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October 2010 Newsletter

Our monthly email newsletter reports on the state of the Melbourne Real Estate market, keeps you informed and up to date on what's happening at JPP Buyer Advocates, as well as presenting some of our recent success stories.

                to Subscribe, send an email to: chris@jpp.com.au
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The REIV released the September quarter medians over the weekend. Metropolitan house price movement was 0.9% and units were 0.3% for the September quarter. For all those who are seeing this as the bursting of the bubble, please look at numbers across a reasonable period. In the past 5 years the median has had an average movement of 9.7% p.a. This should sit around 10% and therefore I can see a slight rise towards the end of the year.

Stock levels also played into the equation. If we take Black Rock for example, there has been less stock on the market with only 30 sales recorded this quarter - 14 of which sold over 1Mil - compared to 38 last quarter - 20 of which sold over 1Mil. Hence the reason I caution against putting too much emphasis on median price data without taking a deeper perspective. The above $1.5m range is the softest market segment and the new estates will begin to falter next. However the $400 - $1.0M range will be the powerhouse over the next five years. This will be driven by investors and people buying their second homes. This demographic is the least affected by changing interest rates. Whilst overall averages may drop or be skewed somewhat, the better properties in good locations will appreciate very well in the coming years.

We had an interesting experience at an auction in Murrumbeena recently. A good crowd attended but there was little interest from buyers. One punter opened the auction with a genuine bid of 900K - well below the property's reserve. The auctioneer 'vendor bid' over this figure several times to reach $1.15M. It was at this point we entered the fray. Craig Cox, the auctioneer, took our offer and could get nothing further from the crowd and finally, after an unreasonably long period of time, announced it had passed in to us. Yet as we started to walk towards the house to enter into negotiation another potential buyer raised his hand to bid. Craig Cox immediately asked his colleagues to confirm whether he had passed the property in before the bid was made. All in attendance agreed that he had. To the auctioneer's credit, he immediately explained the position to the prospective purchaser, that it would be unlawful for him to reopen the auction, and that he would negotiate with us first. If we did not reach agreement, then he could be consulted.

The prospective purchaser was furious, but Buxton's did a very good job to handle the situation. A deal was struck and the other prospective purchaser was literally "left out in the cold". He was turned away from the property without the option to be involved in the negotiations at all. It's important for purchasers to understand their rights when bidding at auction. If a property does pass in to them, the rules they were bidding under during the auction no longer apply - buyers can now negotiate on all elements of the contract including settlement dates or make an offer subject to a building inspection for example. The vendor doesn't have to accept of course, however the highest bidder has first right of negotiation at the vendor's reserve - more importantly the agent is unable to deal with anyone else until he has finished dealing with the highest bidder. Therefore if property does look like it's going to pass in, it's important not to hang back but make intensions clear and get in the box seat.

Since the auction we have referred to Consumer Affairs who had some conflicting information on their website. They have agreed that the auctioneer did the right thing and are changing their website to reflect this.

Latest REIV Quarterly Median Prices

  Sept Qtr 2010 % chg Jun-10 to Sept-10 Jun Qtr 2010 % chg Sept-09 to Sept-10 Sept Qtr 2009 % chg Sept-05 to Sept-10
Sept Qtr 2005
Houses $565,000 0.9% $560,000 20.5% $468,900 59.3% $354,600
Units & Apartments $470,000 0.3% $468,500 15.5% $407,000 56.7% $300,000
Source: REIV.

Ian James


Market Overview

Pass in's at Auction

Melbourne: the world's capital of the property auction. With so many properties being sold at auction and anecdotally more of these will either be negotiated before auction or passed in on the day and negotiated after auction than will actually sell under the hammer. Here is a little insight into handling the pass in situation.

If there are multiple bidders at an auction, and the property is on the market, then deepest pockets will win. I have attended thousands of auctions and bid at hundreds of them and although I am rarely intimidated by anyone at an auction, I can be beaten by someone that has substantially more money than I do. If they have a similar amount then I will probably win simply because I understand the process better than most. But rest assured, in the 10 minutes that genuine people are bidding at a genuine auction, then the person who is willing to commit the most money will win. If the property passes in then you need to be prepared to negotiate to a conclusion. Never assume you will be going anywhere after an auction for at least 90 minutes.

Negotiation is not simply saying black is white or white is black. You must lead your opponent in order to reach an acceptable conclusion. I have negotiated hundreds of properties both as private sale and pass in situations and without doubt, the more professional and experienced the agent is, the more chance I have of reaching an acceptable conclusion. Whilst the agent is trying to get the most out of you as he can, his job is also to reach an acceptable outcome: A DEAL.

If you find yourself in this situation, and as of the last four weeks I have been in this situation four times, you must think your way through, calmly and with as little emotion as possible.

  • If you are not alone, keep some of your party outside.
  • The first question you want answered by the agent is: How much does the vendor want in order to sell this property today? This is the quintessential question that you have earned the right have answered. In other words, what is the reserve? If they do not answer this question, and they have this right under certain circumstances, do not move on your initial price that the property was passed into you at.
  • If you do not know the reserve at this point, then you need professional advice. You have certain rights, as does the vendor and I have only been placed in this situation a couple of times. Assuming you do know the reserve, then you need to decide whether it is fair and reasonable.
  • If the reserve is below your expected limit you should not leave the property without owning it. If you do the odds drop markedly for you to be successful. It does not mean you have to pay the asking price but, be aware that as soon as you decline to pay or counter offer, then you have lost the first right of refusal at the vendors reserve. This is what you earned by having the property pass in to you. And this is why we go back to leaving one of the decision makers outside. You can express emotion at the point when the agent gives you a ridiculous number for the reserve. The largest I have had recently was nearly 30% above the quote price. This number is quite often for "shock" value. If the number is very high, say more than 15% above the quote, then you should show some emotion: even if you were expecting this. If you do not you have just tipped your hand to a very sophisticated and experienced negotiator.
  • Do not let emotion rule the negotiations. Just because you were the only one to bid and it passed in at $700k, it does not mean the vendor can't ask for $900k and stick to his guns. Especially if you had assumed it was going to go there anyway.

It is impossible to teach the art of negotiation in 5 minutes in a written article. Some of the points above will save you tens of thousands of dollars. Some, even though you know the theory are very difficult to put into practice. Much of negotiation is putting your mind into the right place. Do not think of the agent as better than you. Do not feel as though he is always right and you are always wrong. When I first started out negotiating properties with some of the best people in the state, it was easy to assume everything they were saying was fair and reasonable and that they are experts and therefore know more than I do.

Keep your head together, remember the plan you came with and do not deviate too far from this.

Professional negotiators will save, or cost you thousands of dollars depending whose side they are on.

For the full article go here

Ian James


Recent Articles Of Interest

Time for stamp duty cuts

To ensure home buyers don't pay more than their fair share of tax, the REIV has requested that all political parties contesting the November State Election adopt a policy to reduce stamp duty rates. In response to strongly growing property prices, the current government cut rates four years ago and the time has come to do it again.

A review of stamp duty bills on a median-priced house in Melbourne shows that home buyers face a higher stamp duty bill compared to one or two decades ago.

Over this time, the government did not make a decision to increase its tax take; soaring revenues are due to bracket creep and inaction.

Read the rest of the article here (Source: REIV)

August REIV vacancy rates

Another month has passed with very little change or improvement in the availability of rental homes in Victoria. The August release of the REIV's residential vacancy rates showed that a mere 1.7 per cent of rental homes were vacant, the same as in July this year and slightly better than this time last year when it was 1.4 per cent.

This is in stark contrast to the first half of the last decade when rental homes were much more available; for instance, in August 2003 the vacancy rate was 3.6 per cent.

Unfortunately, due to insufficient investment and construction of residential homes, the Melbourne market shows no signs of returning to vacancy rates like that in the short- or medium-term. Renters will find that this translates into higher rents and higher competition to secure the home of their choice.

Read the rest of the article here (Source: REIV)

Record median house price following quarter of moderate growth

The REIV has released the September quarter median prices, which reveal that the median price of a house in Melbourne has increased by 0.9 per cent to $565,000 from a revised $560,000 in the June quarter.

REIV CEO Enzo Raimondo said that after 18 months of unprecedented growth that saw the median price increase by $160,000 from $405,000 in the March quarter 2009, price growth had levelled off.

"House prices have never been this high and it is clear that affordability will continue to be a significant issue, particularly for first home buyers.

Read the rest of the article here (Source: REIV)

Sam James


Spotlight on Melbourne Suburbs

In our regular spotlight section we examine a selection of Melbourne suburbs, highlighting what's happening in these areas right now.

Surrey Hills

Municipality: City Of Boorondara
Population: 13106 (2006 census)
Postcode: 3127
Location: 11 km from Melbourne CBD

Surrey Hills is in the City of Boorondara, it is located approx. 11km east of the Melbourne CBD. Surrey Hills borders Mont Albert, Balwyn, Box Hill, Canterbury, Camberwell and Burwood. Surrey Hills is a very sought after eastern suburb, the streets are mostly tree lined and there are parks scattered all around the suburb.

The houses in the area range from double fronted Victorian homes all the way through to new architecturally designed homes. There are also some fantastic villa units spread throughout.

The suburb is accessed via train, tram and bus. The tram runs along Riversdale Road from the city out to Wattle Park. The train is close to the shops on Union Road. These shops have a mix of take aways, restaurants and boutiques.

Surrey Hills has shown fantastic growth historically putting it in the top third of suburbs in Melbourne. Whether looking for a family home to live in or a unit to rent out, make sure Surrey Hills is added into your search.

Median House Prices

Sep 10
Jun 10
Mar 10
Surrey Hills $1,154,500 $1,351,000 $1,445,000 $1,065,000 $1,095,000 23.4%
Source: REIV.

Median Unit Prices

Sep 10
Jun 10
Mar 10
Surrey Hills $588,750 $675,000 $826,813 $560,000 $520,000 29.8%
Source: REIV.

Photo from Wikipedia

Courtney James


Addressing the proposed 'housing shortage'

Another week passes and yet more arguments on the wisdom of property investment. New reports of an extreme national house shortage hit the media, this time from Goldman Sachs who foresee a 250,000 housing shortfall by 2013. It's not easy to accurately assess the gap between available house supply and demand. To do so analysts take numerous factors into account including rental vacancy rates, the number of homeless, the level of migration, and various other statistical data from the 2001 and 2006 census. Somewhat confusing is information in the 2006 census which recorded 830,000 unoccupied dwellings scattered across Australia. On the face of it this places a large question mark in front of the supply equation and various critiques jumped on the data to form arguments proposing undersupply statistics are myth based imaginings used by the industry to further fuel an unstainable housing bubble.

However what the data doesn't represent is how many vacant dwellings are second homes, homes in the process of sale or homes awaiting redevelopment. Furthermore, findings by the National housing supply council in their '2010 State of Housing Supply Report' did note that areas with a high proportion of unoccupied dwellings are located in low density low demand regions such as neighbourhoods popular for holiday homes, or regional locations lacking amenities to attract significant demand.

BIS Shrapnel senior analyst Angie Zigomanis recently reported Victoria is starting to build more homes than required. However the main bulk of new home construction is around the outskirts of our cities- areas that simply can't rival the necessary lifestyle amenities provided in densely populated inner city suburbs. To be blunt, they are simply not locations people want to, or can practically reside in. This is probably the reason a mere 16% of first home buyers opt for new houses despite government grants offering generous incentives to do so.

Many buyers invest a lot of time, money and effort in assessing statistical data - attending seminars, purchasing online property reports, and wading through investment magazines. However advice is conflicting and although statistics are useful to a degree, they can be used by either side to reveal or conceal preconceived ideas further confusing the debate. Home buyers are more likely to purchase in areas providing good roads & public transport, close to jobs, schools, and shops or risk facing the cost and time of a long commute from regional locations. Obviously it's the suburbs providing adequate liveability that attracts the most demand and subsequently ever increasing property prices. In these areas, with few other options available, buyers inevitably face high mortgage payments and limited affordability.

Metro Trains Melbourne operates 16 train lines with 200 stops. Aside from some of the stations located at the tail end of zone 2, suburbs serviced by the overburdened train network attract the highest median house prices in their local area and gain the greatest demand from all ends of the housing market. As such, it's clear, access to public transport is top of the wish list for both buyers, investors, and renters. These suburbs are highly populated with limited, if any, land available for new housing. Buyers desiring an inner-city lifestyle are commonly restricted to apartment style living. In the middle city suburbs land has been subdivided into smaller lots and existing houses extended outwards and upwards. Council planning schemes have been relaxed in many areas allowing sub-divisions on ever decreasing block sizes and unless the matter is addressed, even our leafy suburban locations will forced to develop upwards and join the high rise culture. Neighbouring suburbs have naturally caught the ripple of buyers squeeze out by price growth, but demand has continually outstripped supply and pushed the great Aussie dream out the reach of many first home buyers.

So far the state governments answer to the 'shortage of housing' has been to action urban land releases on former farmland in growth corridors such as Casey, Hume, Whittlesea, Wyndham, and Melton - areas lacking in public transport, adequate health services, and other amenities needed to support a growing population. It was boldly stated that infrastructure would be provided in these areas to make them liveable for new home buyers, however this was to come in the form of a hefty new tax called the 'Growth Areas Infrastructure Contribution' - the GAIC. The GAIC is levied if land is sold, transferred or subdivided, or if sizable building works are conducted. The cost can be up to $95,000 per hectare and essentially this cost falls at the feet of the purchaser further increasing the cost of housing. There is negligible encouragement for any new home buyer to move into these areas and quite clearly it's going to do little, if anything, to address the growing issues facing the practicalities of sustainable population growth.

We do need more homes but not in new estates stretching out into far away farmlands. Melbourne already has well populated facilitated areas ripe for development which currently fall low on the radar with home buyers because they slip outside of zones with feasible transport systems serviced by existing train lines.

Doncaster, Rowville Bulleen and Templestowe for example were promised train lines in the 1969 transport plan instituted by the Henry Bolte state government. Plans purposely designed to cope with increasing population predictions. The scheme was heavily weighted towards extending the freeway network of which much has now been built. However it still leaves many of our outer suburbs crying out for better public transport systems which would go a long way in attracting families to the outer regions of Melbourne.

In 1985 the city loop was born with planners valiantly stating that it would be able to service 181 'plus' trains per hour including additional train lines. However the number of suburban trains per hour has remained much the same as when built - the project has been totally underutilized. Melbourne International airport is still arguing its case for a rail link. Our larger regional cities such as Geelong, Ballarat, Bendigo and Bairnsdale - would flourish with a surge of new growth if people could easily commute in 30 minutes via a 'real' fast train network to a true transport hub in Melbourne. Changes such as these this would open up affordable options for first home buyers and greatly relieve the intensity bubbling underneath inner city house prices. Changes that would arguably be more useful to the vast majority of residents than the proposed NBN network which has also been listed as 'necessary infrastructure'.

We now have two independent regional ministers with significant clout to encourage regional development. The potential is ripe for growth and holds much promise. It will be interesting to see if they can sway the government into implementing some of these practical ideas.

Catherine Cashmore


Technology Monthly


Polybius is probably the most mysterious game ever to have been released (if it was ever really released at all). It is an arcade game that supposedly appeared in the town of Portland, Oregon in the United States in 1981. The legend goes that the game proved to be an instant hit with the locals, to the point where many became completely addicted to it and started suffering unusual side-effects including amnesia, insomnia, night terrors, suicide and in one case a person became an anti-game activist. The game was said to contain flashing lights, hypnotic patterns and subliminal messages such as 'submit', 'consume' and 'obey authority' There were also reports of 'men in black' visiting the machines and instead of collecting the usual marketing data, they collected unknown data, which was allegedly responses to the psychoactive machines.

The game itself was rumored to be a cross between a puzzle game and a spaceship shooter...here is the description from the manual:
'Use left/right/up/down to maneuver ship clockwise/counter and towards or away from the base. Use fire to destroy enemies. Occasionally, glowing shapes will launch from the base with a red number circling them. If the number matches either digit on the base number (on each arm of the base) or is evenly divisible within, shooting it will reduce the base number by the polygon number. Getting the base number to zero advances to the next level. Intercepting the polygon will increase shields. Colliding with enemy pawns, missiles, or mines reduces shields. Scoring is based on enemies killed, reducing base number, and level change. The largest score increases are with divisible numbers, especially square roots. At higher levels, the base shoots a paralysis beam which may briefly immobilize the player. This occurs when all arms of the base align.'...Did you get all that?

Many people have claimed to have a copy of the game or an original arcade cabinet but no proof has ever been offered. In 2007 a website called Sinnesloschen (*WARNING* - Read to the end of the article before downloading) went online offering a 'remake' of the game based on interviews and stories of the original. The cabinet has also made an appearance on the Simpsons episode "Please Homer, Don't Hammer 'Em...". Below is a picture of the Simpsons episode next to a screen shot of the game.

PLEASE READ: This is the warning from the manual:
"WARNING This game uses strobe, auditory, and visual effects that could potentially cause seizures, nausea, motion sickness. DO NOT PLAY THIS GAME IF YOU HAVE SEIZURES, HEART PROBLEMS OR RHYTHM DISTURBANCES, PREGNANCY, OR ARE ON ANY PSYCHO-ACTIVE MEDICINES. If you have any of these or other prohibitive medical conditions, you should not play video-games in general, including this one. DO NOT PLAY THIS GAME FOR EXTENDED PERIODS OF TIME (may cause some motion sickness).

*Images from Sinnesloschen

Chris Thursfield


Recipe: Chinese Takeaway Fried Rice


  • 4 cups cooked white rice
  • 2 bulbs garlic, finely chopped
  • 2 cm piece fresh ginger, peeled and julienned
  • 6 shallots or 1 onion, sliced finely
  • 1 cup frozen mixed vegetables, boiled and drained
  • 2 eggs
  • 2 tablespoons light soy sauce
  • 1/2 teaspoon pepper
  • 4 tablespoons cooking oil


1. In a Chinese wok over medium flame, heat up the cooking oil.

2. Beat the eggs with a good pinch of salt and a small pinch of pepper.

3. Add the garlic and ginger, and stir fry until fragrant. Add the sliced onion and fry until soft and caramelised.

4. Add the rice, break up the lumps and stir fry until rice is loose.

5. Add in the light soy sauce, pepper and mixed vegetables to stir fry and mix well.

6. Push the rice to one side and pour the beaten egg into the vacant part of the wok. Bury the egg with the rice and leave for 10 to 15 seconds.

7. Fry for a further minute while mixing together.

*Recipe From Bestrecipes.com.au, Image is public domain

Chris Thursfield


Did you know?


Clever Puns:

1. The roundest knight at King Arthur's round table was Sir Cumference. He acquired his size from eating too much pi.

2. I thought I saw an eye doctor on an Alaskan island, but it turned out to be an optical Aleutian.

3. She was only a whiskey maker, but he really loved her still.

4. A rubber band pistol was confiscated from algebra class because it was a weapon of math disruption.

5. The butcher backed into the meat grinder and got a little behind in his work.

6. No matter how much you push the envelope, it'll still be stationery.

7. A dog gave birth to puppies near the road and was cited for littering.

8. A grenade thrown into a kitchen in France would result in Linoleum Blownapart

9. Two silk worms had a race. They ended up in a tie.

10. Time flies like an arrow. Fruit-flies like a banana.

11. A hole has been found in the nudist camp wall. The police are looking into it.

12. Atheism is a non-prophet organization.

13. Two hats were hanging on a hat rack in the hallway. One hat said to the other, 'You stay here; I'll go on a head.'

14. I wondered why the baseball kept getting bigger. Then it hit me.

15. A sign on the lawn at a drug rehab center said: 'Keep off the Grass.'

16. A small boy swallowed some coins and was taken to a hospital. When his grandmother telephoned to ask how he was, the nurse said, 'No change yet.'

17. A chicken crossing the road is poultry in motion.

18. It's not that the man did not know how to juggle, he just didn't have the balls to do it.

19. The short fortune-teller who escaped from prison was a small medium at large.

20. The soldier who survived mustard gas and pepper spray is now a seasoned veteran.

21. A backward poet writes inverse.

22. In democracy it's your vote that counts. In feudalism it's your Count that votes.

23. When cannibals ate a missionary, they got a taste of religion.

24. Don't join dangerous cults: Practice safe sects!


This months site is Retrosabotage

This site puts a spin on classic retro games such as Xevious, Space Invaders and even Mario. There isn't much more to say really other than go and watch some of them. Three of the best clips are:

1. Space Invaders - Invasion
2. Tetris - Twenty Lines
3. Mario - Jumping

*puns from Ebaumsworld

Chris Thursfield


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