After a huge weekend of auctions with the clearance rate remaining above 80%, there seems no end in sight to the upward migration of price in the Melbourne property market. The Age on Sunday reported that Residex have announced that Melbourne median house price has surpassed $500k. So we can assume the current flood of buyers are not necessarily all first home buyers.
Of the ten auctions our team attended on Saturday and two on Sunday all went within a few thousand dollars of our price recommendations. But there were no singularly outstanding results. To sum up the weekend results, all auctions went just about where we thought they would go. However there was one auction that stood out. And not because of the price it achieved.
We made a prior offer on a property well above the price quote. In fact it was nearly 20% above the lower end of the range. This offer was made more than a week prior to the auction on exactly the same terms and conditions we were allowed to bid at auction. The fact the offer was turned down was no shock to us but the surprise was the fact the agent didn’t change the price quote. When we questioned the Officer in effective control at the agency we were told they had no legal obligation to adjust the price quote as the reserve was within the quoted range ($380k – $420k). When asked at the auction after a bid of $430,000: “Are we on the market?” the response was “No!” The property was not announced on the market until $455,000 (slightly above our original offer).
During the auction when the auctioneer was trying to drum up another bid she remarked to a group of gentlemen: Have you driven all the way from Warrnambool not to even make a bid? (Or words to that effect). As I was leaving the auction one of those gentlemen made a remark to me and I stopped to talk to him. I asked if they had driven all the way from Warrnambool just to bid and they said yes. I asked them if they were told anything about the offer prior and they had no idea. Whilst the auctioneer thought this was a funny quip, I thought it simply one of the rudest and most despicable acts I had seen in Real Estate in a very long time.
And The Real Estate Industry wonders why it has such a low standing in the community as a whole. This is truly underquoting. This should be stamped out. Licensed, reputable agents should not stand up for the ridiculous antics of the few. If the REIV cannot stop its members doing this, then hopefully Consumer Affairs Victoria can. This goes way beyond getting the best deal for your vendor. There were plenty of potential purchasers that were going to bring the price up to high $400’s which is what it finally sold for. The comparable sales in the area showed the property would most likely go into the high $400’s – which it did. The agent had a written legally binding offer well in excess of their asking price that met every condition identical to that which we were allowed to bid on (in other words it was declined on price) more than a week out from the auction. If the agency can’t sell real estate without doing irreparable damage to our industry, then I think it is time they find a vocation they are more suited too. Real Estate Agents are one of the least trusted professions according to a stack of newspaper polls and it is operators like this that add to that standing.
On a lighter note: we may not have yet reached the highest point in the unemployment cycle and big business still has some consolidating to do so this does not make it an obvious choice for the reserve bank to raise interest rates anytime soon. Yet many people are feeling fairly confident about starting to spend and invest money again and there are many more spending it on property investment than before. There are a lot of people who are still a little “gun-shy” about jumping back into the stock market, and therefore direct property investment seems a good option. There are also many more “fee for service” financial planners recommending direct property as part of a balanced investment strategy. Previously many financial planners did not recommend direct property investments because they received no commission for doing so (and this was how they earned their living). Another factor that came up last week is population growth. Each year demographers say it is slowing down or give estimates that are wildly out of date within 12 months. Our population is growing and we have to house everyone. Supply is not keeping pace with demand; therefore we can assume this will also put upward pressure on property.
Next weekend being AFL Grand Final weekend, and the middle of the school holidays, we will probably see fewer new property listings. However, the following week is usually one of the largest weeks of the year for new listings. It will certainly give us an indication of how the spring season will shape up.
If you are interested in buying a property and want some professional advice, do not hesitate to give us a call for a free no obligation meeting.