More properties on offer for buyers as Spring approaches

With Spring not far away, the market is turning to focus on auctions, and most buyers would be buoyed by the increase of properties on offer online.

While reported clearance rates have been reported at higher levels in recent weeks, the Melbourne property market seems to be becoming more complex.

The media has been circulating stories for so many property-related topics, from underquoting, overquoting, off markets, interest rates, ethical agents, planning and zoning, buyer advocacy, property taxes, investors, the housing crisis etc. The list goes on and on…

We thought we would explore just a few:

If a property is quoted higher than the market is prepared to pay at the beginning of the campaign, it almost always results in buyers excluding it from their list even before they have seen the home. The price someone is prepared to pay for a home can also vary depending on personal needs.

How do we (as buyer advocates) overcome it? Research. This includes around 20 years working in this area, following the nuances of suburb precincts, monitoring prices and communicating with agents.

At the end of the day, quoting accuracy is unlikely to change much. An agent is getting paid by the vendor to sell their house for as much as they can get. Their goal is to attract as many buyers as possible to that property to find at least one person who wants to buy the home.

They want the property they are advertising to be first choice for buyers when considering all the other homes at a similar price point.

Victorian buyers have it better than buyers in some other states of Australia. Take Queensland for example. If a property is scheduled for auction in Queensland, agents do not provide a quote range at all, which no doubt makes it even harder for buyers to estimate value.

Melbourne buyers are in love with the term ‘off market’. They think they are buying something special, and while there are a few genuine off market properties, where agents have matched a buyer with a seller who may not be seriously thinking about selling yet, most of the ‘off market’ sales are not actually that.

One agent last month said they sold 16 properties ‘off market’; however, the majority (if not all of them) sold had sent out ‘blast emails and texts’ to their entire database within the location and price range to advise them of the ‘secret opportunity’!

Then there is the price off markets are often commanding – which is, more often than not, quite high and does not make commercial sense. Of course an uneducated, desperate buyer may come along, but in our experience generally these properties revert to public campaign.

A buyer advocate works exclusively for buyers, and buyers only, to help them work through their property goals, search for suitable options and opportunities, work through all the due diligence (including a detailed price analysis), strategise and negotiate to purchase the property. They are also involved post-purchase, attending final inspections and answering any other queries.

They do not act as vendor advocates and share commissions with selling agents.   These agents are property advocates and dabble in a bit of everything.

We’re not saying that there shouldn’t be property advocates out there, but they shouldn’t call themselves buyer advocates.

The landscape is really about to change in a number of ways as local and federal governments deal with the national housing crisis. It’s all about getting rid of the red-tape and making the approval process more streamlined. We have talked previously about the changes to planning laws for low rise and medium density development in Melbourne, making the process ‘codified’. As of 8 September, this is about to officially filter through to single houses. In simple terms, local council regulations that were above and beyond those of state regulations will be scrapped. For example, in Bayside, you will now be able build bigger (particularly noticeable on the first floor – see image below for reference) and with decreased front setbacks and increased site coverage (was 50%, now 60%). There is also the freezing of NCC proposed housing regulation changes, greater incentives for first home buyers. It will of course take time for this all to filter through – but it will have an effect.

 

We feel the Melbourne market is very mixed at the moment, with different councils tracking better than others. The Eastern suburbs are performing more consistently than Bayside at the moment. Turnkey, well-renovated and new homes are doing well, while those requiring serious work are having limited appeal (mainly due, we think, to increased building costs and the shortage of trades). New prestige apartments for downsizers are selling well, older established smaller apartments are struggling and do not present as the great investment option they once were.

We heard through an agent in the inner north on the weekend that one investment advocate has determined that their clients should pay more now to secure a property so they don’t miss out later this year because ‘they think’ the market could be stronger at the end of the year.

We’ve always been of the belief that the first priority is making sure you’re trying to buy the right property. Then we navigate the conditions that home is being sold in. We have never bought a mediocre home because it’s all there is around, just because the market might go up. And, as yet, we haven’t found anyone with an accurate crystal ball!

 

Some of the bigger auction sales we have seen in recent weeks

• 10 Hepburn Street Hawthorn – quoted $4.8-5.28m – sold after auction for an undisclosed price in the $5.7m’s
• 115 Abbott Street Sandringham – quoted $2.0-2.2m – sold for $2.596m
• 48 Howe Crescent South Melbourne – quoted $4.6-4.85m – sold for vicinity $5.6m
• 29 Chamberlain Street Ashburton – quoted $2.3-2.5m – sold for undisclosed price around $3.3m
• 6 Rockingham Street Kew – quoted $3.0-3.3m – sold for vicinity $3.75-3.85m
• 72b Herbert Street Albert Park quoted $2.6-2.8m – sold for $3.12m

 

 

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

 

45 Coppin Street Malvern East – John Morrisby/Genevieve Hoyle, Jellis Craig

39 Mary Street Hawthorn – Scott Patterson/Jacqui Bendall, Kay & Burton

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

 

Auction Spotlights

Very well renovated period home in a lesser part of Hawthorn.

Flats next door. Church across the road. Street a busy local one.

But this is an architect-designed single level option with great lifestyle options and secure parking. Hard to find.

A really good crowd of about 100 people gathered in the rear yard. Auctioneer Jeremy Desmier looked for an opening bid but didn’t get one, so nominated a vendor bid of $4.9m. “I’ll give you $50,000” a serious party offers. Yet this is declined, $100,000 advances are the only option right now, auctioneer Jeremy states and not too long after the $100,000 is given. A little after again a further advance of $100,000 is given by bidder 2.

“This is audacious”, I think to myself. After a bit more too-ing and fro-ing from these bidders, the property passes in at $5.6m.

The auction is duly shut down and the solid crowd slowly dispersed. All a bit

interesting this auction, given the agent quote was $4.8-5.28m.

The property ultimately sells a short time after for a price almost $200,000 over what it passed in at. The market is hot for the well renovated homes…do they need to be low-quoted too?

 

An original condition yet meticulously maintained brick home on a wide block of approx. 750sqm was bound to attract the attention of buyers.  The home could be updated and become a family home for decades to come. Alternatively, the position, land size with 24m frontage and north rear certainly caught the eye of developers looking to build new (stca). The property had been attractively quoted $2.0-2.2m throughout the campaign.

Over 60 people crowded the sunny rear garden, amongst the fruit trees and rows of veggies, for the auction led by Mark Earle and the Buxton Team.  As usual, bidders were hesitant to make the first move, but just before a vendor bid was placed, the first genuine offer of $2.1m started things off. Bidder 2 and 3 quickly entered, trading bids, never giving bidder 1 the chance to move again. The home was called on the market at $2.2m and continued to move swiftly with a fourth bidder entering proceedings. Only in the high $2.4ms did bids slow down somewhat as some of the parties hit pressure points. The final two parties had to dig deep for the property, trying to outlast the other, varying offers between $500 and occasionally several thousand.  The home eventually sold for a strong $2.596m