Are buyers finally getting the hint that now might be the time to buy? Overall weekly turnover has been trending upwards now for the past 15 weeks, coming in yesterday at a healthy 894 total properties sold. Therefore although the clearance rate held fairly steady at 57% it seems buyers could be moving out of hibernation – encouraged by more favourable conditions – as we progress towards the warmer months. After all this wouldn’t be unusual – we expect to see more buyers in the traditional Spring/Summer selling season. However what we don’t expect to see is a marked reduction in stock after what’s been a winter of record ‘stock on market’ numbers.
There have been many reasons put forward for the lower evolving supply of property. The most predictable being ‘pie in the sky’ vendor’s who aren’t prepared to sell under their pre-conceived ‘wish’ price. As a consequence, some have now decided to place their homes onto the rental market whilst others have delayed plans to move (note the increased rental vacancy rate which now sits at 2.5% – last year it was 1.5%). This has effectively turned the year upside down for selling agents who are used to listing higher numbers in spring to help line their pockets for the Christmas break.
When there’s a drop in stock, especially in a market that’s not really providing home buyers with properties suited to their needs – (at least not at ‘any’ price) – and yet there’s a bump in the number of people looking for property (including a more robust investor market,) – it is inevitable that we’ll see a higher concentration of buyers around certain listings and as a consequence, I expect a greater appreciation of growth to eventuate in the final quarter of 2011 than at any other time this year but only in certain areas and property types.
What we need to remember however is we’re not out of the doldrums yet. Aside from supply and demand, the greatest influence on our market is perception. The perception that the property market is in free fall still pervades most media outlets, even though it’s only true of certain areas and property types. I’ve often commented on how just one or two bidders who show confidence at an auction can have a motivational effect and cause the price to snowball. However even though there’s been an increase in the number of bidders raising a hand at the weekend auctions, it’s not necessarily having such a predictable outcome. One auction I attended this weekend achieved 5 bidders who weren’t shy about showing interest, but each participant gave no more than 2 bids for the property, and the well-seasoned auctioneer had to work hard to get even that!
This doesn’t mean there’s no competition – there is – however it’s not equating to boom prices across the board and if we were in a more confident economic climate, a reduction in stock at this time of year would do just that. This could be the reason increasing numbers of vendors are now choosing private sale campaigns over the auction process – something that could cause a push in the weekly clearance rate. However buyers often assume purchasing a private sale listing is less stressful and carries more certainty about the vendor’s expectation than those marketed for auction, but this is not necessarily the case. Most are advertised without a fixed price and still quote as if listed for auction. This muddies the water somewhat for buyers who traditionally expect to see a fixed price and negotiate downwards. However agents have had to pull out all the tricks this year to get buyers to meet their vendor’s expectation and the experienced have the process well honed. Therefore even if we do experience a hotter market atmosphere, the emphasis will still be locked firmly in favour of those who are able to negotiate and deals will continue to happen behind closed doors.
3/67-69 Mimosa Road, Carnegie is a classic 3 bedroom villa unit – one of 6 on the block – with the stand out feature of two undercover parking places. The home next door (number 2) had sold with one parking spot earlier this year for $591,000 so it was expected that this property would achieve a similar figure. Quoted at $540-590K and in front of a crowd of roughly 60 bodies the auctioneer asked for an opening bid. As is usual in these situations, everyone feigned nonchalance and therefore they were forced to open with a vendor bid of $540K. Considering the reluctance shown at the start, it was unexpected to see 5 bidders emerge from the crowd (albeit at a conservative level) Even more amusing was the realisation that not one bidder placed more than two bids throughout the entire event,( and a very hard working auctioneer had to fight tooth and nail to get those!)
At $580K it was announced ‘on market’ and a few of the previous bidders were encouraged to take a second shot. However it was a slow, painful, walk to encourage just $4K more out the buyers and achieve a selling price of $584K.
Also selling under the hammer, but with a more buoyant atmosphere was 10 Carramar Avenue, Camberwell. The five bedroom period masterpiece on over 600 sqm of land attracted 4 bidders and presented as one of the better quality homes currently on the market in the neighbourhood. There were no vendor bids at this auction – with one bidder opening confidently on 1.680 Mil it was just a hop and skip before it reached its on market price of 1.820 Mil. However it didn’t stop there, an extra 35K was squeezed out the crowd to achieve a healthy ‘under the hammer’ selling price of 1.855Mil.
However it wasn’t all fun in the sun for auction sales today. 1/6 Tollington Avenue, Malvern East, may have been beautifully situated with Hedgeley Gardens at the end of the street, but it wasn’t capturing the imagination of property shoppers in Malvern. Quoting $500-$550K – and long pre-ambles aside – the home failed to move past its vendor bid of $500K and passed in despite a crowd of what one agent took the time to count and inform me were 48 attendees.
15 Barina Road, Glen Iris had a little more success. Marketed in excess of 1.3 Mil in front of a crowd of roughly 60 attendees, the auctioneer wasn’t slow in opening with a vendor bid of 1.3Mil. He didn’t have to dangle the bait for too long however, here was a total of four bidders and the initial pace was both confident and fast. In fact the action didn’t slow until 1.450 Mil when, whilst still asking for 10k increments; one buyer was determined to offer only 5K. The auctioneer was adamant he would not accepted the bid, and for a good five minutes, a half time break, and further threats to the purchaser that unless they gave him 10K more they’d miss out – he finally did the decent thing, and accepted the 5K offer. The home passed in at 1.455 Mil however failed to sell via negotiation and is now on the market private sale for a price of 1.680 Mil
With the wind picking up to the point it was hard to hear the auctioneer or bids, 3/103 Cole Street, Brighton, prepared to go under the hammer. The nice little unit offering an entry level price into the Brighton market attracted a modest crowd of 50 and 2 bidders. Quoted in excess of $550K the auctioneer didn’t need to open on a vendor bid because a chap at the front of the crowd was quick to offer 550K to start the ball rolling. You only need 2 bidders to make an auction, and with an air of confidence the price soon climbed to its on market level of 600K. Another few bids, and some 24K later, it sold under the hammer for $624,500
Ending the day was 3/28 May Park Avenue, Ashwood. The well located 2 bedroom unit, quoted at $420,000 – $460,000 and ticking the right boxes for a home buyer or investor. According to the auctioneer there had been good interest leading up to the auction with a number of contracts being distributed prior to the day. Therefore it was somewhat surprising not to see it pass in on a vendor bid of $400K with a reserve of $460K.
Catherine Cashmore
