A falling market – but is it really helping today’s buyers?

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This weekend’s clearance rate was 54%. It is well down on last year’s 68% according to REIV statistics. With only 690 auctions over the weekend, compared to well over 1000 this time last year, the turnover of properties is substantially down.

A clearance rate in the 50’s is a trend we’re starting to get used to in Melbourne, however there’s no doubt it feels low compared to the 70 and 80% clearance rates we’ve previously experienced.  Paint a broad brush over the market and the picture doesn’t look good.  Record stock levels, vendor discounts, days on market increased and so forth.  However for the average punter looking for their family home, the description of a falling market may not bare out in experience.  Quality stock has been buried under vast amounts of unit developments, off the plan sales, student apartments, high rise flats – properties that generally only market well to investors (particularly those overseas). Shifting through the rubble and finding the nuggets of gold, is as hard now as it’s ever been – and although buyers are being a little more thoughtful about where they place their dollar, some vendors are winning out even in a falling market.

Of course, from a buyer’s perspective, purchasing a property that holds up well in both good and bad markets is the jewel in the crown you want to own. Home buyers are even fussier, and find themselves getting emotionally attached to homes that slip just outside of budget.  In a boom market no one needs encouragement to purchase – confidence levels run high, demand increases, and the real estate industry reaps the benefits.  However in a patchy market – the type of market we’re in now, where only the cream of the crop is selling, – buyers should be encouraged to tread a well negotiated path if they’re going to take advantage of some potentially great deals.

The opportunity may be here now, but for how much longer is questionable.  Agents are already complaining about forthcoming low stock supplies, and on top of this, various mortgage brokers have reporting a sudden increase in loan approvals.  Therefore, take heed if you’re a buyer! The downhill journey may not last much longer. Don’t wait to get caught in an exhaustive uphill struggle.

Passed in on vendor bid

5/1a Lansdowne St, St Kilda

This nicely renovated unit at 5/1a Lansdowne St, St Kilda would probably have attracted more attention if it hadn’t backed onto busy St Kilda Rd. Maybe this was the reason so few potential buyers attended and the result wasn’t the one the vendor was obviously hoping for. Quoted at 550-600K, the auctioneer was forced to open on a vendor bid of 550K. Despite performing to a silent crowd, he didn’t give up easily. Taking an early half time break with the hope of spurring on any bidders who may have been waiting for the traditional ‘pause’, didn’t change the mood however. After a few drawn out minutes, and much vocal encouragement, he passed the property in with the not so conservative reserve of 629K.

26A Ross St, Elsternwick

26A Ross St, Elsternwick didn’t fare much better. An attractively renovated 2 bedroom Art Deco ‘one of a pair’ – quoted at 720-790K – perhaps would have achieved a better response had the location not backed onto a brothel! Despite the large crowd, and a street packed with cars from eager onlookers, the auctioneer was once again forced to open on a vendor bid. Calling out 700K – under the quoted range – and asking for rises of 10K didn’t convince the onlookers. After a trip inside to see his vendor and another quick try with the attendees, he passed the property in for 700K with a reserve of 779K.

36 Yackatoon Ave, Aspendale

Meanwhile, down in the Bayside suburb of Aspendale, a golfers dream was about to present itself to buyers. 36 Yackatoon Avenue is a beautifully renovated family home (on approx. 539 sqm of land) backing onto a golf course located just a hop, skip & jump from the bay. Under such circumstance you could have been forgiven for expecting a larger crowd – and better result – however the auctioneer only had a handful of neighbours to perform to. Quoted at 660-720K he opened on a vendor bid of 670K. His best efforts however didn’t convince any buyers. After putting in a second vendor bid of 680K, the property passed in with a 720K reserve.

Passed in on a genuine bid.

7/27 Charnwood Rd, St Kilda

It wasn’t all that lucky for the renovated 1 bedroom unit at 7/27 Charnwood Rd, St Kilda – despite having the number ‘7’ in the address. Quoting 400-440K to a healthy crowd of buyers, the auction opened on genuine bid of 400K. With 3 bidders it resulted in a lively auction. Around 435K the bidding slowed down, and the agent went inside to see if the vendor was ready to ‘meet the market’ However it wasn’t to be, the agent managed to squeeze only a few more bids out the willing purchasers until it finally passed in at 439K.

Sold under the hammer

It wasn’t all bad news today and some vendors were willing to meet the market’ in order to achieve a successful result. Two homes in the much coveted McKinnon school zone were amongst the lucky winners.

2 Strathmore St, Bentleigh

2 Strathmore street Bentleigh, quoted at $870,000 – $960,000 was an ideal renovators dream. Positioned on 723 sqm, the 2 bedroom, original, cream brick veneer, offered the perfect opportunity for a family to build their dream home. One hopeful buyer decided to try his luck opening the auction with a cheeky bid of 600K, however this was soon eclipsed by a swift vendor bid more in line with the price quote, of 870K. Three bidders took the price upwards in steady 10K increments, slowing to 5K as it sneaked closer to the top end of the price quote. At 930K the auctioneer went inside hoping the vendor would be placing it on the market. However we weren’t quite there yet. It needed another few bids to achieve reserve at $950k, and at $957k the house was sold.

16 Seaview Ave, Bentleigh

Around the corner at 16 Seaview Avenue (also in the McKinnon School Zone) a similar tale was told. Located on 687 sqm of land, the original 3 bedroom house had no problem attracting the crowds. However, the auctioneer still had to get proceedings underway with a vendor bid of 850K. The price headed upwards in 10K lots and slowed to 5k lots as it got close to its reserve of 930K. It then proceeded upwards in 2’s and 3’s until 945K at which time a last bid of 5K got rid of the competition to see a successful ‘under the hammer sale’ of 950K.

Finally another reasonable reserve saw a happy buyer at 164 Sycamore St, Caulfield South

164 Sycamore St, Caulfield South

Situated on 460 sqm of land, and quoted at 680-750K the original 3 bedroom property opened on a vendor bid of 690K. The hopeful auctioneer asked for 10K rises; however he only got offered 5. Not one to look a gift horse in the mouth, he happily accepted the offer, and thereafter bidding from 3 buyers commenced. Predictably the pace slowed as the price got into the low 700K and pausing at 715K the agent was forced to go inside to ‘seek instructions from his vendor’. Sometime later (obviously after a drawn out conversation trying to convince the vendor it was a good idea to announce the house ‘on market’) he returned to do just that. Any hope however that an extra few grand would be squeezed out of the crowd faded quickly, and the house ended up selling bang on reserve.

82 Orrong Cres, Caulfield North

82 Orrong Crescent, Caulfield North, quoted at $1,500,000-$1,700,000, was the perfect specimen to attract a large crowd, and a large price! Located in a sort after area surrounded by café’s and million dollar homes, the house offered ample accommodation for a family – plus some! Turning up late, the auctioneer excused himself by simply saying he’d been enjoying a short black at the café ‘around the corner’. However he didn’t need to be so persuasive about the area’s positive features – 4 bidders were already bitting at the bit to raise a hand. Opening with the traditional ‘vendor bid’ of 1.5Mil, hopeful purchasers wasted no time getting stuck in, rising in 25K increments. Without needing to consult with the vendor, the house was declared on market at the top end of the price range at 1.7Mil. A slight slow down in the pace didn’t last long and it soon picked up once again, and it sold shortly thereafter.

Catherine Cashmore

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