Commentators love terming our market a ‘buyers’ market’ yet ask the average ‘home buyer’ if they’re finding it any easier to purchase property, and I doubt the answer would be an out and out yes!
It doesn’t matter how much stock is on the market, if that stock doesn’t suit home buyer’s needs, it can hardly be deemed a ‘buyer’s market’ And in the current climate – offering plenty of stock for ‘set and forget’ investors – (rather than family home buyers) – it would be better termed an ‘investor’s market’!
Investors are not the same as owner occupiers. They do not have to warm to the “feel” of a home. They can be walking distance from any café, not their favoured one. They can purchase close to any good school, not the one their children attend. For an investor, it’s more important to have a generically good floor plan, than one than intrinsically meets their needs. They don’t need to buy until a good opportunity presents itself, and for this reason, they can step in and out of the market at will, picking the best opportunities currently available, whilst targeting the ‘need to sell vendors’. There are abundant opportunities for investors. It’s an ‘investor’s market’.
However home buyers rarely have such a luxury. When home buyers purchase property it often follows months of searching through limited suburbs of choice for a property with the particular idiosyncrasies to suit individual tastes. More often than not, when a home buyer finds their ‘dream home’ there are half a dozen other people who have targeted it as well – (and a discretionary vendor who will test the best negotiation skills.)
These types of home buyers represent the dominate buying demographic currently in our marketplace. They make up roughly 60% of the ‘shoppers’. They are either young couples looking for a family home, or current owner occupiers looking to upgrade. They tend to fall most commonly in the 500K-800K ‘couples’ price range, or above $1Mil upgraders and want sizeable homes, in middle ring suburbs, close to public transport and family lifestyle amenities.
Houses ticking these boxes are not in abundance, and as we head into winter the available stock supply is failing to meet demand. As a consequence, turnover is dropping, and some of the only the stand outs attracting the required concentration of bidders needed to exceed vendor expectation, are those that can appeal to this audience of purchasers.
Furthermore – in any market, as soon as emotional triggers take a hold, it’s impossible to take a considered point of view and judge a house objectively. Therefore average home buyers really do need to take cautionary steps before getting out the cheque book, and today’s results once again proved the point. Steady clearance rates, low turnover, but the odd ‘stand out’ result to contradict ‘buyer’s market’ headlines.
Passed in and Negotiated
6/63 Roselyn St, Brighton – Brighton is a suburb which appeals to owner occupiers, rather than renters, so when an affordable opportunity presents itself offering an attractive easy maintenance lifestyle, sitting in a street of 1Mil plus homes, you’d expect to get some interest. Quoting 540K-590K, the auctioneer kept the small crowd waiting, as he wandered out 10 mins late. Confident there was interest in the crowd, and not tempted to start with a vendor bid, he asked for an starting bid from any of buyers he ‘knew’ were interested. The request didn’t go unheard – the auction kicked off with a genuine bid of 550K. However, what initially looked like it would be a competitive auction, died a sudden death as 2 bids later the action stopped at 570K. Unable to inspire the interested parties to dig any deeper, the highest bidder was taken inside to negotiate, and the home was eventually purchased for 610K.
Passed in on a genuine bid
8 Boondara Grove St Kilda East was another surprising pass in, however it was also an example of vendor expectation being a little too high to meet the current market. This beautifully renovated semi-detached Art Deco style townhouse located in the heart of St Kilda had been verbally quoted around the high 800K – low 900K range. However when the auctioneer asked for an opening bid, the price quote didn’t stop one hopefully punter trying his luck with a bid of 200K! The auctioneer made some quip about it being a little late for the Melbourne comedy festival and it wasn’t long before someone else offered 850K. 3 bidders competed, however none was willing to exceed the quoted range – (which was not where vendor expectation was sitting) The property passed in at 925K with a reserve of 1.025Mil.
The top end of the market has been struggling to gain much pace, and suburbs such as Albert Park – (which contain some of the highest priced land – dollar per square meter in Melbourne) – have had little interest to push capital growth since mid-last year. 37 Kerfred Rd, Albert Park, Quoting $1,250,000 – $1,350,000 is a well located, and nicely renovated single fronted period home. It also attracted a large crowd of ‘would be buyers’ It’s clear from the crowds turning up to the auctions that there are buyers waiting in the wings to make their move, but confidence is the missing ingredient. Asking for an opening bid didn’t result in any takers, and the agent was forced to open on a vendor bid of $1,250Mil. When there was no response, and with a reserve that was no doubt some way away, the agent was forced to make a second vendor bid of $1,270Mil before passing the property in.
79 Merton St, Albert Park told a similar tale, quoting $2,750,000 – $2,950,000 – this property was right at the price point that’s currently suffering low demand. However it was a beautifully renovated 4 bedroom home, abundant in period detail – albeit without parking which – although common in this suburb – would have deterred some. The agent was forced to open on a vendor bid of $2,750Mil – There was no interest from the small crowd of onlookers, although it was clear not all were neighbours, and some would have been there monitoring the market, however with a silent crowd, he was forced to pass the home in with a reserve recorded at $2.850Mil.
Sold under the hammer
Finally – the successful result of the day went to the house that was well set up to grab interest from the dominant home buying demographic currently shopping for real estate. The ‘family home buying market’. 7 Jenner St, Blackburn South, offered a ‘foot through the door’ chance for homebuyers to take advantage of a 3 bedroom original house, on a full block of land, close to transport, schools and shops, offering lots of potential to extend and add value into the future. Five bidders waiting to raise a hand however didn’t deter the auctioneer opening the action with a vendor bid of 490K without even asking for a genuine start. Entertainment value was further boosted when – approaching its 590K reserve, the auctioneer was prepared to take $50 bids to keep the action buoyant. It did the trick however, because the property sold – top of the range – for 619K.
Catherine Cashmore
