We have just seen the results of the first weekend’s auctions that carry some importance. Next weekend has over 1100 scheduled auctions. We can take the results from last weekend and analyse them effectively as there were over 600 properties on the market. We know from the results published in the Herald Sun that less than half the properties offered for Auction on the weekend were eventually sold. Even though clearance rates talk about 72% this includes all properties sold before, sold after and passed-in then negotiated on the day. The amount sold under the hammer would probably be closer to 25% – 30%.

Prices over the weekend were exactly as expected. Those properties with excellent location, amenities, good accommodation, a little bit or a lot of “WOW” and priced and quoted correctly sold very well. For example a 3 bedroom unit in Lorranne Street Bentleigh was quoted $570k – $630K and was well built, presented well and is in a fantastic location. We had estimated $720 – $730K to our client and it sold $735K. It was “on the market” at $650k. This was slightly above expectation and although there were three other bidders we counselled our client to pass and move on to the next one.
Alternatively a 4 bedroom renovated family home in Chapel Road Moorabbin on 820sqm was quoted $600k – $660k sold for $646K. Comparable sales last year are around this price and if it were this time last year that would have meant a significant jump in price.

Agents are asking us to do deals in some instances and others are rejecting our offers. Next weekends results will either signal another year of unprecedented growth or a tempering of the market. We will see a lot of stock on the market in the new estate areas but they will again most likely be facing single digit capital growth. This means they are struggling to match CPI. There will also be more total stock come onto the market as people try to cash in on growth over the last few years. GOOD PROPERTY WILL STILL SELL EXTREMELY WELL BUT AVERAGE PROPERTY WILL NOT. Property selection, assessment and negotiation will become far more crucial than ever before.

Melbourne has about 1000 people per week moving into the most liveable city in the world. There is a finite amount of property on the market and if we look at every major city on the planet, all good property goes up, average property has average growth and poor choices can cost you a lot of money. Professional assistance should be sought by all prospective property purchasers this year.

Ian James

Another week has slipped by this year leaving us no closer to seeing any trends. Whilst the “clearance rate” is up there near 80% there is not enough volume to give us any indication of where the market is going.

There were some anomalous results of family homes selling below expectation whilst reports from some outer suburban agents are saying that people are queuing to get into opens and offers are very forthcoming on properties. The amount of good property coming onto the market continues and agents are very quick to “chat” about offers and deals, the market is still a long way off giving any clear signals as to what will happen for the rest of this season. Just because one property sells below expectation, this does not mean we are seeing a trend.

This is the first year I can remember the agents agreeing so quickly to enter early deals. With several deals already away this month and another seven offers on the table, it would be easy to assume that agents are a little worried and they are looking to grab any deals available. This is not the case. All of the properties we have gone after are being relentlessly negotiated. It is a case of finding good properties, assessing them quickly and accurately and then moving decisively.

In a rising market the key ingredient in buying well is paying the “right” price for the “right” property at the “right” time. Those potential purchasers that procrastinate through February and March will probably find themselves needing an extra 10% to purchase what they could have bought earlier in the season. It happened last year and could happen again this year.

Ian James

Sub Prime issues, stock markets falling all over the world, interest rates going down in the US and potentially up in Australia. We have a ten year drought seemingly coming to an end with FLOODS which may well reinvigorate our massive primary industry. The Chinese and Indian economies are becoming the dominant force throughout the world and they are major trading partners of ours. Chris Richardson from Access Economics has been reported to have said Iron Ore price increases for the year will inject more spending into the national economy than our stock market losses of last month. So what is going to happen to the Melbourne property market?? Anybody that tells you they know, is joking.

The Sydney market is flat, Queensland is under water, Perth has slowed and Adelaide is a very small market. Melbourne’s population is said to be growing at 1000 people per week. This is higher than any other capital city in Australia. Demand for housing is high and supply is short. It means that property prices in Melbourne will most likely continue to rise at a very healthy rate. Maybe not the 20 – 30% of last year, but I would consider in the high teens to be probable if you buy well.

Whilst the fastest growth corridors are still the outer west and outer north, for the first time in decades municipalities such as Hobsons Bay, Glen Eira and Monash showed population increases.

Buying well is not only about negotiating the lowest price. It means making a good choice of property, assessing it correctly and then negotiating it in a timely fashion. Keep in mind that if the property is actually good, there will be competitors trying to buy it out from under you.

We will have a better understanding of how properties will perform this year once we see the February auction results. Until then, the signals from the local agents have been mixed and no clear pattern has emerged yet.

Ian James

Another week of gloom and doom on world stock markets! More media “experts” saying there will be a rate rise in February. Our new Prime Minister is promising an $18 billion dollar surplus in his first budget and more economic responsibility. But we are still at a 4.5% unemployment rate: what does all this mean for the housing market this year? Anybody telling you they know what is going to happen in the market this year will preface the comment with “this could happen”.

Plenty of Mums and Dads have a great deal more equity in their homes now than they had last year. Also, the expected tax cuts and the fact that most people that want a job can find one at the moment, means there will still be investors in the property market. More so if the stock market doesn’t rebound. I think the property market this year will remain fairly similar to last year. The 20-30% gains maybe be tempered back to 10-15%, but the demand will again be strong and if supply doesn’t increase, auction clearance rates will again be high and this means increased levels of negotiations will be necessary and accurate assessment of the properties worth will be paramount.

With the Australia Day weekend upon us and kids back to school next week, things will again be quiet on the new property listings but as of next week we should see a huge rise in the numbers of properties. Enjoy your last weekend break before the autumn selling season is upon us.

Ian James

Even though the market is yet to fire up there are reasonable supply numbers beginning to appear. It looks like there will be no massive shortage of property even though demand will still be outweighing supply in February and March. Even if interest rates move again as early as February, I still think property values will continue to perform well this year. As we see the first sets of clearance results from the big weekends of end of February and early march, we will be able to get a better idea on how the growth rate for property values will progress through the year.

Australia Day weekend will see the start of the autumn season with the properties going to auction late February beginning their advertising periods. It will be interesting to see how this years market will develop.

Ian James