In the current market where buyers are still treading a cautious path and investors are jumping at shadows, a property listed for auction needs 2 ingredients if it’s going to sell. Firstly it must be situated in a good, highly sought after residential location which holds appeal for owner occupiers. Secondly, it must have a vendor with their feet firmly planted on the ground! If one or the other is missing, the selling agent will have a job on his hands trying to inspire interest because buyers clearly aren’t in the mood for purchasing on a whim.
Most of the auctions I attend each weekend – at the very least – tick the first box. They are well located with potential for good long term growth and as such attract healthy interest selling at market value. However with uncomfortable frequency I come across vendors with their head in the clouds. In such circumstance there’s often a common trend – the vendors are attempting to sell for a profit after only a relatively short period of ownership.
This was born out in the auctions I attended today. Of the five I witnessed, only two failed to sell. The first had a vendor selling after barely a year of ownership, and the second was situated on busy thoroughfare and therefore failed to attract a crowd.
Flat markets teach a valuable lesson because they test the ‘real’ strength of demand without being unduly distorted by bullish speculation often apparent during a boom. Essentially a property is only worth what a buyer will pay and reassuringly for buyers and vendors, the sales results coming in from the homes displaying the right attributes assure that even in a turbulent atmosphere our metropolitan market has the potential for growth as you’ll see from the results below – (hence the importance of choosing and negotiating well in the first place)
However you won’t perceive this if you’re concentrated on the clearance rate which this week only struggled to 53%. Therefore it’s important to look at little deeper and take things in context – with a number of results yet to come in, we’re already at well over 800 sales for the week and counting – (most of which have been private or prior auction sales,) This falls in line with the weekly average for the year. The real test of the spring market won’t prove visible until we’ve cleared the AFL grand final from this year’s calendar, so it would be foolish to ponder too many early predictions. However although it may look a bit gloomy on the surface, homes are selling and in some cases expectations are being exceeded. Therefore it’s more a case of slow growth, rather than no growth.
10 Evandale Rd in Malvern is beautifully located just a heartbeat from the best amenities Malvern has on offer, however the condition inside was a little below par to really attract the level of competition it needed for a sale. A crowd of around 60 turned up for the auction however the home only attracted one willing to barter. Opening on a genuine bid of 900K but with no competition, a swift vendor bid from the auctioneer managed to squeeze a second bid of 1,025Mil before the pace stalled completely. After a quick trip inside to see the vendor the agent returned and attempted to push the price higher with a second vendor bid of 1,040Mil. Clearly the buyer was not in the mood to play games and the property passed in with an undisclosed reserve. It’s interesting to note the current vendor’s have only held the property for just over a year.
3/4-8 Ardrie Rd, Malvern East had the right ingredients for a bit of heated bidding. A state trustee auction – and therefore being sold with a ‘feet on the ground’ reserve – always attracts interest. However the added bonus of having a property that ticked the right boxes for both owner occupiers and investors gave the needed oomph to achieve a sale under the hammer. Opening on a vendor bid of $530K, 4 bidders competed in front of roughly 60 onlookers many of whom were local residents. The neighbours obviously felt the price was representing value, because at one point 3 were debating whether to start a syndicate and buy the home together – however they held back probably a good job at that, because when the auctioneer announced the home on the market at $560K it took another 45K before the hammer fell at $605K.
Quoted at $750-$850K, 2/200 Kambrook Rd is a well presented modern townhouse, however it’s unfortunately situated on the corner of Neerim Rd – a well frequented thoroughfare – and therefore wasn’t well set to attract a large degree of interest in our current lacklustre market. Only a mere 8 people turned up to the auction – and most arrived late. The auctioneer seemed well aware there was little chance of a sale, and after opening on a vendor bid at the lower end of the quoted range ($750K), he didn’t delay too long before passing the property in with a reserve price of $810K.
Finally 2 Albert St in Brighton was offering an opportunistic purchaser a prime location – just a hairs breath from the golden mile – and the best renovation potential of the day with the house being sold at a land value. As such, the auctioneer didn’t need to work hard to attract interest. There were three bidders in a crowd of roughly 60 willing to compete at the top end of the market. Opening with genuine bid of $2.5Mil, the pace flowed nicely until the price ticked over the $3Mil mark. A few more bids exhausted the interest and the home passed in for $3,060 Mil. However what competitions outside the home couldn’t achieve was soon managed behind closed doors. The property sold shortly after for an undisclosed price a few steps above the passed in figure.