Market Wrap – Monday May 16th 2011

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Anyone working in the real estate industry always gets accused of talking up the market for their own ‘greedy’ ends. However, when you’re working on the buyer’s side it allows somewhat of a level playing field to call things as they are. As buying agents we have no vested interest in stimulating a bullish atmosphere; quite the reverse – in flat and fairly negative conditions we’re granted a greater opportunity to negotiate properties at levels some 10-20% below assessed market value.

Therefore, when I say today’s atmosphere felt distinctly different to last weekend’s rather lack-lustre status quo, it’s not with the intention of talking the market into a 2007 style boom – it’s the beginning of a gradual shift into conditions where there are less quality listings for sale, and a heightened degree of competition around each high grade property on offer.

It won’t cause an immediate perceptible change in the clearance rate because we’re still seeing an increasing number of listings being auctioned rather than marketed ‘private sale’. However it’s likely to result in the first upward shift in our market which by end of year should see around 8% growth in about the top third of performing suburbs. Clearance rates data reported to the Herald Sun Property magazine on Saturday is quoting a 77% clearance rate for the Inner East zone.

In areas where impending interest rate rises will have most effect, we can assume that the change to stamp duty from July 1st may well be hampered. Outer “estate” suburbs such as Wyndam Vale, Tarneit and Craigieburn, just to name a few, will most likely see a total stall in price growth and even some modest falls over the next 6 months.

There were between 3-5 bidders at each of the 5 auctions we attended today, and considering it was appalling weather for hanging around on street sidewalks, interested onlookers weren’t lacking either.

All sold – 4 under the hammer, and one via negotiation.

4/121-123 Yarra St, Abbotsford

4/121-123 Yarra St, Abbotsford – a 2 bedroom + study warehouse isn’t an unusual property for the location, however it’s currently got little competition of type and style to detract interested buyers. Therefore it was no surprise to see healthy competition and roughly 50 or so interested onlookers attend the auction. The agency had been quoting interest in the ‘low 600K’ however they opened the bidding in traditional fashion with a vendor bid of 580K. It took a few moments for the race to get started, however in the style of a good 4 player tennis rally – rising in 10K increments – the price hit 680K in no time and was announced ‘on market’. The auction didn’t really slow until the numbers got close to 700K and then 2 owner occupiers – who will usually stretch the budget for the ‘right property’ – pushed it upwards to 715K before the contract finally hit the auctioneers hand. This is top of the range – particularly in what’s still deemed a ‘flat market’

6/122 Sackville St, Collingwood

6/122 Sackville St, Collingwood – a smallish renovated one bedroom apartment – predictably attracted less competition, however it provided a good initial stepping stone for a first home buyer to get their foot through the door, so interest was healthy enough to attract 2 bidders. Quoting 290-320K the auction opened at 270K, and although it went on the market in the low 300K, such was the pace of events, the auctioneer didn’t get a chance to announce so until it hit 350K. Slowing to 1k increments, the property sold for $355K

47-49 Huntingtower Road, Armadale

47-49 Huntingtower Road, Armadale – An opportunity to purchase in excess of 1000sqm of land in Armadale is not one to be missed, especially considering land sizes in this location are commonly less than 300sqm. Of course, the nicely presented 3 bedroom Federation house with solar heater pool and no heritage overlay could only add to the appeal! Despite pouring rain and a sea of large ‘Jellis Craig’ umbrellas which had generously been distributed to the crowd, there were plenty fighting for a ring side seat. Quoting interest around 3.5-3.6Mil the auctioneer didn’t waste time asking for an opening bid, instead he got the ball rolling with a vendor bid of 3.2Mil. 4 bidders took over and it wasn’t long before 3.610Mil was achieved. Going inside to talk to the vendor, the 2 bidders left in the game were obviously hoping it would be announced on market. However the vendor wasn’t prepared to let it go so easily. Promising we were ‘nearly there’ the auctioneer managed to squeeze a few more bids before passing the property in at 3.675Mil. The final selling price is undisclosed, however it sold in the range of 3.690-3.710Mil.

2 Judd St, Carnegie

I didn’t expect as much interest in what’s essentially a development site, however 2 Judd St in Carnegie wasn’t out of step with the other auctions witnessed today. 580 sqm of land (not even the traditional 600sqm generally needed for subdivision in this location) a healthy group of around 50 turned up to watch. 3 bidders were being buoyed on by the numerous sales agents ‘working’ the crowd coaxing bids of 10K increments even though some clearly wanted to break it down. The bidding opened with a genuine bid of 600K, in no time at all it had reached the reserve of 685K – without taking brake to talk to the vendor, the team of sales agents managed to get another 10K out of the 2 bidders left in the game to result in a sale price of 696K

6/66 Riddle Parade, Elsternwick

Finally – 6/66 Riddle parade Elsternwick was not going to buck the day’s trend. A good art deco apartment always gets a plethora of interest from owner occupiers, and with no hesitation the bidding was opened on a genuine bid of 400K. Four bidders and 16 bids later at 520K it was announced ‘on market’ – however it was another 18 bids before it finally sold for $560,500.

Catherine Cashmore

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