The financial fallout in America is not going to do anything positive for investor confidence, however the agents this weekend were taking full advantage of the news to spruik the safety of investing in ‘Bricks and Mortar’. Without exception – in each auction ‘pre-amble’ – there were comments to the effect “the share market is crashing, and therefore there’s no better time to turn to real estate”.
Of course it’s to be expected that agents will spruik the benefit of real estate, however the clearance rate – which again came in at 57% (the new ‘norm’) – has been rock steady for some months now. As ever, the property market seems to beat to its own drum, and if anyone was perturbed over Saturday’s financial reports it wasn’t evident. Numbers walking through opens and standing outside auctions gave the impression we’re in anything but doom or gloom. The crux of course is when will the ‘window shoppers’ turn into ‘buyers’?
Whilst investors have flexibility to step in and out of the market as confidence dictates, there are increasing numbers of homes buyers who – having sold earlier this year whilst stock levels were at their peak – are now looking to purchase. Data released this week shows evidence of this with a marked increase in approvals for owner occupiers (and slightly less so for investors). However, the physical evidence is also clear – during the torrential rain at Saturday’s auctions, there were large crowds of ‘brolly-less’ buyers (not neighbours!) standing outside home sales monitoring results and getting very wet in the process! It’s inevitable those with ‘pre approvals’ will take action sooner or later and therefore the already noticeable increase in competition around better listings, will result in upward pressure over some sectors of our market.
The amount of stock on market is another contentious issue. Good properties with motivated vendors, priced to sell in the current market, are not in abundance, however agents are reporting large numbers of off market – (and on market) – stock where vendor expectation is set firmly at prices that far exceed even the best times of 2010. These are the discretionary vendors who don’t need to sell – however they will do if a buyer can be found who’ll pay their ‘wish’ price! We’ve seen multiple off market homes which fall into this category – and now some agents are starting to cull the books, realising there are better ways to spend their time than trying to find the loan buyer who’ll dig deep despite the flat conditions. After all – a selling agent only gets paid if they can find a buyer.
1/20 Foster Rd, Glen Huntly is bigger than average villa unit situated in a popular residential location. It was also being auctioned by Ruth Roberts – one of the few female auctioneers in Melbourne soon to be set for 15 minutes of fame on Channel 9’s ‘The Block’ finale.
Thankfully the rain hadn’t quite set in, so the young lad who in true entrepreneurial style was selling snacks to the waiting crowd of neighbours and buyers, was able to make quite a bit of weekend pocket money and cause a fair bit of amusement in the process.
The property is well suited to a broad demographic of buyers (starters, investors, and downsizers) so it was no surprise to witness competition. Quoting 620K- 680K the auction opened on a genuine bid of 600K with 4 bidders competing.
Announced on the market at 660K, Ruth was determined to eek every last cent out of the under bidder –and whilst voicing innocently that she was only ‘there to help him win’ – managed to get him to increase his bid clearly stretching the budget.
The property was eventually sold 36K above reserve for 696K.
42 Nirvana St, Malvern East was another successfully contested auction. However at this point the rain had well and truly set in and it wasn’t just a drizzle either – it was a full out downpour. The house was a classic ‘roughie’ – a renovators dream – 2 bedrooms, original condition, but a great location for those willing to roll up their sleeves.
Some agents may have considered conducting the auction indoors, and I can assure you no one outside would have complained! However not Ray White – with a crowd of ‘brolly-less’ buyers (including some of the agents), the auctioneer – safely shaded from the weather by his penciller – proceeded to ‘entertain’ (cough) us with a long pre amble.
With now almost deafening rain, the auction got underway with a genuine bid of 950K. It was becoming increasingly hard to hear the bids and clearly some were struggling. At 980K the auctioneer went inside for the traditional half time break. If he placed it on the market at when he came out I didn’t hear it – neither did a number of other buyers. The question ‘is it on the market’ was asked a number of times, and as the bids increased to 1.110Mil, the agent needed to repeat several times that reserve had indeed been met.
With thundering rain, the property finally sold under the hammer for a price well past reserve. The final number has been requested ‘undisclosed’ however I can report it was in excess of expectation.
5 Cosy Gum Rd wasn’t so successful. A dream family home – period style, fully renovated, with 5 bedrooms – attracted the largest crowd of the day (well in excess of a 100). Another Ray White auction – so no hope of indoor reprieve from the rain! However limited shelter was available under the wide veranda at the front of the property, and this is where most buyers congregated.
A long pre-amble buoyed with positive expectation that there ‘must’ be at least one buyer in the crowd commenced. However not a soul raised a hand, and the auctioneer was forced to start with a vendor bid of 1.4Mil.
Despite what seemed the longest ‘half time break’ I’ve ever experienced (somewhere in the region of 15-20 mins), and the large crowd resiliently staying put, the auctioneer was forced to pass the property in on his vendor bid. There was a later offer of 1.3 Mil – but the vendor’s weren’t willing to reduce expectation.
The reserve is ‘undisclosed’
Unlike 5 Cosy Gum rd in Carnegie, -31 Kingston St, Hampton, did manage to attract some bidding. A fairly well situated 3 bedroom ‘updated’ family home was lucky enough to schedule the auction for the first appearance of sun during the day.
Quoting $975K-$1.070M, a bold bidder wasted no time opening on a vendor bid of 920K. However with stifled competition from what seemed 2 rather reluctant bidders, the auction soon pulled up passing in at 1Mil, with a reserve of 1.1Mil.
Finally 12 Meyer Court in Brighton East attracted only a handful of onlookers despite its secluded court location.
Advertised at $860,000 – $920,000 the fairly compact three bedroom house on 594 sqm of land didn’t look as if it would receive a single bid. The auctioneer opened on a vendor bid of 850K, and after a few long minutes, was just on his way to ‘seek instructions from his vendor’ when his vendor bid was matched by a genuine buyer.
With no further competition the property was passed in at 850K to later be negotiated at 890K
A 57% clearance rate is rather hard to assess considering the number of results missing from the equation. However whilst interest rates remain stable, there’s every indication our market will remain stable for the remainder of winter.