Fresh Market News

Melbourne July 19th & 20th, 2008.

The clearance rate was 63% per cent with 306 homes sold and 177 passed in from the 483 auctions held this weekend.

Million Dollar Melbourne.

$1 Million dollar plus activity.

The market is really in a very down frame of mind about auctions as we go to press with our latest market news. Looking at the results below of the 28 reported sales below (leaving out private sales) only 8 sold at auction or a reported clearance rate for homes over a million dollars of 28%. The general feel around the auctions was very negative and downbeat.

You can make life as negative as you want but the long term facts are our clients are still buying homes (at a lot better prices than last year) because if you believe oil is going through the roof owing to demand and supply factors then why wouldn’t big land in great spots be doing the same in the longer term.

Not that it is our job to interpret or defend or comment too deeply – leave that to the newspapers – We see our role to buy or pass on homes depending on the facts. There are not a lot of quality being offered at the moment (meaning now) but when they appear either on or off market we are buying for people who have a long term horizon.

Auction attended this week.

10 Norwood Ave, Brighton
This was a property that we rated as land only at 711 /1000. The house itself is very liveable but doesn’t flow well, however if you only had $2m and want to retire near Brighton Beach then it would be hard to not at least consider this. As a land site its main issues were its lack of depth and its south facing rear. The auction itself had about 50 people there and effervescent James Paynter started and finished it with a $1.8m vendor bid. The paper has reported there has been a later higher offer but it still remains unsold.

This sale also has ramifications for the very high quality but still unsold 18 Norwood Ave
Brighton which we rated at 816/1000 a few weeks ago. Land characteristics are almost identical with 10 being slightly smaller but they are both on the south side of the street. If 10 Norwood does eventually sell for around $2m does this mean the actually building at 18 Norwood is worth between $3.5 and $4million. The main issue we had with 18 Norwood was we thought it was overpriced and we still do.

21 Immarna Road Camberwell
This was a property that we rated at 754/1000. The house itself is your fairly stock standard developers or builders home of average quality on a good sized block in a OK part of Camberwell. 30 people at the auction and Geoff Hall did his best to excite an unexcitable crowd with no bids and a pass in on a vendor bid of $1.85 million.

With a reserve and now private sale asking price of $2m this property may also prove hard to sell despite its north facing rear. Our reasoning is 18 Gowar Avenue Camberwell (very similar home but sold a few months ago) had a similar auction and pass in auction strategy and reserve with Jellis Craig. The final result was considerably less than what is being asked for now.

123 Male St Brighton
Not the highest rating duplex you will see with no car parking and floorplan that has its problems. We rated it 117/1000. 40 people at the Hodges auction under auctioneer Jason Swift. Like many other auctions this weekend – no interest from the 40 people present and it passed in on a vendor bid of $730,000.

98 Rowell Avenue Camberwell
By the time we got the 98 Rowell Avenue Camberwell I was wondering if the sun was going to come up tomorrow. Thank heavens auctioneer Glen Courtinho from Hocking Stuart showed that it would. Another property they we did not rate highly 188/1000 and it was very surprising to see such strength in the bidding. 100 people at the auction –bidding opened at $1,050,000, was on the market at $1,160,000 and with 4 different bidders it was sold for $1,291,000. This result was surprising although it does show you that with a good quote - $1.1m and a good street (Rowell) that a less than great home can still sell in this market for a good result – for the seller.

8 Hawthorn Glen Hawthorn
We don’t normally get into the quirky side of real estate but if you want to show your children a fairy house then have a look at 8 Hawthorn Glen Hawthorn. We rated it as land only 681/1000 as the house is a bulldozer job and the block has a south facing rear. However,  great location for a new home site if you have an inventive architect.

OFF MARKET – MAJOR HOMES

Three really grand offerings on the market. If you had around $10 million which would you buy?  In other words how do they compare?

We rated this property 771/1000 this one 756/1000 and this one 408/1000

First and foremost buying any property well is about going through a process.

1. Clarifying Your Needs
2. Find - in this case we have.
3. Assess
4. Negotiate

So before you bought Barnsbury, Salisbury or The Avenue it would ideal if you the purchaser had some clarity on who you are, exactly what you wanted now and also in 5 to 10 years. What other people within your inner circle wanted and so on.

Your Needs
For instance if you were a risk taker then the issues with other development at 160 The Avenue Parkville might not be an issue especially with its central location. If you were after a grand family home and were prepared to put $1-$3 million into a renovation then 1 Salisbury would be a great property to think about. If you wanted a home that took you back to the old colonial days and you had a leaning towards to their lovely botanical gardens, then 9 Barnsbury would have some of your interest.

Assess
In many ways these sorts of homes are a lot more complicated to assess in terms of value because of rarity of offering, lack of comparables (very few homes like this are sold) and what the market is actually doing right here, right now right on Barnsbury or Salisbury or The Avenue – after all you may have no competitors but you may also have strong competition from overseas or developers or other very private buyers.

Negotiate
On these sorts of properties that is always to the big question. How do you manage an expression of interest or tender. There are many traps for young players. Bidding against yourself; gazumping; not understanding all the development restrictions are some of the negatives. Looking for win-wins, managing terms to suit and of course buying your dream home are some of the positives.

We have found over the years dealing with competent agents in a professional manner after you have done the appropriate amount of research (meaning you understand real value and other issues) are the cornerstones in getting the best results.

Show Me The Money

Auction attended this week.

Very Classy Residence...

31 Clowes Street, South Yarra.
This is one of the better inner city residences I have been to. Luxuriously appointed kitchen and bathrooms and very nice living spaces. The home was completely refurbished in 2007 by Nicholas Day and absolutely oozes class. We rated this property 638/1000.

Positives (apart from the building itself) – proximity to Botanical Gardens, Yarra River, sporting precincts, extra good storage and car garaging.

Negatives – south facing courtyard lacks light, road noise from the Monash and for me, no downstairs bedroom can be a negative (the study could be used, but no bathroom to support it), and there are flats across the lane way.

Agent Marcus Chiminello from Marshall White is seeking somewhere in the mid four millions. There is not a long list of recent comparable sales to draw a conclusion regarding the price, but emotion and appreciation of quality should see it sell in and around that level.

13 Edro Avenue, Brighton East.
This is a victim of tough selling times in Brighton East if I have ever seen one. This is a good part of the suburb and a good street. The street’s just off Hampton Street such as Sashta Avenue, Bright Street, Camperdown Street, Binnie Street  are, in good times, hotly contested properties given their proximity to Brighton. This property is land value only, but a good size north facing rear block. Agent from RT Edgar was quoting $950,000 - $1,040,000 prior to auction.

We rated the property at 749/1000, as a land only rating.

About forty people  turned out, weather was nice, but bidding was slow and weak. Bidding opened at 850, auctioneer had his half time break at 900, and announced the property was on the market – not all that common for this to happen well below the agent’s quote. Deceased estate according to the agent and all proceeds of the sale were going to a worthy cause, and in fairness he did announce during the speel that the property would be sold on the day. Two bidders battled it out in small increments and the property sold at $980,000. Based on land size and location, I thought this was a $1.1m property.

11 Osborne Avenue, McKinnon.
This is a very nice family home that we rated at 771/1000. Agent Trent Collie from Hocking Stuart was quoting 1.17m – 1.32m prior to auction and on a cold and damp afternoon, a good crowd of about seventy to eighty people turned out and there was a good vibe about the auction. Lots of agents and a few buyer advocates were amongst the crowd.

Auctioneer Nick Renna opened with a vendor bid of $1.2m, and there was competitive bidding from two parties to $1.35m and the property was passed in. $1.35m would not be a bad result even in a good market. The property sold after the auction for $1.46m, a strong result in this market. A similar, albeit larger home in Chalmers Street McKinnon sold recently for $1.535m, but in a better and quiter street.

Osborne Avenue has a wide variety of homes in it, and does connect with McKinnon High School at the end of the street. It is an area that a significant number of homes have sold to Chinese buyers so their children can attend that school. The area also has a number of good primary schools.

10 Anderson Avenue, Bentleigh East.
Very family orientated area, in the north western corner of Bentleigh East. Good family home, 4 bedroom, 2 bathroom and a great living area. We rated the home 743/1000. Nice feel, but not nice enough for any bidding. Auctioneer Nick Renna from Hocking Stuart opened with a vendor bid of $780,000, had the traditional half time break, but still no bidding upon his return. A crowd of forty of fifty people attended, but there was no buzz and the home was passed in on a vendor bid of $800,000.

The pre auction quote was $770,000 - $850,000 and there are scores of comparable Bentleigh East sales to suggest this is a good buy, even at the top of the range. The reserve was reported as being $879,000. This time last year, I would not have been surprised to see four or five bidders on this home and a result that may have seen something closer to the high $800,000’s, given it’s inclusion in the McKinnon High School zone.

902E/126 Rouse Street Port Melbourne.
This top floor penthouse has very special views across the bay and to the city from the huge wrap around terrace (about 24 sq. according to the agent). Inside, 4 bedroom, 3 bathrooms, ample living spaces and high quality kitchen and bathrooms. No downstairs bedroom may limit the market and the asking price of mid three million dollars could also offer a challenge to selling agent Selly Santoso of Ray White in Port Melbourne. REIV data does not give me any confidence to suggest a sale at that level will occur in a hurry; Rouse Street is a long way short of Beaconsfield Parade in terms of buyer appeal and you can see countless other high rise blocks from the terrace; something similar properties on Beaconsfield Parade may not have to encounter.

Nethertheless, the views are great, the living space is impressive, location is fantastic and I could put up with the view from the master bedroom each morning.
We rated this home at 593/1000.

Architectural advisory

Auctions attended this week.

9 Loller Street, Brighton.
Great Brighton location and north facing rear, this property offered a multitude of options (redevelop, bulldoze or renovate) and if the vendor was prepared to sell, this was always going to. I rated this property 620/1000. Every now and again you come across a smart-alec crowd bidder, and this happened here. A low take-it or leave-it opening bid followed by small raises (“what, you aren’t going to accept my $10,000 increase, there is nobody here bidding?”) were part of the artillery of this young man and most people would have found this annoying. I am sure the auctioneer, Leigh Hallamore did; he passed the property in to another bidder for $1,300,000 - $10,000 less than what was offered. “But you have to accept my bid!” claimed the young man. Unfortunately, no, the auctioneer doesn’t. The property did sell, for an undisclosed amount (believed to be below $1,400,000). Based on recent land results for Brighton, this was a bargain. But not for the angry young man.

49 Hobson Street, Newport
This auction was always going to be interesting. A house of good design and build yet there were other two dominant negatives with this – south facing rear and industrial views (see below – this photo unfortunately did not make the grade for the advertising material). I rated this 525/1000. Before a good crowd, auctioneer Wayne Sweeney opened the bidding at $750,000 - the base end of the quoting range. Three bidders obviously in love with the renovation and happy to live on the doorstep of a petrochemical minefield fought this out, and it eventually sold for $810,000. I felt this was a fantastic result for the agency and vendor alike – sure the house was good, but in a weakening market we have seen time and time again properties with dominant negatives passing in. With limited offerings on the market, often people panic and accept second best – I felt that is what happened here.

12 Elm Grove, Brighton
North facing rear and in a great leafy location. A good renter (currently collecting $2600 pcm according to agent) with few maintenance issues were other positives. The negatives were the house (a brick veneer spec home with a not-so-good layout – bedrooms to the rear instead of open-planned living and a façade which will date). Could easily change this. We rated this property 575/1000. David Hart of Buxton’s opened the bidding at $1,100,000 and closed it shortly thereafter in front a small crowd which did not bid and never really looked like doing so. At the time of writing this remains for sale at the reserve price of $1,350,000.

Happy Spouse, Happy House

Note to self: Just get into the market!

The average clearance rate of 63% over the weekend is being held-up by apartment sales. Across metropolitan Melbourne this week, the apartment clearance rate was 76% compared to houses at 58%.

What is this telling us?
Astute buyers are seeing great buying opportunities in the market place. These buyers may have decided to have a lower mortgage and buy an apartment instead of a house. If they stick to the same principles of buying well, they will have gained an increasing asset. It may not be what they originally planned but it will allow them to make money further down the track and then purchase their dream home.

The principles to buying a great apartment are as follows;

• Make sure the apartment is in a side street,
• Choose an apartment that has character for example Art Deco or 60’s Blonde Brick. Both of these styles have big rooms and high ceilings and look fantastic when renovated,
• Look in suburbs that hold their value and enjoy good growth in apartments for example St Kilda Elwood and Albert Park,
• Buy an apartment that is structurally sound,
• If possible buy in a block that has a good working body corporate and where the majority of owners live in the block (as opposed to renters).

MILLION DOLLAR SALES (all results can be found at REIV)

ALBERT PARK
S 25/156 Beaconsfield Pde B 7rm strata $1,931,500 Buxton
PI 4 St Vincent Pl B 6rm 182sqm $1,350,000 VB res $1,450,000 Hocking Stuart
PS Beaconsfield Pde B strata $1,570,000 Rand Corporation Elwood
BALWYN
PI 11 Crest Av BV 6rm 875sqm $1,520,000 VB res $1,650,000 Jellis Craig
PI 3 Banff Ct B 8rm 823sqm $1,000,000 VB res $1,050,000 Fletchers
BALWYN NORTH
PI 100 Hill Rd Rend 7rm 655sqm $1,200,000 VB res $1,359,000 Hocking Stuart
PI 24 Doncaster Rd B 10rm 1094sqm $1,725,000 VB res undisc Jellis Craig
PI 60 The Boulevard B 7rm 1006sqm $1,000,000 VB res $1,100,000 Fletchers
PI 7 Kyora Pde B 8rm 836sqm $1,425,000 VB res $1,550,000 Noel Jones
BEAUMARIS
PI 415 Balcombe Rd Rend 8rm 558sqm no bids res $1,245,000 Hocking Stuart
BENTLEIGH
S 11 Osborne Av B 9rm 700sqm $1,460,000 Hocking Stuart
PS Wright St $1,040,000 Hocking Stuart
BLACK ROCK
PI 26 Bent Pde WB 6rm 627sqm $900,000 VB res $1,000,000 Buxton
BRIGHTON
PI 10 Norwood Av B 6rm 630sqm $1,800,000 VB lo $1,950,000 res undisc Buxton
PI 12 Elm Gr BV 6rm 498sqm $1,150,000 VB res $1,325,000 Buxton
PI 704 Hampton St BV 7rm $950,000 VB res $1,000,000 Hocking Stuart
PS Boxshall St Rend 5rm 311sqm $1,300,000 Buxton
BRIGHTON EAST
S 352 North Rd BV 6rm $1,255,000 Ray White Port Melbourne
PS Glencairn Av BV 7rm $1,000,000 Hodges
BULLEEN
S 33-37 Bridge St v/land 1085sqm $1,020,000 Noel Jones
CAMBERWELL
S 98 Rowell Av BV 9rm 500sqm $1,291,000 Hocking Stuart
PI 21 Immarna Rd Rend 9rm 723sqm $1,850,000 VB res $1,990,000 Noel Jones
CHELSEA
PI 476-482 Nepean Hwy v/land 1122sqm $1,200,000 VB res undisc Stockdale & Leggo Patterson Lakes
ELWOOD
S 41 Ruskin St WB 6rm 500sqm $1,090,000 Hocking Stuart
PS Kendall St WB 4rm 446sqm $1,150,000 Rand Corporation Elwood
HAMPTON
PS Poole Av B 5rm $1,140,000 Hodges
HAWTHORN
S 153 Power St B 6rm 290sqm $1,070,000 Hocking Stuart
KEW
S 56 Fitzwilliam St WB 5rm 293sqm $1,020,000 Hocking Stuart
PI 99 Mount St WB 4rm 485sqm $1,100,000 VB res $1,250,000 Marshall White & Co
MALVERN
PI 50 Hunter St WB 9rm 602sqm $1,850,000 lo $1,950,000 res $2,080,000 Marshall White & Co
MELBOURNE
PS Queens Rd C 4rm strata $1,100,000 Icon Property
MOUNT MARTHA
PS Sinclair Ct B 9rm 2034sqm $1,225,000 Bonaccorde
SANDRINGHAM
PS Hobson St B 6rm 355sqm $1,150,000 Buxton
SOUTH YARRA
S 2/50 Garden St C 5rm 140sqm $1,005,000 Beller
PI 46 Hawksburn Rd 6rm $1,020,000 res $1,350,000 Kay & Burton
PI 30 Little Park St BV 5rm 136sqm $1,800,000 VB res $2,250,000 Castran Gilbert
ST KILDA EAST
PS Sidwell Av 7rm $1,065,000 Hayden Real Estate
STRATHMORE
PI 51-53 Streldon Av B 14rm 1300sqm $870,000 VB res $1,000,000 Nelson Alexander
SURREY HILLS
PS Warrigal Rd BV 9rm 709sqm $1,060,000 Jellis Craig
PS Wharton St $1,030,000 Hocking Stuart
WHEELERS HILL
PI 128 Grandview Rd BV 9rm 785sqm $850,000 VB lo $1,000,000 res $1,200,000 Ray White Glen Waverley
WILLIAMSTOWN
PI 24 The Esplanade Esplanade v/land 565sqm undisc VB res $2,650,000

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