Market Comment - Monday 28th February 2011

After the second week this year of more than 1000 sales we can see the market is moving into the balanced market that was predicted in early January. 66% as a clearance rate from the auctions and the balance of 1184 sales being made up from the private sales of last week means we should see price growth average about 1% per month for the next few months at least.

With a relatively solid economic outlook and very few, if any experts predicting a rate rise from the Reserve Bank, we should see a steady market throughout Melbourne, with the exception of “New Estates” We will still see the “amazing” results: I attended an auction in Balwyn on Saturday where a property was announced on the market well within the band of fair and reasonable buying, in fact it was announced on the market at the exact price our property report had said was fair, but two bidders battled out the final amount to 20% over reserve.

This and the other aberrations in the market place do not mean property price are increasing at out of control speeds again. There were plenty of properties that sold exactly as they should. There were a few that sold below what they should have and there are plenty that did not sell at all. A unit in Surrey Hills opened on a vendor bid of $510k, after a campaign quoting $500k - $550k. With only one genuine bid of $521k, the property could not be negotiated and remains unsold.

The market is poised for a solid year, with plenty of people ready to enter the market. Investors under $700k are rife. Property turnover is reasonable and at the moment good investment properties are selling at reasonable prices. As long as the stock levels don’t dry up price growth should remain steady.

Established second home buyers are the more difficult sector to foresee. These people usually have enough money to “overspend” if they like the property enough; however, they are usually the slowest to find the “right” property. The sector between $700k & $1.5M will be the trickiest to negotiate through this year. Stock levels are the tightest for good property and I believe growth will be the greatest in this sector.

The upper end, $1.5M plus will always have more aberrations than any other sector and although these properties are often talked about more than any other, they make up a very small percentage of the overall market. There is plenty of stock, and the agents are saying they have plenty to come. I do not believe the buyers will necessarily keep up. If supply outstrips demand, then growth in this sector will stall.

If you are in the market for a property this year please do not hesitate to call or drop in for a chat. There is no obligation for an initial meeting.

Ian James

Market Comment - Monday 21st February 2011

Finally we reach the first weekend of the year with enough auctions taking place to give a more accurate feel of current market sentiment. 695 auctions were gazetted to take place this weekend, and some quality stock has been offered for sale resulting in a clearance rate of 66% and 1048 total sales for the week.

We said last week that there is a large discrepancy in the grade of homes currently on the market. A proportion of property which didn’t sell last year is stubbornly hanging around, and if you follow the theory that every house has a buyer providing it’s offered at the right price, we can only assume many vendors are still either unwilling to ‘meet the market’ or hanging on for their ‘wish price’ as there is no lack of buyers wondering through open for inspections.

An internet search of homes for sale may bring up large numbers of listings, however when you filter the results down as we do each week for our clients, there is only a handful of property that really ticks the right investment criteria. The bottom line – clearly evident from today’s bidding experience which produced some bullish results – is that good property is selling for good prices, under healthy competition. However there is enough stock hanging around to keep clearance figures lagging below the 85% rate recorded this time last year

Assessing – quite correctly - that today’s results would stretch budgets, we took advantage of negotiating a number of properties prior to auction this week. However for those listings for which this was not possible, you could be mistaken believing we were back in 2007 pre GFC boom times with bidders clearly showing bullish rather than bearish qualities.

30 Clyde St, Glen Iris – quoting 625-675, was a classic single level modern town house perfect for those downsizing. The event opened on a genuine bid of 630K. The next bid was 750K which placed the property directly on market – precisely where we had assessed its value. With a third bid of 800K a bullish battle ground had been set. In a deliberate play of confidence, the winning bidder jumped upwards in uneven amounts ranging from 5 – 10K until the property had been secured over 100K above reserve for 860K. The winning bidder was a downsizer who seemingly had no limit to the budget they were prepared to spend. Four bidders took part

Meanwhile a few streets away unit 5/6-8 Beaconsfield Rd, Hawthorn East followed a similar bullish game plan. A beautifully renovated Art Deco two bedroom apartment. The auction opened at 630K. It was swiftly followed with a bid of 725 K, and then 800K, before things slowed to a more moderate place. Announced on the market at 810K the bidding managed to push the price over mid 800K. We had previously assessed the property to be worth around 850K, therefore the final selling price of 855K was no surprise. five bidders took part.

A more modest, but by no means small result was achieved at 24 Douglas St, Rosanna. Quoted in the ‘mid 600K’ and attracting four bidders . It opened on a vendor bid of 600K and had a slow start before the competition really gained pace. Announced on the market at 730K the price pushed another 20K before the hammer came down at 751K.

Next week there are near to 1000 homes going under the hammer, and with the RBA still giving out the clouded message that interest rates are not likely to climb in the immediate future, and the media seesawing between ‘boom and bust’, expect a fairly balanced market – slightly in favour of the vendor – to start to emerge .

Please do not hesitate to call if you are contemplating a property purchase anytime soon

Catherine Cashmore & Ian James

Market Comment - Monday 14th February 2011

The clearance rate this weekend gives little indication of the overall performance of the market. There were 376 auctions gazetted to take place, however results from only 326 were reported to the REIV - 206 sold equalling a clearance rate of 66%. This may not sound great until you assess that most properties are selling private sale – 632 this week - and with a large number of results missing from the calculations, it’s impossible to draw any firm conclusions. Next weekend 685 properties go under the hammer, before the first super Saturday of the year when close to 1000 properties will be auctioned.

The mixed bag of results reported proves the market is still finding its pace after the Summer break – some of this is down to the quality of stock. Due to the high supply last year, vendor’s that couldn’t sell, & vendors with unrealistic expectations, have relaunched homes onto the market with hope conditions may have changed enough to inspire a fresh glut of interest. In some cases this has worked, however buyers are choosy about the properties they assess and the dollars they choose to spend.

There is however no doubt that buyer enquiry rate has risen with confidence returning after the State and Federal election and the RBA’s spate of 6 interest rate rises, but this doesn’t mean we’ve entered bullish conditions. There is an evident preference amongst buyers to purchase in private sale negotiation rather than stand boldly at auction and risk being pushed to uncomfortable figures. Many of the auctions we attend commonly result in passed in negotiations and on the flip side, vendor’s are still reluctant to ‘meet the market’, preferring to hang out for their ‘wish price’ than sell 10K or 20K less.

As for those results that don’t get reported, one such example was Saturday’s auction at 4/47 Spray St, Elwood. It’s a classic 2 bedroom updated apartment in a location that traditionally attracts a lot of demand. However you’re unlikely to find any mention of the auction in the paper because it never took place. Simply not enough buyers turned up to run the auction. This is not an unknown occurrence and each week will typically happen to a small handful of listings, however to see it happen in an area which usually inspires so much attention was surprising. I did wonder if the floods last week had dented the reputation of Elwood in buyer’s minds, and if so, I doubt it will be a lasting situation. I was told by the selling agent 4/47 Spray st, would now be withdrawn from the market and offered for rent.

In contrast 5/10-12 Milton St, Carnegie attracted a fair crowd of onlookers and potential bidders, A small 2 bedroom villa unit in a block of 6 with plenty of ‘value add’ potential! The auction was opened quickly and strongly by a confident buyer at 485K. 4 other bidders joined in and in quick succession took the price upwards in 10K increments until it was announced on the market at 535K. The unit finally sold under the hammer to a very happy young couple at $540,500. A solid result for the area.

New stock is not coming onto the market in any great force, and as the overhang clears, we’re likely to see evidence of modest rises. As competition increases around fewer listings it will put buyers under pressure. Over the coming few weeks, negotiation is going to be the real key to securing the best deal.

Don’t hesitate to call or email to make a time for a no obligation meeting to discuss how we can assist you..

Catherine Cashmore & Ian James

Market Comment - Monday 7th February 2011

Our first thoughts are for all the families who have been affected by this weekend’s rains & flooding.

As our hearts have gone out to QLD recently, we have all dug deep and sent them our wishes to help them recover and rebuild from such a large disaster.

We also hear & feel for the people of Sydney who have just got over a long heatwave, while this Monday mornings news shows bushfires in WA, with many house gone already!

And all this on the 2nd Anniversary of Black Saturday, which took many of our residents & left many without homes, for which a large percentage are still waiting to rebuild..

Our office was slightly affected – all replaceable & repairable, business still as usual.

The real estate industry was extremely lucky over the weekend. Had we experienced such dire weather conditions on a busier weekend later in the year, there would have been a fair number of auctions cancelled or at the very least affected by the immense gush of water which turned streets into rivers. However there were only around 180 auctions due to take place, and thankfully most of those were in areas not affected by floods. Despite the wide spread deluge which bought traffic to a standstill, all opens and those very few auctions were well attended.

The clearance rates & results will begin to show a clearer picture in approx. 2 weeks when more property comes available & more sales occur, while at this point we are still seeing a handful of properties that didn’t sell prior to Christmas giving unrealistic results. Time will tell if Supply will outweigh Demand!

The passion for property and land has never been more evident than witnessed over the past few months during the erratic weather. Despite all the destruction, the psyche is to re-build bigger and better, rather than retreat in fear of future disaster. Population growth stimulates supply and demand, and is the main motivator for our robust market. However the passion of ordinary Australian’s to own their own piece of land is another factor which can’t be ignored, and this also plays into our market dynamics. SO for the time being at least, it’s onwards and upwards.

If you are after more property info or would like to come in for a no obligation meeting, don’t hesitate to call or email.

Sam James & Catherine Cashmore