JPP Buyer Advocates

Market Comment - Tuesday May 10th 2011

2011-05-10T15:33:00.000+10:00

If anyone in the market place believes that First Home Owners will again be a market force because of stamp duty savings the Victorian State Government is offering, they are seriously deluding themselves.

Firstly, the stamp duty savings will count for anyone that has already purchased and settles after 1st July this year. Therefore there would have been a rush now! Average settlement is 60 days putting us past 1st July.

Secondly, the savings on a $565k (median house price in Melbourne) home will be just over $5700. As this is a reduction in Stamp Duty and not money that would be seen as a deposit, the banks will most likely not leverage this money which they did with the First Home Owners Grants. When $30,000 was being given to First Home Buyers, the banks looked at this as the equivalent of a deposit and lent accordingly. If you were borrowing 90% loan to value ratio, then with an extra $30k, if you could afford the repayments, the bank would lend you up to an extra $300k. This would not be the same with a reduction to a fee.

As far as waiting for further cuts through for the next 3 years in order to reach the full savings of nearly $14,500, the market will have most likely moved further than this. The best time for first home buyers, or anyone else for that matter, is as soon as they can reasonably afford to. Buying property is long term: 5 – 10 years.

As a first home buyer, if you cannot afford to purchase where you want to live, consider renting where you want to live and buy an investment property where the tenant will assist you to pay off the mortgage. Or, and this is the scary line for all you mums and dads, stay at home longer, and buy an investment property. Why don’t you join forces with your parents and buy a property together.

The sooner you get into the property market and the longer you are in the property market, the more money you will make.

If you are considering a purchase why don’t you drop in for a no obligation chat.

Regards

Ian James

Market Wrap - Monday 9th May 2011

2011-05-09T12:06:00.002+10:00

Market Wrap

We’re currently in what I’d term an ‘opportunistic’ market. An agent today quoted another phrase which I thought summed it up well – an ‘honest market’

We witnessed five auctions this weekend with only one property selling ‘under the hammer’ All were quoted ‘conservatively - all had multiple bidders; however the only one to sell without negotiation was a property that reached its reserve within the quoted range. A percentage were successfully negotiated after sale, however it’s clear vendors still have their sights set too high and price quotes aren’t reflecting true vendor expectation.

Therefore the fight between buyer and seller continues, resulting in a perfect negotiators playing field. Despite sentiment being cautious, there were good numbers at all the auctions we attended this weekend and the majority had multiple bidders competing. The press is reporting bumper stock; however the figures don’t match the online data and are dubious at best. A suburb by suburb breakdown shows most of this stock is located in the outer suburban areas where demand is naturally low, or in newly developed high rise apartments which are un-appealing to owner occupiers. Quality listings will always attract competition, however in a flat market, we/re able to take advantage of some great opportunities.

23 Vunabere Ave Bentleigh is a classic 3 bedroom clinker brick house on 754 sqm of land. Quoting 790-870K the auction was fairly well attended with a lively atmosphere. Opening on a genuine bid of 650K – (a good way from the quoted range) – the agent ‘cut to the chase’ with a vendor bid of 770K. With four bidders competing, it was a fairly swift auction. At 855K bidding slowed, and the agent went inside for a ‘not so brief’ half time break. I can only postulate he was trying to persuade the vendor to put the property on the market, because after what seemed like a good 7 minutes, he eventually returned and gave no indication we were even close to reserve. The auction pushed up a little further before passing in at 892K. Failing to get any further movement from the buyer via negotiation, the vendor finally agreed to sell at the passed in price of 892K

44 Holloway St Ormond is a large corner block of land with an older style 2 bedroom property, and a vendor who was prepared to ‘meet the market’ The quoted range was 790-840K. Without even asking for an opening bid, the agent took the lead placing an immediate vendor bid of 790K. Asking for rises of 10K someone finally offered 800K. With seemingly no more interest the agent took his break to meet with the vendor. A few moments later he returned to announce the property ‘on market’. This revived things somewhat and going up in 1K moves, three other bidders decided to get involved. The price didn’t get far before the property sold under the hammer for 805K

36 Mortimore Bentleigh was another property that had been quoted conservatively but certainly didn’t have a reserve to match. A smart, modern, 5 bedroom family home, attracted a large crowd and 3 active bidders. Quoting 1.05-1.15Mil the auction opened on a vendor bid of 1.05Mil. When there was seemingly no movement from the crowd, the agent had to place another vendor bid of 1.1Mil before the action started. With healthy competition the price gradually pushed passed the quoted range. One buyer asked 3 times if the property was ‘on market’, however even though he had a pre-set reserve, the agent gave no indication market level was even close. At 1.23Mil the buyers dug in their heels and it passed in later to be negotiated for 1.3Mil

2B Evelyn St, Bentleigh is a small 2 bedroom unit the McKinnon. Quoted at 500-550K the agent struggled to get the ball rolling before finally placing a vendor bid of 500K. Only 1 bidder was prepared to show their hand by offering a bid of 510K. However with no competition the property was passed in to later be negotiated and sold for $535,000.

13 Maskell Street in Brighton – a luxury 4 bedroom town house quoting 1.7Mil + – presented the auctioneer with the unfortunate task of conducting proceedings next to a frequently traversed train line. Despite the noisy location, the auction was well attended with 3 bidders willing to take a role. Opening on a vendor bid of 1.7M the pace was painfully slow. The auctioneer had to place another vendor bid of 1.75Mil before the buyers got serious and the price struggled to 1.825Mil. Passing in at this level the property was later negotiated successfully to be sold at 1.875Mil

Catherine Cashmore

Market Comment - Tuesday May 3rd 2011

2011-05-03T13:21:00.000+10:00

The market is changing again. The upper end over $2M is remaining skittish. Good properties will sell but the competition is much less than it has been for the past twelve months. It is truly at negotiators market at this level. This is not a market for the feint hearted. However, it is not a market to say “no” to everything the vendor offers. The trick with negotiation is to work out when to say “yes”

Negotiation in its purest form is RISK vs REWARD. Knowing when to make an offer and when to do nothing can mean the difference between securing the property for $1.95M and paying over $2M. It can also be the difference between securing the property and missing out.

Before making any offers at all, you need to set your game plan. This is more about setting goals and objectives in certain time frames rather than a dollar amount. We may decide that the asking price is well above what we are happy to pay, however we still like the property enough to purchase it. This means we need to take a long term, higher risk strategy, rather than continually increasing our offer in order to meet the expectations of the vendor. Unfortunately this can mean missing out to someone who offers only slightly more than you do.

Alternatively, you may be happy to pay a price that the vendor is happy with but the property is going to auction. You need to use a strategy that will secure the property quickly, rather than trying to save money.

You need to take into account the level of experience the selling agent has, the time the property has been on the market, the market itself and even the method of sale the vendor is using. Weighing all these factors will assist you to making good decisions.

Negotiation directly with experienced real estate agents is not for everyone, however a well thought out plan will give you a much better chance of success.

If you need help purchasing a property please feel free to contact us.

Ian James

Market Wrap - Monday 2nd May 2011

2011-05-02T12:42:00.003+10:00

Market Wrap

We have now segregated our market wrap from our market comments.

From now on each Monday morning you will see the statistics that are available and some of the auctions and properties we have attended over the weekend.

On Tuesday we will now write a more comprehensive market comment based on emerging trends and issues fundamental to buyers (and sellers) of real estate in Melbourne

SOLD under the hammer

4/13 Hawksburn Rd, South Yarra – a well located 2 bedroom apartment quoted at $430-$480K. This auction attracted a lot of interest with 5 bidders in all willing to show their hand. The agent didn’t have to work too hard to get the ball rolling - opening on a genuine bid of $430K, the bidding progressed confidently in 5K increments until it was announced on the market at $480K. At $522K - just as it seemed the steam had gone out of the bidding and all interest had been exhausted, the initial bidder who opened the auction at 430K came back into the game jumping to 525K. With a final squeeze of the remaining participants budget, the property sold under the hammer for $532,500.

At the other end of the market 9 Marlborough St, in Caulfield also attracted a good degree of interest. An un-renovated single fronted 3 bedroom Edwardian with plenty of room to add value, was a perfect acquisition for someone trying to get a ‘comparatively’ affordable foothold into this $1.350M median location. Opening on a vendor bid of $730K 3 bidders took the challenge – albeit tentatively – pushing upwards in increasingly small increments of 10K, then 5K, until it was announced on the market at a pre-arranged reserve of $810K. With 2 bidders still in the game, the house sold under the hammer for $827,500.

8/94 Lewisham Rd North in Prahran was perfect suited for first home buyers and investors alike. A one bedroom renovated apartment quoted at 350-380K attracted a crowd of around 50 onlookers, and surprisingly 5 bidders. Opening on a vendor bid of $350K, the price shifted slowly upwards in 5k increments which were gradually broken down until it was announced on the market at $384,000. It sold under the hammer for $401K – a good property gets a good result for both buyer and seller.

Passed in Vendor Bid

49 Jupiter St in Caulfield South is a 2 bedroom renovated art deco located in a street littered with million dollar plus sales. Judging by the size of the crowd attending, and the number streaming through the open prior to the auction, there seemed to be plenty of genuine interest. However after a relatively long pre-amble the agent failed to inspire anyone to raise a hand. Quoting $660-730K, the auction opened on a vendor bid of $660K and after much effort, ended up passing it in at this level.

8 Loller St, in Brighton also failed to attract a bid despite a large crowd attending. However the auctioneer valiantly worked hard for about 20 mins encouraging buyers to show their hand, before admitting defeat and passing the property in. Quoting 1.150,000 – 1,300,000, he opened on a vendor bid of $1.2 Mil. He followed this with another vendor bid of $1.250 before passing the property in.

Sold via negotiation

63 Grosvenor St, Balaclava is always a location that attracts a lot of attention. Considered one of the best streets in Balaclava the auction was extremely well attended. Despite the beautiful weather, the agent chose to conduct the auction inside which only heightened the stress for those preparing to bid. An unusual architect designed 3 bedroom townhouse stood this property out from the crowd and 3 bidders were subsequently inspired to raise a hand. After announcing the quoted range was 950K+ he opened on a vendor bid on this number. After a little effort he finally encouraged all interested parties to raise a hand. Going up in increments of 10K however obviously wasn’t fast enough, or close enough to the reserve for this auctioneer. After only two bids, he decided to place another vendor bid at 1Mil (even though it looked as if the bidding would get to this level on its own.) At 1.050 Mil – 100K above the price he quoted initially - and on not yet on the market - he went to have a chat to the vendor, later returning to proudly announce that the reserve had ‘plummeted!’ and we were now ‘very’ close to going on the market!! However another 15K obviously wasn’t good enough for the newly reduced reserve (!) and the property passed in at 1.065Mil to later be negotiated with the winning bidder at 1.1Mil.

Ian James and Catherine Cashmore

Market Comment - Monday April 18th 2011

2011-04-18T15:38:00.000+10:00

It was great to read the excellent article from Chris Vedelago in Sunday’s Age. We have written many times since 2007 about clearance rates and what they actually mean. VERY LITTLE. If you have a voluntary system where agents are averse to letting the public know when they are not selling properties under the hammer, you can never expect to get an accurate picture of what is happening in the market place.

The majority of the properties we purchase at JPP are advertised for public auction. That is because about 75% of what we purchase is within about 25kms of the CBD. On an annual basis, JPP would purchase around 20% - 30% of the properties we buy, actually under the hammer during an auction. Of the seven properties we were going after last weekend, three were purchased Thursday & Friday, one passed in and was negotiated at auction on Saturday and two were purchased under the hammer. We were outbid on the other one. We purchased 2 from 7 under the hammer yet all were advertised as sold at auction in the papers.

The Herald Sun’s Saturday headline “Bubble Bursts”. To look at a very small segment in the quietest quarter of the year and say the bubble has burst is a beat up. There was 8.7% growth between the same quarter in 2010 and now. So over 12 months, and this is still a small time frame, we can see the market is still very resilient. Are we expecting to see growth at 20% this year, of course not! But the top third of suburbs in Melbourne will still perform at about 8% or so.

Investors are coming back into the market but will not spend money on rubbish. Smart investors are always buying when the market is flat. A property that is poorly presented, overpriced, or has a badly managed campaign may not only struggle to get a reasonable price, but may not sell at all. Most investors are looking for long term capital gain. This means they look for properties that have the best attributes that cannot be changed, such as location, good orientation and easy access to rail transport and public amenities. Investors will still pay fair money for these properties.

Population growth again was in the papers last week. And although the population growth is slowing, it is still substantially outperforming numbers of properties being built. Whilst the Supply continues to outweigh Demand, property prices will continue to rise. It is not a guess, nor is it a real estate agent talking, it is simple economics.

Is it easy to know exactly what the market will do? Of course not, if anyone knew the future, Powerball would be very boring!!

If you are considering a purchase of a property please feel free to give us a call or drop into one of our information nights

Ian James

Market Comment - Monday April 11th 2011

2011-04-11T10:29:00.002+10:00

It’s very hard to go a week without numerous reports hitting the headlines suggesting a possible market crash. Despite facts being stressed concerning our population surge and shortage of ‘useable’ housing, a minority find a public voice to beat the drum of impending disaster. No market or investment is risk free, which is why it’s important to protect and minimise risk through a carefully strategized plan prior to making any financial decisions. Weekly we witness buyers bidding at auctions with the heart rather than the head, often paying above market value to secure the house of their dreams. However the market we’re experiencing at present is a perfect ‘negotiators’ market’, and with a little patience and the right advice, its possibly the best market to step into before we start to see prices creep upwards once again as stock diminishes as it always does during the winter months.

In a balanced market, it’s important for vendors to keep expectations at a conservative level if they’re to be assured of a successful result. Agents are reporting good stock for the next month, however as it diminishes we’re likely to see competition push property prices higher (all be it at moderate levels), as our inner and middle ring suburbs suffer once again from low supply and continuing high demand.

However anyone thinking the market is about to crash would have done well to accompany us on the auctions this weekend. We attended 5 auctions – all had huge crowds, multiple bidders, and achieved above average prices which proves we’re a long way from the doom and gloom scenarios often spruiked by the bubble ‘naysayers’. Considering there has been a lot of stock on the market of late, it’s no surprise to see a plethora of second home buyer’s either upsizing or downsizing, as many sell before they purchase, and this is the main force behind

However although some of today’s results proved positive for a number of vendors, there is still plenty of stock on the market for buyers to take their pick - and with good negotiation skills - healthy opportunities are there to take advantage of.

3 Central park Rd, Malvern East – Is a beautiful 5 bedroom Edwardian house on a corner block of 925 sqm. However with a heritage overlay it was only ever likely to attract interest from home buyers rather than developers. A crowd of at least 150 people attended this auction. Quoted at 2.5 – 2.7 Mil and with such seemingly healthy interest, the auctioneer didn’t waste any time in asking for an opening bid right at the top of the range. He many have unwittingly priced out a few bidders who were hoping to start at a more conservative figure, and when no one offered to step forward, he placed a vendor bid of 2.7 Mil and invited jumps of 20K increments.

A good 7 mins later and almost looking as if it would pass in with no interest, two bidders stepped up to take the challenge. The price made its way to 2.82Mil before the action ceased. The pause to go inside and talk to the vendor’s failed to see it placed on the market despite the price being a good 100K above the quoted ‘interest’ level. The agent - giving the well-used excuse of what a hard decision it is for the owners to make a choice after 33 yrs of residing in the home, and assuring the crowd it wasn’t far from being placed ‘on market’ - enthusiasm diminished. The property passed in, only to be sold later via negotiation for 2.86 Mil. (Price undisclosed)

Just round the corner – 28 Wheatland Rd is a property that couldn’t quite match the prestige of Central Park Rd, but attracted an equally large attendance. This 3 bedrooms, 1 bathroom, un-renovated Edwardian, on 601 sqm of land, had a quote range of 1.4 – 1.5Mil. The opening bidder, who had taken time prior to the auction to question the auctioneer openly during his pre-amble on the risks of purchasing a property in case it was vandalised prior to settlement (!) - tried his luck at opening the event well below the quoted range at 1.1Mil. He was quickly outbid by the agent with a vendor bid of 1.35Mil, and from there on 3 bidders took the challenge pushing the price upwards until it was placed on the market – without pause to consult the vendor – at 1.45Mil The pace didn’t slow, and the house sold under the hammer for 1.490 Mil. (For once within the quoted range!)

29 Carlton St in McKinnon quoted at 1.020 to 1.120 Mil – is a beautifully renovated Californian Bungalow, on 460 sqm of land with 5 bedrooms, and therefore was always going to attract a large crowd of home buyers. Situated in the heartland of the McKinnon School zone – a very tightly held neighbourhood with little stock - the crowd easily bordered on 200. There were four buyer advocates in attendance, none of which were successful for very good reason. Opening on a genuine bid of 1.1Mil, this auction literally ‘flew’. In no time at all the property was placed on the market at 1.25Mil however that wasn’t the end. How any valuer will price this one is beyond me. Three buyer advocates didn’t even bother placing a bid as two buyers took the bit between their teeth to push the result way passed market value to a whopping result of 1.417 Mil. The highest price achieved so far this year in McKinnon.

Catherine Cashmore

Market Comment - Monday 4th April 2011

2011-04-04T11:21:00.001+10:00

The market is beginning to tread water. Coming into Easter we still have a huge amount of property on the market which has been slowly selling when the vendor meets the market. The REIV has issued the clearance rate at 61% but this will almost certainly drop into the 50’s when the 117 auctions with no result are tracked down and added to the clearance percentage.

The market is fragmenting. Over $1.5M is beginning to soften. There are many properties still on the market that have failed to sell at auction and seemingly, no shortage of vendors still happy to try their luck. Whilst the best properties are still selling with multiple bidders, the properties that are overpriced, or simply presented at their best, are struggling to sell. This leaves more supply than demand and vendors in greater difficulty than they have been in to sell for the past 6 months.

The $400 - $1M market is by far the strongest. This is the investors’ market place of choice. This segment has multiple bidders going after multiple properties. This is the strongest performing segment over the past decade and should hold the least risk for investors going into the next decade.

We have seen the Australian Bureau of Statistics come out with the population statistics for the year ending June 2010. For all the naysayers who believe the housing market is about to fall into a screaming heap and drop 40 - 60 per cent, just have a look at the population increase in Melbourne and the HIA is saying the building of residential property is slowing. Melbourne’s population has increased 605,000 people since 2001. This is the fastest growth in the country, and faster growth than any other time in history.

With the supply of dwellings falling and the population increasing, rents will go up, property prices will go up, and our children will find it hard to purchase their first home, anywhere but on the fringes of the CBD. It will be up to our state and federal governments to assist these people, however it will be up to market forces to determine what a 2 bedroom apartment 5 kms from the CBD will be worth in 10 years’ time. In my opinion it will be easily over $1M

We can talk about the US housing crisis, where their unemployment has taken a beating, where their home loans are “non-recourse” and where they built a ridiculous amount of homes and then sold them to people who could not afford them, but none of this has occurred in Australia, specifically Melbourne.

This is not like a carbon tax, where you can like it or not. You can believe it or not, you can vote for it, or as in our case you can not! This is market forces on an essential element of our natural lives. Breathing, eating and then shelter. It does not matter whether you rent or wish to buy, you need a roof over your and your families head.

Property prices will fluctuate over short periods of time, however over the long term we will continue to see property prices grow at approximately 7%-10% throughout Melbourne. The top third of suburbs will be at 9% - 10%

If you are considering purchasing property please do not hesitate to call us or drop in for a chat.

Ian James

Director

JPP Buyer Advocates

Market Comment - Monday 28th March 2011

2011-03-28T10:29:00.000+11:00

Did anyone expect anything different from this year? Clearance rates in the 60’s but sales still consistently over 1000 per week according to the REIV. These numbers are down about 15% from the unsustainable levels of 2010 but only about 8% down on 2009. The difficult question to answer is what will this do to price?

On many occasions turnover numbers give a good indication of how strong the market will grow. With sales numbers down on the last two years, I can still foresee growth, but down from around 10% to be closer to 8% for the top third performing suburbs in Melbourne. As less people purchase property and the population continues to grow, tremendous pressure will be put on tenants paying rent. Whilst rental returns growth has slowed over the past couple of years, (mainly due to the rapid rise in purchase prices, not a slowing of increased rents if interest rates rise), and growth slows marginally, landlords will still be looking for return on investment. Pressure on fewer property purchasers means higher pressure on rental growth.

There are several reasons why the purchasers have become a little skittish this year. We have had a year like no other that I can remember. Natural disasters have hit both Australia and our region; there has been pressure on the global economic climate caused by the lingering effects of the GFC throughout the European community regarding sovereign debt issues. The Middle East has had its fair share of turmoil already this year, with potentially more to come. And then there is our nation’s leaders: I don’t think anyone is doubting that the “Greens” are holding a considerable amount of power in Canberra these days, not to mention the “three amigos”; the three independents. All of these factors lead to uncertainty. Uncertainty will always affect our property market.

As far as the natural disasters are concerned, the amount of rebuilding needed both here and abroad, will actually stimulate our economy in the short to medium term. This will lead to labour shortages and wages growth. Western Australia is already starting a huge advertising campaign to bring in skilled migrants. If there is enough pressure in this area, the Reserve Bank may put interest rates up again. And if we increase our labour market by allowing immigration to increase, which we will have to do, we will have more trouble housing everyone.

The “price bubble” argument cannot be sustained whilst we have inordinate and necessary population growth. Even the biggest sceptics around would have to agree, that with our current and expected population growth, and our current levels of housing starts, there will continue to be a shortage of useable property for many years to come.

If you are considering a property purchase please feel free to call us for a chat.

Ian James

JPP Buyer Advocates

Market Comment - Monday 21st March 2011

2011-03-21T12:31:00.000+11:00

So far this year the auction clearance rates are tracking exactly as we predicted. With well over 1100 sales for the week reported to the REIV, split fairly evenly between auctions and private sales, there was a clearance rate 66% according the REIV. We attended plenty of auctions on the weekend and with a few exceptions nearly all sold for what we thought they would.

This clearance rate represents a very normal market. One here in Melbourne that would be slightly in favour of the vendor and this is usually about as balanced as it gets. However, there was a dramatic drop in available stock last week. The Herald Sun reported on Saturday that the properties on the market in Melbourne and its surrounds dropped from 8904 to 6902, however this is during a week with a public holiday so we expected some drop anyway.

What is starkly obvious about Melbourne’s inner suburban market at present is most bidders appear to be second home buyers, or downsizers. There are few, if any, first home buyers able to compete - and this is clearly evident when surveying the crowd at auctions. However, we should see a rise in the first home buyer market when the stamp duty cuts kick in during June. This is bound to cause a temporary boost in the market and purchasers looking at property which appeals to first home buyers would be wise to secure prior to this date.

42 Fairway Rd, Doncaster attracted the most attention today. With well over a hundred in the crowd this 4 bedroom house located on the edge of a golf course managed appealed to 6 hungry bidders. The quoted range was 680-750K, however unlike the other sales today, it was announced on the market within the range at 740K. With Frantic back and forth ‘tit for tat’ bidding, it finally sold for 770K.

52 Eastern Rd, South Melbourne is a renovated Georgian style double fronted property with some unique qualities ensuring it stood out from the crowd. The agent had been quoting 1.4Mil+ but expectations were obviously a good deal higher! The auction opened on a genuine bid of 1.410 Mil and in front of a crowd of approximately 150 people, two other bidders took their chances with the price moving in steady increments until it was announced on the market at 1.615 Mil (some 200K above the price quote). The property sold for 1.755 Mil. With a result 140K above reserve, the vendor was obviously very happy!

If you are considering purchasing property soon, please feel free to make an appointment and come in for a no obligation chat.

Ian James

Market Comment - Tuesday 15th March 2011

2011-03-15T10:43:00.000+11:00

With the Melbourne Labour Day weekend, the market was extremely quiet. Only 218 gazetted auctions and again a clearance rate in the high 60’s. With the next two weekends we should see sales via auction and private treaty climb back well over 1000 per week.

Obviously most news across the weekend has been overshadowed by the natural disaster in Japan. Whilst we have many friends and clients in Japan that are safe, JPP wishes to convey our deepest sympathies for those affected by the devastating earthquake and subsequent tsunami.

Japan is the third largest economy in the world, and Queensland’s largest export destination. There will be a ripple effect throughout the world as Japan comes to terms with the enormity of the devastation and then the challenges of the subsequent clean up. Whilst exports may be down temporarily, the clean-up and rebuilding will need massive amounts of raw materials. This will most likely make up for any short term downturn in Australia’s economy. Like the GFC, Australia’s economy may slow marginally, but house prices are unlikely to be affected.

Property prices in Melbourne are still finely balanced and in my opinion will stay slightly favouring the vendor for most of the rest of the year. If anything property prices may go up marginally better than 8% -9% if there is not enough stock on the market.

If you are considering a property purchase soon, please do not hesitate to contact us for a no obligation chat.

Ian James

Market Comment - Monday 7th March 2011

2011-03-07T10:28:00.000+11:00

As we can see from the weekends 66% clearance rate, the market is continuing its balanced state. This means we can assume to see a very small consistent growth that will be imperceptible on a weekly basis but at quarter’s end will be close to 3%. After 6 months the $500k properties you can purchase now will be pushed to up towards $525k - $535k. It will not be enough to get the bank to refinance, it will not be enough to sell and make a profit: stamp duty, solicitors’ fees and selling fees would easily eat up any profit on that short a term. However, anyone thinking property prices will be 3%-5% lower by September will be sadly mistaken.

The Herald Sun have said there were 8612 properties up for sale or auction in Greater Melbourne. This is down from the previous week of 8649. For the prices of properties to begin to retract, we will need to see clearance rates in the 50 – 60% bracket and we will need to see the total numbers of properties on the market increase significantly.

For those that follow the clock theorem, I believe we hit 6 o’clock at Christmas. We will see reasonable growth through the first half of this year and an accelerated growth in the latter half of this year for Melbourne’s top third of performing suburbs. Around the middle of the year we will see whether the governments first home buyers discounted stamp duty will reinvigorate the “New Estate” sector. I am uncertain as to whether this will be significant. Developers are still not being well funded as banks have better options in the average mum & dad borrowing 80% for a standard house. Finance is still in short supply worldwide and banks are continuing to mitigate risk.

There were some exceptional results on Saturday. 5 Gaynor Court sold under the hammer $2.743M. This was after a third bidder entered the fray after arriving just before the auctioneer wrapped up proceedings at $2.685M. The third bidder asked the auctioneer what the last bid has been and the auctioneer made a good natured comment that $2.7 would be a good bid and seemed rather surprised when he received a positive response. The bidding went back and forth but was finally won by the original bidder.

The lower end of the market, $400k - $700k is not getting ridiculous prices, however it is getting good results. 3/11 Selwyn Street Elwood sold over the weekend at $450k. This was as predicted as was 12/7 Dickens Street Elwood. We estimated this to be a low to mid $500’s property and it sold for $541k. No surprises here!

If you are considering purchasing a property this year why not come and have a chat. There is no obligation and the first meeting is free.

Ian James

Market Comment - Monday 28th February 2011

2011-02-28T10:39:00.000+11:00

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

2011-02-21T10:08:00.000+11:00

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

2011-02-14T10:26:00.000+11:00

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

2011-02-07T13:27:00.002+11:00

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

Market Comment - Monday 31st January 2011

2011-01-31T12:13:00.000+11:00

The 2011 real estate market has opened. Like all years, it will begin like a huge locomotive. It will slowly gain traction, and then begin to pick up speed before its momentum will carry it through to Easter. The REIV have reported a 54% clearance rate when taking into account all auctions since 20^th December 2010. This weekend’s clearance rate was 51% however out of the 126 auctions, 48 have not been reported.

Whilst there were substantial swings and roundabouts throughout last year, as predicted, (Overall, 2010 will bring us a fresh round of record prices. I think we will see at least 10% - 15% upward movement in the inner city and established suburbs around Melbourne – market comment 14/12/2009) the house price median according to the REIV increased by 11.4% from December 2009 – December 2010 and apartments for the same time moved 9.3%. For the first time ever, the median house price of Melbourne exceeded $600,000.

For an opening weekend there was a good result in Highett on Saturday. A unit expecting high $400’s went on the market at $500k and sold at $506k. Whilst I do not expect this property to set a benchmark of any kind it was a good result for the vendor.

Floods: Do not expect anything but political point scoring to come out of the Australian floods. Usually, after a natural disaster of this scale, the economy dips marginally and then comes back strongly as the government spends the money on rebuilding.

Interest rates: I cannot see any movement this month. All other bets are off. I believe there will be one rise between now and June, and it will depend on how much the banks pass on as to whether there will be more. The more interest rates move, the more pressure there will be on homes in “New Estates” and rises in interest will put pressure on landlords to raise rental rates. This will actually have an effect of raising prices in inner city suburbs not lowering them.

Finally, our overall economy is still booting along nicely thanks to China and it also looks like the US is slowly emerging from the GFC, however, do not be complacent about what is happening in the Middle East. Egypt controls the Suez Canal and a substantial amount of oil is carried by ships through this canal every day. If it were interrupted and ten to fifteen days were added to the shipping time to go around, then this could potentially slow world economic recovery. This may have an effect on interest rates or exchange rates and then by extension, on property prices.

Anyone considering a property purchase this year should be looking for expert advice. Please feel free to give us a call or drop in for a chat

Ian James

Director JPP

Market Comment - Monday 24th January 2011

2011-01-24T12:16:00.001+11:00

Welcome back to our weekly market comment series. I hope each and every one had some sort of break over the festive season and are ready to get back to work in 2011.

Property affordability is again in the News. Demographia International has released a report ranking 325 cities around the world on property price median vs. median income. As has become usual, Australia has been on almost the very bottom of the unaffordability lists. Sydney, Melbourne, Adelaide and even regional centres such as Geelong and Ballarat get a mention. The study looked at cities in USA, Canada, UK, New Zealand, Ireland, China and Australia.

China, (Hong Kong) was by far the most unaffordable city, followed by many of the Australian cities then the rest were spread out over the 325 places. If we also look at whose economy has faltered during the GFC, we see that all but China and Australia has dropped prices dramatically over this period. Both Australia and China did not.

I think there is a good point that comes out of this study. It shows that the release of land on the fringes of the city should be made more affordable and easier to build on for the young first home buyers who wish to own their homes. However, the release of this land would not negate the want of most people to live closer to the CBD and as such continue to push prices up in the 0 – 20km radius of Melbourne.

The market this year will most likely be more stable than last year. I believe we will see a far more restrained growth, without the massive climbs and falls. The market in the more established areas of Melbourne should grow in the vicinity of 7% – 10% whilst I can foresee the outer fringe, “new estate” areas potentially showing a correction in the recent upward surges they have shown thanks mainly to the First Home Owner Grants of late

At JPP we look forward to assisting you with your future property needs. Please feel free to give us a call or drop in for a chat to talk about your next property purchase.

Ian James

Market Comment - Monday 13th December 2010

2010-12-13T11:17:00.000+11:00

Channel Nine news ran with a lead story on Saturday night, saying the market in Melbourne has definitely faltered and talked about the bubble bursting. The “expert” they interviewed was a reporter from the Herald Sun. The talk of only 60% clearance rate shows the market in Melbourne is lost!!

There were more auctions held than any weekend since March 2008 and the clearance rate remained at the same level as it has been since October this year. I think it was a slow news day on Saturday. The market is tilted in the buyers favour for the moment. The market is hardly in free-fall. We will not see 40% drops in property values. We will not see people “giving” away their properties. In fact, I think we will see modest growth throughout 2011 in the top third of suburbs in Melbourne.

The consistent clearance rate of 61%, and a recorded 1210 total sales for the week, is indicating we have a market which is neither hot nor cold, but rather best described as a ‘negotiators market’. This was fairly obvious when looking at the number of unreported results – 195. We purchased seven properties in the last 4 days with another 5 still under negotiation.

17 Northcliffe Rd, Edithvale– 3 bedrooms 2 bathroom house, renovated and on 822 sqm of land. Quoted $610,000 - $670,000, the auction opened on a vendor bid of 610K, however despite a good crowd there was zero activity from buyers. The agent worked very hard to get things started – going into see the vendors more than once and sending his agents into the crowd to chat with buyers whilst he did so. Finally someone offered 620K and this set the ball rolling. 2 bidders fought it out to 690K where it passed in, (despite the agent stating one more bid would probably put it on the market). The property sold via negotiation for 695K.

Taurus Rd, Doncaster East – a 4 bedroom, 2 bathroom house verbally quoting high 600K – low 700K. The auction opened on a genuine bid of 650K, In contrast to the other auctions, the pace was fast with 3 bidders and a lively atmosphere. The bidding slowed at 727K at which point the agent put it on the market and, with no other bids knocked it down at 727K.

8 Black St, Brighton – 4 bedrooms 3 bathroom, 2,000 sqm of land, and a vendor that had lived there for 38 years. A premium spot in Brighton, the agent was quoting 5Mil – 5.5Mil. There was a large crowd and seemed to be good interest, however another slow opening. I’ve never heard an agent go on so much about a properties potential before asking for bids. He seemed to be thoroughly enjoying the attention or just avoiding the inevitable pass in which was becoming an all too familiar pattern. Once he did stop talking, one buyer was willing to open on a bid of 4Mil. This opened the way for someone else to get involved, and for a moment there I did think it might just reach the quote range. However alas – no such luck. The house was passed in at 4.8Mil and was later sold via negotiation for $5,125,000.

And so the pattern continued throughout the day. Few properties sell under the hammer these days but good negotiators will make the difference in walking away from a good property and securing it for a good price.

If you are considering a purchase of property in Melbourne, please do not hesitate to give our office a call. We will be taking a short break after next weekend but our emails and office phones will be managed throughout the festive season.

This will be the last market comment for the year. We will start again early in the New Year. Our last newsletter will go out later this week. From the team at JPP, I want to wish you a safe and happy festive season.

Ian James

Market Comment - Monday 6th December 2010

2010-12-06T10:45:00.001+11:00

Clearance rates remained at 60% on a similar number of auctions to last week. There were 1205 sales reported the REIV last week. This is substantially down on this time last year, when around 1500 properties a week were being reported all the way through to Christmas. With the biggest auction weekend of the year gazetted for next weekend, I would not be surprised to see a drop in the clearance rate.

However, if the clearance rate remains resilient at around 60% this bodes extremely well for vendors next year and means purchasers will be looking at increasing prices for property. Total sales will also help work out what next weeks “litmus test” will mean for early next year.

The REIV have also reported that this year will have been the most auctions ever, surpassing the figures for 1999. That was a year where growth in the Melbourne median had come off a decade low growth after Paul Keating’s “recession we had to have.” Interest rates were very similar to what they are now. Most of 1999 the RBA cash rate was 4.75%. Unemployment rates were dropping until after “9/11” when the World Trade Centre was attacked in 2001. Australia’s Population growth rate was rising, and even our inflation rate (CPI) was climbing. All of these indicators were similar to what we have now. In the years 2000, 2001 & 2002 we had median house prices in Metropolitan Melbourne increase 9.2%, 18.42% & 15.56% respectively, according to Valuer General Data. I would consider the last decade to have been different to the ‘90’s’ and this is the reason I do not foresee exactly the same results but would assume a trending upward of the Melbourne median price to be a foregone conclusion over the next five years.

Some sales of note for this week:

10/120 Ferntree Gully Rd, Oakleigh East. Not the best location, however from an affordability point of view it had attraction for home buyers looking for a nicely renovated 2 bedroom villa unit for the same value as a one bedroom in a better location. Quoted $310,000 - $340,000, the auction opened on a genuine bid of $310K and took no time at all to exceed the quoted range and be declared ‘on the market’ at 350K. It sold 37K above reserve for at $387,000

31 Hopetoun Rd, Elsternwick - A beautiful location – 450 sqm of land, with an original Edwardian ‘renovators delight.’

This result was outstanding and surprised even those well-educated on sales in the suburb. Quoted at $1Mil - $1.150Mil. The agent opened conservatively on a vendor bid of 1Mil. There were 5 bidders keen to get involved (with 2 buyer advocates attending), however the next bid surprised all and knocked a few out before they’d even had a chance to raise a hand. A lone voice from the back of the crowd shouted out 1.2! – And resulted in the property going immediately on the market. Only one other bidder was willing to get involved over this amount, and after a speedy back and forth battle, the final selling price was $1.350 Mil. The vendors looked very happy, and I understand the purchaser is an owner occupier who plans to renovate rather than rebuild.

There are still over 2000 gazetted auctions scheduled for the rest of the year. If you are considering a purchase before Christmas, or early in the New year, please give us a call for a no obligation chat.

Ian James

Market Comment - Monday 29th November 2010

2010-11-29T10:39:00.001+11:00

398 pass in results were reported to the REIV over the weekend. And there will most likely be more after the REIV follow up 95 unreported auctions. We have to go back to December 2008 to see this many properties passed in on one weekend. 1197 properties were reported to the REIV as sold this week which is average for Melbourne. It’s a rough 50/50 split between private sales and those sold at auction.

It is always nice to be able to “We told you so!” And the media have just worked it out. “Market glut favours buyers” and “Savvy homebuyers set for bargain Christmas”. These are some of the headlines being used in the national papers today.

It was obvious 4 weeks ago that there would be an oversupply and that some good properties would be on the market for very reasonable process, and it is just as obvious that things will change over the next 8 weeks or so. IT WILL NOT LAST.

From the latest counting in the State Election, it looks like the Liberals have won 45 of the 88 Lower house seats. It is also being touted they may have the balance of power in the Upper House. If interest rates remain on hold next Tuesday, and the Federal politicians actually prove they can get one of their promises across the line (The National Broadband Network), we will begin to come out of the state of confusion and feel we can move on with our lives with some surety.

With surety comes decisive decisions. With decisive decisions, more people will buy property. With more people buying property there will not be an oversupply; there will be a stock shortage. Watch prices start to slowly rise in March 2011 in the top third of suburbs in Melbourne.

Obviously, the weekend had mixed results: 2/63 Wheatly Rd, McKinnon was quoted at 530-570K. It is a classic downsizer home, backing onto one of Bentleigh’s premier parks. One of 5, this 2 bedroom villa needed no effort from the auctioneer to swing buyers into action. Opening on a genuine bid of 580K - above the quoted range - there were 4 bidders eager to take part. Due to the pace of bidding the auctioneer didn’t get a chance to announce it on the market until 649K – however I’m assuming it had met reserve prior to this. The selling price was 661K to a couple of very excited girls who had just purchased it for their mother. Smiles all around!

8 Diosma, Doncaster – a nice 4 bedroom family home quoted $680K - $750K. Opening on a bid of 700K, 3 buyers were happy to compete. Again the pace was slow, and the auctioneer was forced to work hard to keep things moving. It passed in at 763K - above the quoted range, and we were told the reserve was 800K. This is a good family home worth a little over mid $700’s.

If you are considering a property purchase within the next 6 months, why not drop in for a chat. There is no obligation for our first meeting.

Ian James

Market Comment - Monday 22nd November 2010

2010-11-22T13:32:00.000+11:00

According to the REIV we are at the start of the busiest 4 week period in Melbourne Residential auction history. Whilst there were over 1000 auctions gazetted for the weekend, as is becoming normal, many were not reported. 893 auctions were reported and we saw an average result of 59%. As an overall clearance rate for the week, this estimate will be close but probably revised down possibly 1 or 2 percentage points. Total sales were also fairly low at only 1047 reported for the week.

There are another three weeks of auctions meant to be in excess of 1000. Add this to the usual private sales for the week and we should see total sales of around 1400 per week. I would hazard a guess it may end up being closer to 1200 per week. It is definitely a buyers’ market at the moment.

However, good property still sells very well. The auction of a 3 level warehouse apartment located in Ascot Vale and was quoted at $550,000 - $595,000. Warehouse apartments have become hugely popular, and seem to sell well in all types of markets. This property in particular had a great floor plan and had some ‘wow’ factor about it. The auction was opened on a genuine bid of $500,000 and announce on the market at $605,000. There were five bidders in total, which for this market is strong competition. The comparables were showing that the property was worth low $600,000’s, the property sold at $656,000.

I notice the media are still talking about low quotes. One of the reporters even saying “if you want a fair idea of what the house you want to buy at auction is worth, add up to 15% on the advertised price and you might be somewhere near the final result”. That is absolutely ridiculous. You could end up paying 20% more than a property is worth. They still have not got it yet! The media and even government departments like Consumer Affairs still want to have a say in how a property is priced. For some reason they just don’t get it. The vendors’ agent is contractually obligated to assist only the vendor. No legislation will ever stand up to scrutiny that weakens the position of the party who is paying for assistance over the party that is not.

Furthermore the media are not really looking at one of the more important changes to legislation. Section 55 of the Estate Agents Act is being changed. The rules previously required a Real Estate agent, his relatives, or employees, to undergo a full independent assessment by the director of CAV with supporting documentation involving a written valuation by an independent Valuer if they wanted to purchase any piece of real estate their agency’s selling. The process is long winded and penalties for breach are serious.

Now the safeguards that were in place have been hand balled to the vendors solicitor or conveyancer. Most people in this profession would have absolutely no idea of what is a fair price or not. I wonder if these professions even have professional indemnity insurance to appraise the value of a home. It is bizarre that the Minister for Consumer Affairs is more worried about cutting down on paperwork than safeguarding vulnerable consumers.

Next weekend we have the State Election. Whilst the outcome may change a few things, the uncertainty may play heavily on the market. If we have anything close to a hung parliament like our Federal politicians are currently enduring then we are in for some interesting times between now and Christmas.

If you are considering a property purchase in the next 6 months please give our office a call for a no obligation chat.

Ian James

Market Comment - Monday 15th November 2010

2010-11-15T12:24:00.001+11:00

We are starting to get used to the Saturday downpours. This is something we have not had to contend with often in the last 10 years. Although many people braved the cold and wet conditions, the clearance rate still remained relatively low at 61%. This is actually 2% higher than the revised clearance rate last week.

Properties still sold well for the week with over 1000 reported to the REIV (Private sales plus sold at auction). There are plenty of buyers but many of them are holding back much more than they have been over the past 6 months. Take Blessington St, a classically renovated art deco apartment in one of St Kilda’s premier locations. It is the type of property that always attracts a good crowd in any type of market. Quoted at 580-630K, the rain wasn’t going to deter anyone. Amidst a sea of umbrellas, 4 bidders immediately got involved. The property was announced on the market at $630k and sold under the hammer to an ecstatic owner occupier for $650k. Blessington Street Art Deco usually sells well in excess of this mark.

Further to this we did 4 deals Thursday & Friday where the agent pre-empted the negotiations and wanted to sell. This is more likely to happen when the agent is not confident of an auction outcome. Whilst the media is driving sentiment down, talking about property prices dropping, reporting the OECD thinks there is still a housing bubble, about interest rates “out of control”, this will eventually drive some vendors out of the market: those that do not have to sell. What we will find then in March or April next year is a lack of supply. With rental yields on the rise, a lack of stock in the middle of the autumn selling season will drive prices up sharply, similar to this year in March and April.

Realistically, by March 2011, the Federal and State Election outcomes should have steadied itself. Interest rates shouldn’t move much more than another 25 basis points and people will want to get back in the market. Prices will begin to rise around March or April and we should begin to see this is the figures released in Mid-year.

If you are considering purchasing a property anytime in the next 12 months, now would probably be a very good time to buy.

Ian James

Market Comment - Monday 8th November 2010

2010-11-08T10:41:00.000+11:00

Clearance rate plummets to 61%! What will happen to the property market?

Simple, it will slow down for the next six weeks then take off again in March next year. Good property is still selling very well at all levels of the market; from the multi-million dollar mark to the excellent investment options that are out there.

45 Dickens Street in Elwood sold under the hammer for $3.335M after 4 separate bidders fought out an epic battle. 800 sqm of land with a beautiful period home. On the other end of the scale, 5/202 Lennox Street Richmond, a delightful 2 bedroom renovated apartment, quoted low at $450k+ (this style of quoting is soon to be outlawed) went on the market at $520k and sold under the hammer for $539k. A very good price for any investor.

There are now 4 main factors slowing the market down. All of which are temporary and will probably be low priority factors by February or March next year. Then the market will do what it does every time our economy goes into overdrive. Prices will sky-rocket.

We have federal politicians who have no idea how to handle the parliament yet. This year’s election still has no real winners. And this makes the average mom & dad nervous. Wait until we have a bill that Julia Gillard really needs to get passed. If Ms Gillard needs to “buy” the Greens vote, but can’t afford it, then she may have to compromise with the Liberal party instead. That will make for very interesting governance!

Secondly, we have a State election here in three weeks, and the commentators are predicting another hung parliament. Won’t that be fun!! As many voters move away from the Labor party, unfortunately some of them vote for the Greens. If the Greens candidate does not get up then the vote goes back to the Labor party through preference distribution!!

Thirdly, we have interest rates going up. They have reached 4.75% and this puts them in an “average” category. They are not excessively high nor are they historically low. This is the greatest indicator of where price will go in the short term. As our economy strengthens, the RBA cash rate goes up and house prices increase. Whilst there is always a short term hiccup, overall property prices will rise sharply: probably starting about March next year.

Finally, the banks themselves are the fourth factor. When was the last time three out of four banks did not put up their own variable rates in the same week the RBA raised the cash rate? Only CBA have bumped their rate and the press are eating them alive. The indecision of the other “three pillars” will also be weighing heavily on people’s minds.

All these factors, except Australia’s growing economy will be sorted out by early next year. There is now a six week window for canny investors to get into the market before the jump in the first half of next year. If you purchase well now, you should have excellent growth throughout 2011.

If you are interested in purchasing a property this year please give us a call

Ian James

Market Comment - Monday 1st November 2010

2010-11-01T09:37:00.000+11:00

With the rain on Saturday not able to dampen too many spirits, the market again proved that it is somewhat reluctant to falter. Well over 850 sales were reported to the REIV last week even with only 354 auctions clearing at a reported 67%.

Whilst many of these properties passed in near the top of their quote ranges the better auctioneers were able to close the deals getting a little more for their clients. 44 Wheatley Road Bentleigh, quoted $700 – $750k passed in at $770K. The auctioneer’s strategy paid off after getting another $10K and selling the property for $780k. This is not UNDERQUOTING, this is good selling agent negotiation. If you were the vendor and the agent was able to get another $10,000 for you, wouldn’t you be happy! The would-be purchasers outside seeing the property passed in above the quote range think this is underquoting. It is not! The vendor has spent his money well on hiring a professional agent who knows what he is doing.

Minister for Consumer Affairs, Tony Robinson MP, has had some very bad advice. He continually tells Victorians that he is “creating more confidence in the industry”, by trying to “hamstring” selling agents who are contractually obligated to assist the vendor. Is this minister going to ask purchasers to do their own building inspections or pest inspections in order to save money? Is he going to tell defendants in court that they should represent themselves and he will see if he can get the plaintiff’s solicitor to help them out? When you are negotiating $500,000 contracts, both sides need representation. A vendor uses a solicitor for the legal paperwork and an agent to negotiate, why isn’t the purchaser?

Mr Robinson cannot seriously think that a vendor who is paying an agent to get the best possible price is going to assist the purchaser in any way shape or form.

After speaking with many agents last week, we know that stock levels are not looking to increase significantly over the next six weeks. This does not bode well for would-be purchasers wanting to be in their new homes in January.

There are still many purchasers out in the market place and if the stock levels remain relatively low, prices are going to rise. Whilst a clearance rate in the high sixties gives the impression of a relatively balanced market between buyer and seller, it is the numbers of auctions coming up in the next six weeks that will determine whether prices continue to rise.

If you are in the market to purchase a home I would strongly suggest that you call us to have a chat. There will be more private sales and pass in’s at auctions coming up. You will be negotiating one on one with some very experienced agents. A good negotiator will make tens of thousands of dollars difference.

Ian James

Market Comment - Monday 25th October 2010

2010-10-25T11:19:00.001+11:00

Super Saturday has brought us exactly what we assumed would happen. Over $840M worth of property changed hands last week according to the REIV; nearly $600M at auction over the weekend. With over 1100 auctions gazetted over the weekend, the REIV reported a clearance rate of 68%. This means that although numbers of property jumped up the level of demand jumped to maintain the high 60% clearance rate.

Most of the sales as expected were in the range of $400,000 - $1,000,000. The above $1M range clearance rate was down near 64% and the above $2M lower still. Most buyers are looking for good long term investments and they see this in the lower end of the market. The market is not as full of surprises as it was this time last year or even earlier this year. Most property auctions we attended on the weekend went at prices that were expected.

6/31 Abinger St, Richmond is a good example of a ‘set and forget’ investment. Well located, the apartment is renovated with 2 bedrooms and car parking. The agent opened on a vendor bid of 450K, it was a slow start, and only after a second vendor bid did the auction gain pace. Announced on the market at 530K, it sold under the hammer at 551K. This was a good property that a fair and reasonable price was achieved.

1/17 Gilles St, Hampton is the type of property that appeals to a wide range of buyers – investors, downsizers as well as young home buyers. A very well located 2 bedroom, low maintenance unit brilliantly located an easy walk to the Hampton Street shops and beach. Quoted at $525K-$575K, The auction opened on a genuine bid of 550K and with 5 bidders competing there was no lagging in pace. The auctioneer held back from announcing it on the market until 650K – a fair way from the price quote – however there was no slowdown in the bidding and it could well have been on the market for some time. Two bidders were still active over the reserve and it was finally knocked down to a young couple at 660K. Again the price was not unexpected. We had estimated $640k - $660k.

The market is sitting vey evenly balanced. With more stock coming on over the next 6 weeks before the Christmas hiatus, it will be interesting to see what level of buyer participation will ensue. It is fairly obvious that many people still see property as the best investment. With the Aussie dollar continuing a spectacular climb, with property prices seemingly levelling out and fuel costs also on the decline, nobody is sure of the Reserve Banks next move.

Investors are driving the lower end of the market. Most are feeling fairly confident about future growth in the below $1M sector. If you are considering a property purchase please feel free to drop in and see us. Our first meeting is obligation free.

Ian James