How has the first half of the property market faired for 2018?
We see the market as more ‘balanced’ now, which is very different to 12 months ago. Stock levels and bidder numbers are both down and the market is far more discerning (and sometimes not even interested) when it comes to the B and C grade homes.
In this market, experience and knowledge counts. Being aware of a property’s history and what is happening in the precinct is becoming more important. This information is not always easy to obtain – full due diligence is up to the buyer of course as the selling agent is engaged by the vendor to represent the vendor.
Half year observations:
- Many agents do not have as many properties ‘locked in’ for spring campaigns as they did for the same period last year and we are noticing a number of changes within agencies regarding staff levels and office relocations. Buyers may have to be more patient in the coming months and perhaps not pin too many hopes on the traditionally plentiful Spring options.
- A lot more ‘stale, old or repackaged’ properties are around, some of these with their third or fourth agent/agency campaign, hoping to achieve a sale. For many, unless the change is combined with a price reduction, they may be for sale a while longer.
- Advertised quotes are being wound back on properties, and while the ‘new’ quoting laws have largely achieved the Andrew’s Government’s objective, the understanding of price and value for buyers is as confusing as ever.
- Suburban towers and/or medium density developments are having a big effect on nearby residential homes. We are noticeably increasing our time spent at council deciphering nearby proposals and how they may affect properties we are considering buying for our clients. Knowing what to look for now may prevent unknown surprises in the future.
- Off-street parking does not appear to be as coveted as it once was, and position is becoming even more important, particularly for teenage families and downsizers.
- Schooling in Melbourne continues to be a prime consideration for many families. In addition to buying close to schools (or public transport) to combat the traffic congestion, we have noticed a swing toward buying in public school zones keeping secondary schooling options open too.
- Less bidders at auction (sometimes due to the quality of offering and sometimes because vendor expectations are too high). We are also noticing less buyers through mid-week inspections.
- Money is harder to get from financial institutions and the impact of bank/government reforms for overseas buyers is starting to take effect, with much less activity from Chinese buyers in particular.
- More people are considering staying where they are – “Should I renovate or relocate?” Talking to architectural colleagues and builders, they are commenting that the enquiry is still strong.
We have many discussions with clients about their options. Having both a buyer advocacy and architectural services branch to our business allows us to have qualified informative discussions about the best options for each individual situation.
The market is quickly slowing down for Winter and the school holidays. Many agents (and Melburnians in general) are getting away from the cold for a month or so in June/July and the future is now fully focussed on the Spring market and what may be coming up for sale in August.
That said there are still a number of homes around for sale privately. Some have been around for up to a year or more, others are testing the market to see if they can still get last year’s price without the preparation, costly advertising and public auction. In amongst all of these, there is occasionally a genuine seller ready to transact. Buyers can waste a lot of time investigating these properties, however, particularly if they don’t have a full understanding of the market and the process.
In the short term buyers may see opportunities, however, in a tightening market we are likely to see even fewer properties for sale and even less of the ‘A’ grade properties (see our previous blog for more information on our thoughts regarding A, B & C grade properties https://www.woledgehatt.com.au/2-june-2018/ ).
As always, we think buying the right house first, is the most important goal. Price can quickly wear off and you may find yourself left with a bargain you won’t enjoy living in or lose significant money on if you decide to re-sell it. As a growing family, that can really set you back.
21 Hume Street Armadale (Will and Tim Bennison, Jellis Craig) – a neat, lock and leave single storey home, suiting downsizers and young professional couples, not far from our office. A narrow street, but central location – sold for an undisclosed price circa $2.8m
25 Kent Street Kew (Hamish & James Tostevin, Marshall White) – a large builder-spec styled home that last sold in 2013 for $2.2m (demonstrating the market isn’t all bad) – sold for an undisclosed price in excess of $3.2m
60 Carpenter Street Brighton (Brydie Hamilton/Bert Stewart, Buxton) – a well located, corner block, with a single level smaller home (great downsizer) – $2.9m
A standout ‘land’ buy:
8 Metung Street Balwyn (Elsa Li / William Chen, Buxton) – approx. 678sqm land buy, tailored for a ‘AAA Chinese buyer’ offering the location and street number. Had previously sold in 2013 for $1.28m, then again in 2015 for $2,111,000 – this time $2,545m
… wonder when this will be up for sale again next?
- good period home in Hawthorn, updated with garaging – circa $6m
- renovated period home with good garaging, Prahran – over $4m.
- modern townhouse, Prahran – circa $2m.
- period home, Brighton – mid $2millions
- large land (potential development site), Camberwell – $5m
- modern home with court, Brighton – $6m
- period home, low maintenance block, South Yarra – over $3.5m
7 Auburn Grove Armadale
7 Auburn Grove Armadale offers enormous potential to renovate and extend the existing period home into a family home for the next decades. More than comfortable to live in as is while developing plans, the home offers good land at the rear, including OSP from the ROW and is well positioned to amenities.
A crowd of about 40 people attended the auction led by Andrew McCann and the Jellis Craig team. Following the preamble, Andrew was met with the currently customary silence from attendees. Eventually placing a vendor bid of $3.5m, no one was prepared to enter a counter-bid and the home was eventually passed in at this level.
Perhaps this is an example of the shifting market and vendor expectations exceeding those of buyers’ for a property such as this. Quoting $3.7-3.9m before the auction, the home remains on the market, now seeking $3.695m.
11 Valetta Street Malvern
The home at 11 Valetta Street Malvern attracted over 50 people to the auction. Positioned only metres from Glenferrie Rd, the Victorian double fronter on approx. 416sqm of north rear land has recently had a full makeover within the original footprint making the home more comfortable for the short term. At some stage, the good sized land then provides opportunity to take the property further (STCA) when desired.
Hugh and James Tomlinson from Marshall White ran the well-attended campaign, with James calling the auction on Saturday. An opening bid of $2.4m was quickly received, followed by a second bidder and the 10k bids went back and forth swiftly. At $2.5m the home was called on the market, eventually settling with bidder one for $2.525m.
With almost half of the year gone, the Melbourne property market has slipped back to a more ‘balanced’ clearance rate.
We are currently seeing the following:
- Less bidders at auction (sometimes due to higher vendor expectations or quality of offering)
- Apartments and construction works are having an effect on traditional neighbourhood areas. The major planning changes of March 2017 are noticeably impacting on suburbs now
- More people are prepared to stay where they are – “do I renovate or do I relocate?” We have many discussions with clients and prospects about this, and having both a buyer advocacy and architectural services branch to our business allows us to provide the pros and cons of both options to our clients in a timely manner
A real focus now is the Spring market and what stock is coming on in a few months, as most agents (and Melburnians in general) concentrate on getting away for a month or so in June/July. That said, there is a lot happening (or properties being tested) off-market.
The market has changed and we are entering a ‘buyers’ market. The REIV clearance rate was 62% at 6pm on Saturday and 35% of the passed in properties were passed in on vendor bids.
For buyers, this may mean opportunities; however, in a tightening market we are likely to see fewer properties for sale and even less of the ‘A’ grade properties.
One question may be, what is a bargain?
For discussion purposes, if we break the properties in three categories – A, B and C, let’s focus on the things we can’t change.
We think an ‘A’ grader is a property that is well positioned, well oriented and has a functional floorplan, often fully renovated. Finding an ‘A’ grade bargain is hard. The properties are usually easy to spot and (with less choice) buyers will gravitate toward the good ones, potentially increasing the competition.
We regard a ‘B’ grader as a property that is still well positioned, has good land content and has the potential to become an ‘A’ grader with some thoughtful changes to the property. We have the ability (Adam is a registered architect who has been practising for nearly 20 years) to identify these properties and quickly work out whether they can be easily improved. He can also make quick assessments regarding zonings, neighbours, council setbacks and overlays. This has helped our clients immeasurably, as they can make timely buying decisions and they have often been able to pursue properties at more affordable price points.
The properties where we have seen the biggest change in the market over the past six months are the ‘C’ graders. Thus time last year, properties positioned well away from amenities, with homes that were poorly designed/positioned for light, often located on busy roads or with negatively impacting neighbouring properties (ie apartment blocks) were attracting as much competition and emotion as the ‘A’ graders. Buyers for these properties have all but disappeared or the buyers are now at much lower price levels than vendors. That said, the odd one has been selling, more often than not to a desperate or ill-informed buyer.
The googled definition of a bargain is ‘something bought or offered for sale much more cheaply than is usual or expected’.
Sometimes waiting for a bargain may mean you miss an opportunity to purchase the property that is going to suit your emotional and lifestyle needs.
You could hold out and wait to buy a property that has been sitting around for sale for the last 3-6 months or more. There are plenty of them around. Many of them have had asking prices well above even the top prices achieved in 2017. If the vendor expectations have changed, you may get lucky and buy a good property; however, just because it is ‘cheap’ may not mean it is the right property for you.
If it is not an ‘A’ or ‘B’ grader, consider how long you may need to hold the property until the next boom, where you may be able to see some good growth. The last boom we recall like 2017 was back in 2009 when the government relaxed the FIRB rules – that’s a long time to wait if the property doesn’t meet your lifestyle needs.
There will be some good opportunities around for buyers; however, we think it is important to buy a property that still meets around two-thirds of your key wish list, focusing on the things that can’t change. And unfortunately, that can mean waiting.
As the market continues to change, waiting to buy at the bottom of the dip may be short lived. Vendors are more likely to hold their properties and only sell if they need to; therefore, stock levels will also tighten further and, with limited choice for buyers, we could quickly see an improvement in the market and an upward trend returning towards the end of the year.
Stonnington Council saw some good results over the weekend. Some of the properties that sold include:
- 143 Finch Street Glen Iris – large family home on good land (approx. 876sqm), ready to move in with nothing to do – $4,855,000
- 18 Plant Street Malvern – smaller (as new) townhouse style property with plenty of wow – undisclosed but circa $4m
- 14 Airlie Avenue Prahran – single storey, renovated family home or downsizer with OSP for one – undisclosed comfortably over $3.5m
- 16 Chanak Street Malvern East – single storey, renovated home with garden view impacted by large apartment tower, after passing in at auction, sold well – undisclosed over $2.5m
- A number of properties for sale on large land, Hampton – $5m plus
- Corner block close to amenities, Brighton – circa mid $2m
- Period home requiring renovation, Canterbury – circa mid $2m
18 Plant St Malvern
The near new, modern townhouse on offer at 18 Plant St Malvern was always going to attract a strong crowd. Well suited to families with older children or early downsizers the home delivers space, light and very comfortable low maintenance living. Andrew Hayne called the auction in front of the 50 plus crowd standing easy in the cul-de-sac. Opening with a $3.0m vendor bid, an offer of $3.3m followed by $3.5m – clearly showing the high level of interest in this property. A third bidder entered at this point and brought increments to a more sustainable level. At $3.6m the home was called on the market with steady bidding continuing, as a fourth bidder entered the action. The property was eventually sold under the hammer for an undisclosed amount just under $4m.
14 Airlie Avenue Prahran
14 Airlie Avenue Prahran offers fully renovated family living with period features in a prime location. An oversized master suite, spacious open plan living and off street parking (note garage too narrow for most cars) are highlights. The secondary living zone is on the smaller side. Marcus Chiminello and Nicole French led the Marshall White team for the campaign and auction. With no opening bids forthcoming, a vendor bid of $3.5m was placed to get the auction started. This did not have the desired effect and Marcus was made to work hard, give everyone time to think with an early half time break and almost passed the property in when a last gasp offer of $3.52m was made. A second couple joined in and the two parties traded offers with varying speed, finally settling at $3.715m where the property was passed in to bidder two. The home was sold in post auction negotiations at a level slightly above this.
Pass-ins are becoming the new normal at auctions. The majority of the properties we attended on the weekend passed in on vendor bids, with no visible interest from buyers. Some of these were good properties – well oriented and well positioned, with good floorplans.
We also saw more than 10% of the weekend’s homes sold before auction. You may wish to question why a buyer would be willing to buy before auction in this market. If the property suits your needs, this may be a great opportunity to create certainty; however, considering the number of other buyers interested and their potential price levels is still important, to ensure an informed decision is made before making any offer. You may be the only buyer.
You don’t have to be buying or selling to be thinking about real estate. The property market is something talked about at dinners and functions (almost any occasion) and with the same passion as if talking about the football or cricket.
Talk has moved from bidding tactics at auction to ‘off market’ properties.
We note that most homes that are ‘off market’ are really only private sales. They are properties where the vendors have listed with an agency to sell their home without a marketing campaign. This can be particularly appealing for vendors hoping for a high price. If they don’t get their price, the process hasn’t cost them too much, whereas a formal advertising campaign could leave a vendor out of pocket tens of thousands of dollars.
Properties selling via private sales are not a secret, as they are still marketed to everyone on the agency database at the general price point via email or text alert advising of a special off market opportunity and usually still have public inspections.
That being said, there are still a number of genuine ‘off market’ properties floating around. Some have been around for six or 12 months, sometimes longer. Some have even increased their asking price. It is important to remember that just because everyone doesn’t know about the home, it doesn’t mean it is a good property and will suit your needs. If it does, however, having an experienced selling agent and experienced buying agent will increase your chances of buying the home.
- 9 Condor Street Hawthorn East (Michael Hingston/Geordie Dixon, Jellis Craig) – modern family home, conveniently located, bought before auction for an undisclosed amount over $5 million
- 61 Were Street Brighton (Lisa Comben/David Hart, Buxton) – family home (with polarising façade) with north facing rear, good street – bought before auction $2,850,000
- 27 Ryeburne Avenue Hawthorn East (James Tostevin/Sally O’Connell, Marshall White) – substantial, single storey Edwardian on approx. 1,196sqm – $5,200,000
- 56 Kerferd Street Malvern East (John Chartres/Tory Resic, Thomson RE) – recently renovated, large family home – $6,110,000
- 69 Irving Road Toorak (Warwick Anderson/Holly Gillham, RT Edgar) – approx. 480sqm, corner block sold for an undisclosed amount closer to $5 million or over $10,000sqm
- 31 South Road Brighton (Ivan Blow/Stefan Whiting, Buxton) – approx. 1090sqm, corner block with single dwelling covenant – undisclosed but over $3.7 million or around $3,400sqm
- 5 Norbert Street Balwyn (William Chen/Anton Zhouk, Buxton) – approx. 681sqm in the Balwyn High zone, $2.338 million or $3,433sqm
- 31 Abbott Street Sandringham (Alan McGillivray/Nick Johnstone, Nick Johnstone RE) – approx. 1,000sqm, corner block in the growth zone, $4,62 million or $4,620sqm
Some of the better properties scheduled for auctions on 2 June: an architect’s view
- Single storey, modern family home, Brighton East – $2.4m
- Townhouse, north rear, Hampton – early $2 millions
- Large land, Brighton – over $4m
- Villa unit (needing some cosmetic updating), Brighton – $1.5m
- Corner block, Hawthorn – $4m
- Family home on large land, Kew – $6m
- Double fronted home with pool, Armadale – $2m
56 Kerferd St Malvern East
A substantial, fully renovated, family home within the Gascoigne Estate was up for sale at 56 Kerferd Rd. The large spaces and pristine finishes throughout were clearly appealing to many, outweighing the impact of the south rear. The ‘move-in-now–and-enjoy’ factor was strong with this offering and the market of late has been receptive to such offerings. John Chartres from Thomson led the auction, opening with a vendor bid of $5.5m. Two bidders responded with rapid offers bringing the level to just under $6m before anyone could even catch their breath. After a quick vendor discussion, the home was announced on the market at $6.025m. This brought on another round of bids, eventually slowing and settling at $6.11m.
63 Wheatland Road Malvern
63 Wheatland Rd Malvern offers comfortable family living behind a pretty Edwardian façade. The position, north rear and up to 5 bedrooms will satisfy many families, while some may have been looking for a more functional downstairs master/bathroom combination. Once Andrew McCann got the auction underway with an opening vendor bid of $2.5m, the attending crowd was characteristically shy. With a little encouragement from Carla Fetter, a bidder responded and was soon met with competition from bidder two, steadily bringing the offer up to $2.75m. Asked if the property was on the market, the reply was positive with the next bid at $2.775m by a third entrant, which brought on a flurry of bids between bidders 1 & 3. At this point a fourth bidder quite literally jumped in and stood intimidatingly beside the auctioneer, shouting out loud and swift bids in response to all opposition. The tactic worked for him, eventually purchasing the property for $2.955m.
In vast contrast to the auctions we attended last week, we saw more properties pass-in on vendor bids this Saturday than sell under the hammer.
The REIV clearance rate for reported properties was sitting at 64% at 6pm Saturday, with 17% of the properties auctioned passing in on vendor bids. More than 10% were sold before auction.
The disparity between vendor expectations and buyer interest is increasing. We are still seeing good numbers at many of the opens we attend, particularly for the ‘A’ grade properties; however, this is now not converting into bidders at auctions for a number of properties.
Some questions that come to mind:
- Do buyers think they need to be above the price range stated on the statement of information to be successful?
- Should buyers expect sale prices to be lower than comparable homes sold in the past 12 months?
- Are vendor sellers within the quoted statement of information?
- Do vendors think the market is always going up?
Stock levels are good for May with plenty of choice, but most agents are suggesting June will see lighter stock levels, with many vendors opting to wait for Spring before selling.
A changing market can be a good time to buy, sell or upgrade. However, it is important to understand a property’s strengths and weaknesses, as well as the process you might be transacting in. It’s also important to remember that an opportunity is only an opportunity if it meets the goals you are trying to achieve.
- 2 Rouen Street Hampton (John Clarkson/Sonja Sendin, Buxton) – pretty period home in the Castlefield Estate (heritage protected), small original front rooms, updated and well located to Hampton Street shops – $2,310,000
- 33 Broadway Camberwell (James Tostevin/Nikki Van Gulick, Marshall White) – comfortable period home that could be further improved, passed in with no bids, selling afterwards over $4m
- 43 Karma Avenue Malvern East (Steve Burke/Tony Doh, Hocking Stuart) – renovated single-storey smaller home with pool, suit downsizers and younger families – $2,420,000
- 5 Rockingham Street Kew (Claire Endersbee/Sally Morrison, Kay & Burton) – approx. 747sqm, south rear – undisclosed but early $3 millions or around $4,000sqm
- 507 Orrong Road Armadale (Dean Gilbert/Nicholas Franzmann, Marshall White) – approx. 1250sqm, zoned GRZ3, west rear with older apartment block – $6,600,000 or $5,280sqm
- 57 Metung Street Balwyn (Sue Wooldridge/Julian Tonkin, JellisCraig) – approx. 649sqm, east rear in the Balwyn High zone – $2,120,000 or $3,266sqm
Some of the better properties scheduled for auctions on 19 May: an architect’s view
- Family home on large land, Kew – $6m
- Period home, well located, Hawthorn – high $3millions
- Modern, large family home, Hampton – over $4m
- Large townhouse, good OSP, walk to amenities – early $2millions
135 Victoria Road Hawthorn East
A liveable single-fronted Victorian home with good fundamentals (ie pretty facade, north-facing rear, central location) was on offer here, and a solid crowd of around 100 attended. There was a real vibe at this auction and for good reason: the quote was an enticing one and seemingly the vendor had reasonable expectations. Where else in Hawthorn East can you buy a product like this in the early $1m range? Auction started with a confident crowd bid of $1.25m, and, not long after, bidder 2 came along. Some mixed bidding increments saw the property announced on the market at $1.33m, and then sell under the hammer for $100,000 more ($1,430,000). Good result for listing agents Andrew Macmillan and Clayton Smith – bit of experience there.
2 Serrell St Malvern East
This home offers a family package in comfortable condition, having been renovated and extended some years ago. Perhaps the flow of the floorplan and proximity to Dandenong Rd are holding buyers back here. Daniel Wheeler and Clare Moloney headed up the Marshall White team at this auction, where the sun tried to glimpse through the autumn trees onto the reasonable crowd in attendance. Daniel opened with a vendor bid of $1.8m after he was met with the usual silence at the commencement of proceedings. A young family reciprocated with a $20k bid. Following a half-time break and a second bidder placing $10k counter bids, the first bidder gained pole position for further discussions with vendors when the property was passed in at $1.87m. The property did not sell after, with the vendors having far higher expectations, seeking $2.18m.
Clearance rates are still good but the method of selling is shifting. The REIV reported a 68% clearance rate at 6pm on Saturday. While not the 70% and 80% clearances we have become used to seeing over the past two years, this is still healthy, suggesting that the auction process is still delivering desirable outcomes.
The method in which the transactions are completing, however, is becoming more varied: ie bought beforehand, sold under the hammer, bought in post-auction negotiations or even a few days later.
Some vendors’ price expectations are too high, quoting laws are tricky to interpret, and banks are tightening lending criteria, which adds up to an environment where alternatives to the auction system are attractive.
Whichever way the property is sold, the opportunity is there for buyers and sellers to achieve their objectives.
For buyers, this means more research to obtain a greater understanding of the process, prices and strategies. For some, this may mean inspecting many more homes in varying suburbs and price ranges to get a better understanding of what their money can buy, interpreting the quotes, interpreting the volume of other buyers (working out the serious buyers from the neighbours, serial inspectors, family etc) and knowing how many buyer groups the property may appeal to and why, to name a few.
We are noticing an increasing divide in the number of properties selling above expectations and those selling below, and this isn’t taking into account the quote. The quote doesn’t determine whether the property is a good one. The fundamentals do: position, size, orientation, style, flow and quality. If one or more of these isn’t quite right, the price can vary significantly.
Of the auctions we attended on the weekend, we saw competition at all of them. They were good properties, however, they didn’t all sell under the hammer and some are still for sale.
- Hawthorn East – single-fronter on good land, but needing work (major renovation down the track) – sold under the hammer, 2 bidders
- Hawthorn – fully renovated, well located, single-storey two-bedroom home – sold strongly, 2 bidders
- Malvern East – renovated period home on good land, sold afterwards, 3 bidders
- Brighton East – modern home (as new) on good land, passed in, 2 bidders
- Glen Iris – large renovated period home, sold under the hammer, 3 bidders
- Bentleigh – modern home (as new), sold under the hammer, 3 bidders
The ‘done’ properties – the ones buyers can move into and don’t need to do anything else to seem to be attracting stronger interest than those needing work. In terms of houses that suit downsizers, that market hasn’t really changed since this time last year. In fact, it may have even strengthened.
We have noticed, with the banks tightening their lending, properties needing unquantified additional spending above the purchase price have lost a little bit of intensity in recent months.
That being said, if the vendors are holding strong on a figure, rather than an outcome, they may well be owners for a bit longer yet.
Some of the bigger pass-ins:
- Brighton – well-located modern home, good land, flexible floorplan and triple garage
- Toorak – dated home, predominantly land (approx. 429sqm)
- Parkville – two-storey terrace, 3-4 bedroom, good living spaces, no off-street parking
- Kew – renovated family home with pool, court location
- Canterbury – period home (with heritage overlay), ready for next update, good land
Properties we like:
Buyers will no doubt be offered many off-markets right now, and we have inspected dozens in the past month. Here is a small sample of the better ones:
- Single-storey townhouse, Brighton East – $2m
- Family home with court, Brighton – over $7m
- Period family home, Brighton – $3.6m
- Two-storey terrace requiring work, Prahran – circa $2m
- Family home with pool, could be further improved, Camberwell – $3m
43 Plantation Avenue Brighton East
The sun was shining on the large crowd spread along the reserve on the south side of the street to see Peter Kennett and the rest of the Hocking Stuart team in action. This modern home gained a lot of interest for the indoor-outdoor lifestyle and entertaining zones it offered. The north rear orientation was another plus. Dramatic two-storey windows spread light in the southern zones of the home. Once the preamble was complete and the call went out for bids, an opening offer of $4.2m was quickly received. A second bidder made one $50k offer, which was countered by the first bidder. Here the action slowed and a vendor bid of $4.35m was placed to move things along. Eventually the first bidder replied with an offer of $4.375m and the property was passed in at this level. It sold after for an undisclosed amount. Perhaps the lack of a downstairs bedroom-bathroom combination and the vendor’s price expectations deterred some potential buyers.
2 Irymple Avenue Glen Iris
A compact two-storey builder-spec home was on offer here, and a reasonable crowd of about 40 were keen to see how the market would receive it. Located not far from Central Park, this is not a typical offering of the area, but that didn’t deter many Chinese groups who clearly saw interest in a home they traditionally fight very hard for, particularly in suburbs such as Kew and Balwyn. Opening with a vendor bid of $2.4m, auctioneer John Morrisby had a bit of work to do get some crowd participation, but that eventually came with a $25k offering. Not long after, another party joined in. Soon after the half-time break, another party got involved, and the property was announced on the market at $2.7m, selling not long after for $2.75m. Good result for the vendor and well run campaign by local agents Ian McLennan and Danielle Waterton.
There is a new market emerging. Like 1950s furniture, wallpaper and black granite benchtops from the ‘90s, expressions of interest (EOI) campaigns are back in fashion.
EOIs are a take on the old-fashioned method of private sale, just with a deadline to create urgency.
Peruse the advertised properties in Stonnington Council over the past month and the number of properties advertised as ‘EOI’ has increased substantially.
Brighton, in the past fortnight, has followed suit.
Vendors are seeing it as a positive alternative to higher quotes and potential auctions with no bidders.
A year ago, it was fair to say that most properties saw multiple bidders, whether it was an ‘A’, ‘B’ or ‘C’ grade property.
The market has definitely cooled and, while certain properties within the market are still out-performing, many now have limited interest, particularly at the level the vendors are hoping to achieve.
What does this mean for buyers? Smoke and mirrors. If the house is an ‘A’ grader, there is likely to be good interest still, so how do you work out where other buyers’ levels really sit? Is there anything you can do to increase your chances of buying? What are the rules?
If the house is a ‘C’ grader, you may be the only interested buyer. How will you know whether the asking price is realistic or well above what others may be prepared to pay?
Expressions of interest, sometimes known as expressions of confusion, are a perfect campaign for vendors when the market is softening, as it provides opportunity.
What does opportunity mean?
- Opportunity for a good agent to encourage a sole buyer to pay a price well above what others might pay.
- Opportunity for buyers to increase their chance of certainty.
- Opportunity for vendors to maintain higher prices.
- Opportunity for properties to sell well, even if there is only one buyer.
- Opportunities to buy well, if there are no other interested parties.
It therefore comes down to the rules and communication.
- Communication with the selling agent (who is being paid by the vendor) to treat you as the preferred buyer.
- Communication with the agent about your price limits.
In the emerging EOI market, some buyers will come out winners, but others may be left wondering why they paid the price they did.
- 28 Selborne Road Toorak (Andrew Smith/Ross Savas, Kay & Burton) – modern townhouse with lift as all bedrooms upstairs – $3,800,000
- 43 Cobden Street Kew (Maurice DiMarzio/Joshua Brinkhuizen, HockingStuart) – semi-detached smaller home needing work – $1,285,000
- 4 Netherlee Street Glen Iris (John Manton/James McCormack, Marshall White) – Stonnington Glen Iris, modern family home over three levels with a flexible floorplan – $3,740,000
- 58 Armadale Street Armadale (Carla Fetter/Andrew McCann, Jellis Craig) – well positioned townhouse over two levels, all bedrooms upstairs, sold before auction – $2,800,000
- 5 Collingwood Street Sandringham (Scott Hamilton/Brydie Hamilton, Buxton) – approximately 727sqm of unencumbered land with wide frontage, with a dated home likely to be replaced in the future (stca) – $2,216,000 or $3,048sqm
- 38 Clarendon Street Armadale (Tim Wilson/Anthony Grimwade, RT Edgar) – townhouse over three levels (no lift) – $2,212,000
Some of the better properties scheduled for auctions on 28 April : an architect’s view
After a small break, and with only one auction weekend left now until Easter, Saturday saw a similar number of auctions as the same weekend last year. However, a noticeable difference was evident in the clearance rate: 68% this week compared with 79% 12 months ago.
Of note, just over half of the homes that did not sell passed in on a vendor bid, suggesting buyers had no interest in the property at that price level.
We don’t think the market has faulted to that extent. It is more likely the combination of negative media hype, the continuing impact APRA is having on bank lending criteria, some vendors’ belief that their property should just be worth more and the agents’ attempts to accurately quote properties contributing to some of the results we are seeing.
If we look at properties that have been accurately quoted, the changes have probably highlighted how an ‘A’ grade property can achieve even stronger results compared with some that have seen limited inspections and/or no bidding.
It is often said that history repeats itself, so it was interesting to see 56a Dendy Street Brighton, which sold very strongly back in October 2013 with eight bidders for $2,272,000, pass in on a vendor bid. It could be fair to suggest that at certain price points buyer discernment for items such as garaging, privacy, overlays, zoning and road quality impact their decisions to pursue a sale.
At certain price points, particularly within strong demand suburbs, less-than-ideal properties have the potential to attract greater interest as the home provides an entry point opportunity to enter the suburb. However, strong interest at a certain price point doesn’t necessarily suggest that the property will grow at the same rate as other homes in the area and continue to attract the same interest as prices increase.
It is important for buyers to understand all the strengths and weaknesses of the property they are interested in, how it will work for them both financially and emotionally, and take into consideration how many other buyers might be looking for the same thing at certain price levels.
We believe that nearly every property should have a stop level, regardless of a buyer’s financial capacity. Knowing where these points are and why can help avoid surprises down the track if deciding to sell, renovate or re-build, trade-up or trade-down.
- 13 Wilks Avenue Malvern (Jeremy Fox/Holly Gillham, RT Edgar) – large family home on approx. 900sqm, with multiple living zones and five bedrooms – $6.3m
- 7 Keats Street Sandringham (Jenny Dwyer/Stephen Tickell, HockingStuart) – approx. 931sqm with north rear and a large family home with pool, very liveable as is but could also be further improved – undisclosed but over $3.3m
- 6b Henderson Avenue Malvern (Andrew Hayne/Fiona Ansell-Jones, Marshall White) – new townhouse on approx. 465sqm, with pool, although all bedrooms upstairs and no lift – $5,040,000
- 25 Denham Place Toorak (Hugh Hardy/Ada Taylor, Abercromby’s) – approx. 617sqm with west rear – $5.5m or $8914sqm
- 8 Johnston Street Ashburton (Damien Davis/Talia Tomaino, Jellis Craig – approx. 906sqm with west rear – undisclosed but circa $2.5m in the mid-high $2000s/sqm
- 59 Brunel Street Malvern East (Steve Burke/Margot Dawson, Hocking Stuart) – approx. 636sqm with north rear – undisclosed in the early $2millions or closer to $3500sqm
- Modern family home on good land, Ashburton – $2.3m
- Semi-detached home, no heritage, no car park, Prahran – early $1millions
- Dated modern home with garaging, Malvern East – $2.2m
- Large land, good street, Black Rock – early $2millions
- Large home, renovated single, level, Kew – $6m
- Land 800sqm, Kew – circa $3.5m
10 Royal Crescent Armadale
Top position to amenities and a pretty brick period semi-attached home was on offer here. The single-level layout would work well for downsizers and was marketed with a range of $1.75-1.925m. Gowan Stubbings and Julia de Campo from Kay & Burton teamed up for the campaign and auction, facing a crowd of about 30 people. While the weather was hot, the bidding activity was not – the auctioneer was forced to open proceedings with a vendor bid of $1.75m and could not elicit a counteroffer from anyone. The home remains available for sale.
25 Barrington Ave Kew
An interesting offering this one: architect-designed by Peter Staughton, the home had a lovely modernist feel. Small secondary bedrooms, no car access from the street and the lack of a large open plan area didn’t deter interest from four parties here (which was really only three, with one bidding also through a family member). Richard Earle opened with three vendor bids ($3.2m, $3.225m and the $3.25m), then the auction finally got started with a clip of bids. Announced on the market at $3.43m, the property sold under the hammer to the original bidder for $3.621m.
Another good day for sellers on the weekend, especially for those selling the ‘rare birds’.
While we did witness a number of pass-in auctions on the weekend, many properties had sold by the end of the day and the reported clearance rate with the REIV (on a good number of reported auctions, 1219) was a healthy 70%. Although we are nearly at the end of February, it does feel like a slow start to 2018. With limited opportunities to buy, it has made things harder for buyers, and the quality offerings have sold very well if vendor expectations have been fair and the property has been well managed and marketed.
If the home is nicely renovated and has good bedroom/bathroom combinations, land size doesn’t seem to factor in too much for buyers, as we saw on the weekend with many WOW homes selling and selling well (i. Fawkner Street, Wrights Terrace, Grove Road). That said, if the land is very special and difficult to repeat, that too will be well received (ie Farleigh Grove – well located, unencumbered, well proportioned, etc).
First open inspection numbers were well attended too, with many buyers viewing the upcoming stock.
Of interest, we noted two four-bedroom family homes with some similar lifestyle offerings auctioned on the weekend. The first to auction had three bidders. With one bidder successful, the two underbidders re-focused their attention on the second home and were the only two bidding parties. Both homes sold within $30,000 of each other.
Identifying what is an A-grader and what is a C-grader is perhaps one of the biggest obstacles for buyers to work out right now, and many are missing by a big margin. Understanding this is important, as it can help when trying to determine value.
- 13 Edro Avenue Brighton East – Peter Kennett/Chelsie Cargill, Hocking Stuart – a modern home, good orientation, and a popular floorplan formula for buyers. After selling strongly only four years ago (high $3 millions), the result on the weekend demonstrated that a good offering can continue to be well received –undisclosed in the mid $4 millions
- 48 Fawkner Street South Yarra – Elliott Gill/Nathan Waterson, Jellis Craig – on only 229sqm (approx.) with south-facing rear but a convenient location with a newly built home of large proportions – undisclosed price toward mid $3 millions
- 1 Harts Parade Hawthorn – Mark Sutherland/Mike Beardsley, Marshall White – approx. 606sqm, with a single level, neat and tidy home with pretty double-fronted Victorian timber façade and north rear, set a new record for the street –$2.9m
- 108 Hambledon Street Middle Park – Simon Gowling/Max Mercuri, Greg Hocking Holdsworth – a brick double-fronter with functional floor plan but basic internals and three bedrooms – $3,375,000
A number of homes were ‘bought before’ auction, some with big results:
- 2a Hawthorn Grove Hawthorn – James Tostevin/Sally O’Connell, Marshall White – a nicely renovated home over single level; however, a noisy location –undisclosed price in the high $5 millions
- 100 Edgevale Road Kew – Kathy Malcolm/Mark Sproule, Marshall White – approx. 245sqm with an updated single-fronted home – undisclosed price over $1.9m
- 44 Wrights Terrace South Yarra – Carla Fetter/Andrew McCann, Jellis Craig – approx. 279sqm, a nicely renovated timber single-fronted home; however, no carpark and south rear – $2,610,000
- 17 Plantation Avenue Brighton East – Peter Kennett/Chelsie Cargill, Hocking Stuart – approx. 652sqm, with north facing rear – $2,420,000 or $3,711sqm
- 5 Boronia Street Canterbury – Tori McGregor/Michael Wood, Marshall White – approx. 650sqm, with west rear and no heritage overlay – $2,430,000 or $3,738sqm
- 3 Carew Street Sandringham – Jenny Dwyer/Nick Kiloh, Hocking Stuart – 452sqm, compact block, fairly original semi-attached home – $1,790,000 or $3960sqm
- Renovated home, Grace Park, Hawthorn – circa $6m
- Basic home with good land content, Hawthorn East – mid $2ms
- Updated period home, Port Melbourne – high $2ms
- Period home with good land content (nearly 1,000sqm), Sth Yarra – circa $7m
- Dated but functional home on large land, Sandringham – circa $6-7m
Some of the better properties scheduled for auctions on 3 March: an architect’s view
67 Kerferd Street Malvern East
This was a nicely presented home over a single level in one of the better streets within the prized and leafy Gascoigne Estate. This property had a number of pluses: north-facing rear and the flexibility on offer to live in now as is and then renovate in time. No car garaging (or potential for it) was the main question mark here, and many would say it was not located in the best part of the street. Opening with a vendor bid of $2.4m, auctioneer John Morrisby received measured bids from three bidders, yet ultimately passed the property in for $2.555m and it sold after auction for an undisclosed price below $2.7m. Not a bad result here and the vendor should be pleased given next door (which although not as good in terms of condition had more upside) sold for $2.585m last August.
73 Stanhope St Malvern
This home offered the opportunity to create a new home for the next generation after a substantial renovation/extension to the existing period front, within Heritage Overlay guidelines. Off-street parking and a north rear orientation were further bonuses to the proximity to amenities. Andrew James led the team from Hocking Stuart in this entertaining auction. A strong opening offer of $1.5m was immediately received after the preamble. The intimidation tactic worked, as all others stayed silent and a break was called to confer with the vendors. The property was pronounced on the market, enticing bidder 2 to join the action. $5k and $10k bids flew back and forth swiftly, bringing the offer to $1.615m, where the opening bidder reluctantly stepped out. Andrew had to dispense with the jacket as the auction heated up with a fresh bidder entering the fray. At one point, he joked that he’d throw in the Lamborghini parked out the front, only to be trumped with the reply that the bidder already owned it, to the laughter of all. Alas, he had to drive away in it, as bidder 2 ended up the successful purchaser for $1.71m.
Saturday saw the first key auction weekend for 2018. Although numbers are still low, the REIV reported a clearance rate at 72% at 6pm on Saturday evening. That is still healthy.
The early $2 million market saw good competition and some strong results, particularly for well-positioned, smaller family and/or downsizer properties (predominantly single storey).
Malvern East performed well on the weekend. There were about half-a-dozen similar homes and all sold for solid results.
We have noticed an increased number of Chinese buyers across Melbourne (including Bayside) looking at homes to buy and saw an increased number bidding on Saturday. This feels noticeably higher than the numbers we were seeing towards the end of last year. Whether this is a result of the recent Chinese New Year or a continuing trend, time will tell.
The increased volume will provide a better gauge for this year’s direction. There are some well positioned properties for sale this weekend; however, many are not without their challenges – no off-street parking, large trees, neighbouring growth zones, poor flow, the list goes on.
There is a market there, ready to purchase. But if vendors are holding out for the ‘A+ grade’ price, we may see a few more pass-ins this weekend.
- 8 Rose Street Armadale (Andrew James/Eloise Manion, Hocking Stuart) – functional, updated single-storey period home, moments from Toorak station and an A-grade address – undisclosed, circa $2.4m
- 12 Stawell Street Beaumaris (Romana Altman/Rebecca Beacall, Buxton) – updated, single-storey modern home with a good feel, well located to shops, park and beach –$2,082,000
- 9 Cluden Street Brighton East (Nick Johnstone/Sarah Korbel, Nick Johnstone RE) – updated single-storey home, still within reach of Brighton schools, shops and transport –$2,745,000
- 14 Paxton Street Malvern East (Fiona Ansell-Jones/John Manton, Marshall White) – updated, but quite small single-storey period home, Central Park end – undisclosed but over $2m
- 14 Winmalee Road Balwyn (Mark Salvati/Meredith Plant, Jellis Craig) – approx. 911sqm, south-facing rear in the desired Balwyn street in the Balwyn High zone – undisclosed toward the mid $2m, or over $2,634/sqm
- 26 Vincent Street Sandringham (Peter Hickey/Matthew Gray, Buxton) – approx. 474sqm, in original condition, a neat liveable short-term option, south-facing rear – perhaps a major renovation/new build site for the future – $1.8m or $3,797/sqm
- 30 Palermo Street South Yarra (John Chatres/Michael Lee, Thomson RE) – approx. 436sqm with south-facing rear – $3,030,000 or $6,949sqm
- 23 Westgarth Street Malvern East (Dean Gilbert/Rae Tomlinson, Marshall White) approx. 408sqm, west rear, five neighbours in a heritage overlay sold for an undisclosed price in excess of $1.6m – or just shy of $4,000/sqm
Some of the better properties scheduled for auction on 3 March: an architect’s view
12 Stawell St Beaumaris
The offering at 12 Stawell St Beaumaris attracted plenty of interest for auction day. Maybe it was the mid-century style, the lifestyle offering with pool in the rear and park out front, the good family zoning all in a fresh and neatly presented package, or perhaps its proximity to the new Beaumaris Secondary College. The crowd stood along both sides of the street as Mark Earle from Buxton summarised the benefits of the property and commenced proceedings. An opening bid of $1.8m was made and quickly moved along, with two further bidders bringing the price into the $1.9m range, where one dropped out. Bids slowed down to $10k and $5k intervals, but climbed steadily to exceed reserve at $2.005m. The going got tough for both parties, resorting to single thousands to try and outlast the opposition. The opening bidder was eventually the successful purchaser with $2.082m.
1 Wright Street Hawthorn
We remember when this property last sold in 2013 (for $1.46m) and didn’t mind it then – wide frontage, single-level home, brick, close to Glenferrie Road and MLC etc. The property hasn’t really changed since, apart from a clever cosmetic update internally and some smart landscaping externally. James Tostevin, professional as always, got the auction started promptly at 10.30am and started proceedings with vendor bid of $2.15m. Not long after, bidders 1 and 2 were in a tussle throwing mainly $10K rises. A half-time break was taken at $2.335m and the property announced on the market. Not long after, the hammer came down at $2.371m – a pretty solid result we felt. In fact, who could complain about making almost $1m in just under five years. Interesting point of note is that the underbidder was a Chinese family – traditionally they don’t like properties that are of old appearance, and semi-attached.
The 2018 market was slow to resume this year. While there were still properties to view in January, the majority were unsold homes from last year.
Most of the new stock didn’t hit the market until after Australia Day and this coming Saturday (17 February) will be the first auction weekend to test the market.
For buyers, it has been hard to find the gems. There are a number of homes for sale with compromises and some will need additional work, which may or may not be easy to undertake. There are structural issues, council regulations and overlays to consider in addition to the extra costs involved, and these issues probably outweigh any potential benefits.
Buyers may also like to consider the practicalities of some of the ‘move in with nothing to do’ homes – how well the floorplan/zoning works for the family, orientation and privacy, to name a few. Stripped of the staged furnishings, the shell may not be as functional as originally thought.
Some buyers now regard homes that were considered close to infrastructure 10 years ago to be too far from the shops and station.
Council zoning is also becoming more of a concern for buyers. Potential for development next door and undercapitalising … a new concept.
Of note, the single-storey homes with flexible floorplans (ie suit downsizers and/or younger couples/families) have continued to be well attended at inspections.
In fact, most of the Saturday opens we have attended have had large numbers of buyers through. The question is whether this will this result in competition and sold stickers on auction day.
While many of the homes may not be ‘A’ graders, there is still a feeling of intensity in the market. There are only five auction weekends for the first quarter of the year, which means that there are only 2-3 weeks of new stock before the market shuts down again for Easter.
Some of the better properties scheduled for auction on 24 February: an architect’s view
- Period home on good land, Hampton – early to mid $2millions
- Modern townhouse – Brighton – early $2millions
- Double-fronted period home needing work – Malvern – circa $3m
- High Victorian brick home needing work – Hawthorn – circa $5m
- Art Deco brick townhouse – Prahran – $1.5m
- Good-sized period family home Glen Iris – $2.4m
- Basic home on good sized land in Camberwell – $2.8m
10 Station St Sandringham
This home offers a comfortable single-storey home, conveniently located to shops and restaurants, the beach and trains. While there was a reasonable crowd present at the auction, no one was ready to take up these opportunities. Peter Hickey and the team from Buxton opened with a vendor bid of $1.55m, before placing another one at $1.6m and passing the property in.
20 Erica St Windsor
Opportunities beckon for the 237sqm of land at 20 Erica St Windsor: retain, renovate and extend the existing period home or start afresh. Lapsed plans exist to build a large family home with additional studio above the rear garage. The wide ROW access could also be utilised as a second ‘street frontage’ to build two homes on the site STCA. Scott Banks Real Estate has been seeking out buyers since before Christmas, culminating in this auction. Opening proceedings with a $1.5m vendor bid, Banks consulted with the vendors when no bids were received. Eventually an offer of $1.505m was made to secure the first right to negotiate post-auction. These seem not to have met vendor expectations yet, as the home remains on the market.