, the auction eventually opened with a bid of $1.5m. From here, it then quickly moved, with two bidders pushing it to $1.7m when the property was announced on the market. The eventual purchaser came in late and it sold for $1.720m. We have recently been seeing properties that start off as an ‘off-market’ opportunity, and if they then don’t sell within a few weeks, they are converted to a campaign (as was the case here). This can sometimes have an adverse effect on a result as the off-market price is normally higher than an advertised campaign price and buyers can get confused.

Don’t rely on the auction date: your dream home could sell before you’re ready

The first few weeks back from the winter break have been fast paced and sometimes even desperate.

Some properties have sold within hours of the first inspection. 34 Yarrbat Avenue Balwyn, 90 Adeney Avenue Kew, and 43 Hardy Street South Yarra are examples.

For something like this to happen, both the buyer and seller need to be on the same page.

The question may be why are some vendors so eager to sell quickly when the numbers through the door are so high? And with more choice and more options likely to come up over the next six months, why are buyers wishing to secure a property so quickly and without completing any due diligence?

Are some selling agents also pushing for the quick sale? With such low stock, there could be quite a number of agents needing to secure a sale for their own financial needs as much as their vendors.

In addition to an increase in the number of properties hitting the web, we are also starting to see an increase in the number of ‘off-market/private sale’ properties available. Many of these (granted) have an assigned auction day (say in September or October).

This is something a little more unusual at the start of a new selling season, especially when there is the opportunity for a full public campaign and (for certain properties) an over-supply of buyers.

We think, for many vendors, privacy may be a driving factor for this, especially as most campaigns now also feature heavily on social media platforms, so that more people than ever (even those who aren’t actively looking at the real estate market) are seeing properties for sale regularly in their feeds. Digital systems that agents are using are getting more sophisticated, and the quality of information more qualified.

For many vendors, selling more privately provides better protection from well-intentioned friends and family prying too deeply into their personal and financial situations and becoming a source of gossip at family gatherings, the school playground, sports events etc.

What does this mean for buyers?

Firstly, it could be good news – there are more options to consider than first impressions suggest.

It can also make the search even more confusing and presents some questions that buyers don’t have to deal with when compared to a public campaign.

Beside the fact that everyone loves to say they bought an ‘off market’ home, almost like it’s a badge of honour, there are questions for buyers to consider:

  • How do you determine value?
  • How do you trust the process?
  • How do you know if you are the only buyer, or one of many?
  • How do you complete the due diligence without giving too much of your own information to the agent/vendor?
  • How do you know the property is really for sale?
  • How do you know if it’s a good property?
  • Just because it is a good ‘price’, is it the right home for you?

 

Highlights: 

 

7 Ferguson Street Brighton East, Sarah Korbel (Nick Johnstone Real Estate) – single level period home, well-located, quoted $1,700,000-$1,800,000 sold for $2,382,000 – 4 bidders

22 Yeovil Road Glen Iris, Simon Lord (Jellis Craig) – land sale – 1,226sqm, quoted $2,650,000 – $2,800,000 sold for $3,340,000 – 4 bidders

50 Beach Road Hampton, Mark Earle (Buxton) – vacant land 315sqm, quoted $1,500,000 – $1,600,000 sold for $2,005,000 – 2 bidders

 

 

Some of the better properties currently on the market; an architect’s view

 

91 Brunel Street Malvern East – Andrew McCann/Kellie O’Neill, Jellis Craig

5 Harts Parade Hawthorn East – Scott Patterson/Danielle Balloch, Kay & Burton

15 Grout Street Hampton – Jenny Dwyer/Sandra Michael, Belle Property 

 

‘Off-market’ Properties:

 

  • Contemporary townhouse circa 2000, 3-2-2, ~189sqm, Prahran – circa $2m
  • Art deco family home, 4-2.5-1, ~719sqm, Camberwell – circa $3.5m
  • Modern single level home, 3-2-2, ~594 sqm, north rear, Glen Iris – circa $2.5m
  • Modern home, 3-2.5-2, ~620sqm, west rear, Glen Iris – circa $2.5m
  • Edwardian Family home, 3-2-1, ~700 sqm, East rear,  Surrey Hills – circa $3.1m
  • Family home, 4-3-2, ~1,200sqm, east rear, two levels, Glen Iris – circa $5m
  • Large Modern Home, 5+-3-3, SE rear, three levels, pool, ~750 sqm, Surrey Hills – circa $3.9m
  • Fully renovated brick Victorian, 4-3-2, ~650sqm, Caulfield North – circa $3.8m
  • Contemporary 4-2-2, entertainer’s garden house, Elsternwick – circa early $3m
  • Family sized TH, 4-3-3, basement, near amenities/beach, Black Rock – circa $3.8m
  • Hamptons style 2 storey, 5-3-2 family home, ~660sqm, Brighton East – circa $3.3m
  • Contemporary 2-storey 4-3-2, ~650sqm, west rear, Hampton – circa $3m
  • Period 4-2-2 family home, east rear ~670sqm, Cheltenham – circa $1.85m
  • Single level to renovate or develop, ~830sqm, Parkdale – circa $1.65m
  • Clinker brick 4 bed family home w. pool, north rear, Sandringham – circa $3.1m
  • Villa 2-1-1, easy walk to beach and amenities, Sandringham – circa $900k

 

Auction Spotlights:

 

7 Ferguson Street Brighton East

A pretty period home that has been extended and updated over the years to delivery an excellent entry to the Brighton East market. Its position to amenities and the park across the road, likely outweighed the tight driveway to the garage and rear property for many interested parties. Quoted at $1.7-1.8m, the home attracted many young families. Auction day drew a large crowd spread on both sides of street to face Joe Doyle from the Nick Johnstone team.  A strong opening bid of $1.95m had the desired effect of wiping many of these young families out of the race. A few swift bids quickly brought the home on the market. A mix of large and small bids continued the steady climb as two further parties entered the action and the early parties pulled out. The final two, although visibly being pushed to their limits, did not want to miss the opportunity and continued to stretch to bid. The home was eventually sold for $2.382m. A strong outcome we felt.

 

66 Manning Road Malvern East 

On a beautiful Melbourne morning 66 Manning Road Malvern East went under the hammer with Marshall White.

A healthy crowd of about 50 people witnessed a somewhat slow Auction.  A single level renovated brick home offering 3 bedrooms, 1 bathroom and a courtyard close to Waverley Road shops, restaurants, and tram access as well as Darling train station.  Quoted $1.4-$1.5m, the Auction was started with a Vendor Bid of $1.4m. There was one bidder who took advantage and put in a bid at $1.42m. Eventually the property was passed into them and sold shortly after, for a price in the vicinity of $1.45m.