As we draw towards the conclusion of the property market for the third term of 2024, buyers have seen generous stock levels for the winter months, when compared with previous years.

Of that stock, however, much of it has been stock that doesn’t meet current buyer criteria.  A lot of it is ex-rental stock with vendor/landlords determining that the benefit-to-cost ratio of holding a property portfolio in Victoria (even just one property in addition to their principal place of residence) is heavily out of balance and too onerous to retain.

A number of these homes are at lower price points, and include older apartments, villa units, blocks of land with old homes on them, which has provided choice for first home buyers. However, many first home buyers have limited financial capacity and an aversion to undertake too much work, given the negativity surrounding building costs and builder viability over the past two years.

A lot of rental stock may have functional heating, cooling, new hot water systems and working appliances, but some of the fundamental maintenance items have not been tended to for years, even decades, with tasks such as re-stumping and sub-floor ventilation causing structural issues for many older homes, affecting more than just some bouncy floorboards.

We have always believed that pre-purchase building and pest inspections are worthy things to get done, particularly as over recent years homes have not been that well maintained (do many home owners actually do this maintenance these days?) and the prevalence of dodgy renovation or upgrade work (often inspired by fashionable reality tv shows) means it is an important due diligence item for buyers to tick. Our clients will do this, but few of their competitors will.

Good houses needing renovation are also available. As always, there are opportunities for brave buyers willing to take on this work, and, if priced right with experienced agents, these ‘renovator’s delights’ are selling through competitive auctions (and over the top of quoted ranges). Two double-fronted Hawthorn examples on the weekend:

Both sold for about $150-200K above the top of quoted ranges, and we’re not sure this would have been the case earlier in the year. Why? Because the cost of such work was ‘seen as’ prohibitive and even finding a good builder to take it on at an affordable price was ‘seen as’ impossible. It seems to us the tide is turning in this regard, and buyers in general are getting comfortable with the idea (and/or cost) of renovating.

Largely due to lack of supply and convenience, a segment of the market that is going very well is modern or older homes that have been nicely updated, particularly in Boroondara. Noted strong examples from the weekend:

It should be noted that the buyers for these offerings are not needing finance to fund these purchases, and therefore increased interest rates and/or borrowing capacity are moot factors.

This winter we have seen an increase in ‘off market’ properties. This is in part driven by increased costs for advertising, which is an up-front cost that is often impossible for cash-flow-poor vendors to find.  While we have purchased some of the good ones, many of the asking prices of these ‘off market’ properties are so far above reality that we don’t think they are really even for sale. Vendors, in many instances, are dreaming and some agents, in many instances, are humoring their vendors in the hope that they will sell via a public campaign in the future when the vendors become more realistic about price.

Buyers can waste a lot of time looking at homes that aren’t really even for sale. When some of these homes eventually do make it to market, a number of them are seen as ‘that’s been around for ages’ before the official campaigns have even started. The damage done can be quite considerable.

So where does that leave us as we prepare for the final quarter of 2024?

General sentiment from agents is ‘October is going to be big’. At this stage, we believe big to mean ‘good volume of stock’. Big, in terms of sales results, may depend a bit more on the type of stock being listed.

For anything not quite right, or above market expectations, there could be more pain for vendors as stock levels rise further, increasing the negative sentiment out there for this type of stock.

 

 

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

107 Ruskin Street Elwood – Rachael O’Connor/Nicole Prime, McGrath

6 Clive Road Hawthorn East – Scott Patterson/Garrick Lim, Kay & Burton

28 Elizabeth Malvern – Will Bennison/Tim Bennison, Jellis Craig

 

‘Off-market’/Pre-market Properties:

• Modern family home, 5-8-3, lift, pool, ~750sqm, Kew – circa $11.5m
• 2 storey family home, 6-4-3, pool, Sackville area Kew – circa $6.2m
• Period front, modern rear, 4-3-0, north rear, Kew – circa $3.3m
• Single level 3-1-2, north rear, ~500sqm, Surrey Hills – circa $1.65m
• Single level needing reno/extension, ~620sqm, Hawthorn – circa $2.9m
• Brick single fronter, 2-1-1, north rear, Hawthorn East – circa $1.7m
• Period family home, 6-3-2, ~830sqm, Camberwell – circa $3.15m
• Timber Edwardian, renovated, 5-3-2, ~730sqm, Canterbury – circa $3.75m
• Iconic period building, 2-1-0 apartment, South Yarra – circa 1.25m
• Brick Victorian, 2-1-1, renovated, north rear, Armadale – circa $1.75m
• Brick Edwardian, 3-1-0, needing reno, Windsor – circa $1.3m
• Victorian weatherboard, 4-2-1, pool, ~300sqm, Malvern – circa $2.3m
• Brick Edwardian, 3-1-0, north rear, ~225sqm, Middle Park – circa $2.55m
• Brick Edwardian, 3+study, 2 bath, 4+ cars, Elwood – circa $5m
• Semi-attached brick, needing reno, 3-1-1, Elwood – circa $1.85m
• Brick villa, 1-of-2, north courtyard, 2-2-1, Caulfield North – circa $1m
• Victorian dble fronter, 4-2-3, pool, Caulfield South – circa $3.25m
• Contemporary townhouse, 4-3-2, Nth of pair, Bentleigh – circa $1.69m
• 2 storey family home, 5-3-2, ~870sqm, near beach/shops, Brighton – circa $8.4m
• Brick Victorian, renovated, 3-1-0, walk to Bay St shops, Brighton – circa $2.2m
• Contemporary 4-3-4+, huge rear garage/retreat, Sandringham – circa $3.5m
• Large Edwardian w bonus studio, 5-3-2, pool, ~810sqm, Sandringham – circa $2.8m+
• Single level Edwardian, 4-2-2, near shops/beach, Sandringham – circa $2.3m
• Single level, 5-2-3 near parks, ~600sqm, Highett – circa $1.55m
• Modern family home w Bay views, 4-3-2, ~790sqm, Beaumaris – circa $3.5m
• Large family home, 4-5-4 plus 2 study, 4 living, pool, Mentone – circa $3.5m
• Renovated period home, 4-2-2, pool, ~640sqm, Mentone – circa $2.1m

 

Auction Spotlights:

8 St Columbs Street Hawthorn

 

A good crowd gathered for this auction which was conducted by Campbell Ward of Jellis Craig (listed by Richard Winneke). On offer was a double fronted brick Victorian home which has been updated in the past, yet many would see challenges today in its floor plan layout and it likely will need work in the near future to update. Within the shadows of Swinburne University and opposite the old Vicarage of St.Columb’s Anglican Church (now used as  offices) this property was not without its issues. That said after a frosty start it attracted good bidding from three parties. Starting at $2.4 million bidding crept along consistently up to $2.625 million when the property was announced on the market. After this, it climbed to $2.7million in regular bids then at $2.76 a very bold jump bid of $40,000 was taken which knocked out the under bidder and the property was sold under the hammer. A good result for a property that has good potential – it seems now the market is receptive to taking such projects on and are a little bit less fussy on location.

 

16 Hudson Street Hampton

Built sympathetically in a style to suit surrounding traditional homes of Hampton, 16 Hudson Street offers single level living with a long list of modern eco features. It delivers 3 bedrooms and 1 bathroom, which is possibly the limiting factor of the home.  Some not too complicated reconfigurations (stca) could deliver the second bathroom.  The home had been quoted $2.1-2.3m throughout the campaign.

A decent crowd lined the street to see Stephen Tickell head up the Belle Team. An opening bid of $2.1m started the auction, with two parties trading swift $50k bids to quickly bring the home on the market at $2.35m.  The $50k bids kept coming, only slowing to $25k for the final three, and bidder 2 succeeding in securing the keys for $2.575m.  A solid result for the size of home, showing position, all done and environmental features can add value for vendors.