Out of the 8 auctions we attended today 5 passed with 4 of those in the high 1Mil+ range With these 4 auctions, despite there being plenty of buyers – even to the point of buyers hanging around well after the auction had ceased – few (if any) were willing to openly bid. When they did, their head was well under the reserve price with a big disparity between vendor expectation, and buyer supposition. This isn’t to say that nothing is selling for the big dollars – there are always those that are ‘out the box’. However the major buying demographic is firmly below 1 Mil, and until the market heats up, I don’t expect this to change. When dollars are being exchanged at this level – it’s commonly behind closed doors.
In the lower levels, if the auctioneer can inspire a couple of buyers to venture a bid it’s not unusual to see competition push the result a good way past expectation (see the first auction result below) – after all, we know from recent figures that home lending has increased and Australians are saving 11% or more of their income. Therefore there is a potential market to tap into which only needs an injection of confidence to perform at boom levels. However it’s hit and miss whether a purchaser really has the gumption and security in both the price they’re paying, and the home they’re buying, to invest without a good deal of hesitation. The tide hasn’t yet turned.
Plenty of buyers – but zero confidence – doesn’t make selling easy for the agents. This week, the patter had changed from ‘the stock market is collapsing – turn to the safety of bricks and mortar’ to ‘interest rates are dropping – step in before prices increase!’ However if the missing ingredient is confidence more so than price, is an interest rate drop really going to fill the gap? A rate drop signifies a struggling economy, and seeing as all four major banks and a few of the small players are already dropping their rates outside of any RBA move, I can’t see an official drop making a huge difference to home buying psychology.
As a consequence, agents are pretty eager to take offers prior to auction simply because it’s easier to convince a purchaser to put their best foot forward before an auction by ‘spruiking’ heated competition, than it is when evidence proves otherwise and the purchaser is wondering why – out of the 60 or so ‘buyers’ stood outside the home – no one is being persuaded to bid.
However the market is a long way from dead – it’s just lacking the component that spurs quick price growth – which is a good thing! After all a healthy market should follow a steady path, not short unsustainable cycles hovering between boom and bust. There were on average 60-100 people attending each auction we visited and open for inspections were crowded with bodies. Plenty were approaching agents after a pass in to enquire the reserve and indicate interest and the atmosphere matched the sunny spring like weather. However even with a marginally better clearance rate of 60%, there’s general acceptance that this is (for the time being) a ‘new’ Melbourne market which involves a lot of bartering, but only minimal bidding.
1/20 Wallace St, Murrumbeena was likely to achieve mid 600K according to the listing agent, and this was certainly in line with recent comparables. However with a bit of heated competition and encouragement from the selling agents placed surreptitiously throughout the crowd, the result was unexpectedly good! Opening on a genuine bid of $475K wasn’t going to impress the auctioneer who had been quoting in excess of 600K. However another buyer soon stepped in with a bid of $600K and from there on in it flowed smoothly.
With 4 bidders, the result climbed passed mid 600K and despite frequent demands ‘is it on the market’ from some of the bidders, the auctioneer didn’t budge until the bidding slowed at $677,500 and he had a chance to take his trip to ‘get his instructions from the vendor’. Upon return he announced it ‘on market’ and a couple of bids later shouted ‘sold’ to the tune of $690K.
52 Bond St, Newton in Geelong was another surprisingly strong result. Quoted in excess of $550K the auctioneer didn’t waste time and opened on a vendor bid of $550K. Four bidders pushed the price onwards and upwards, and the auction whistled past its reserve of 620K to sell under the hammer at $705K.
Meanwhile at the upper end of the price bracket 30 Foam St Elwood was struggling to get any interest at all. A smallish crowd of 40 or so attendees turned out to ‘watch’ and not a bidder was within cooee! A long pre-amble emphasising the home’s location ‘in the golden mile of Elwood’ did nothing to inspire. Opening with a Vendor Bid of $1,050Mil – and then a further vendor bid of $1.1Mil – the house passed in with a an asking price of $1.230Mil.
The same story was told in Middle Park. 222 Richardson St, Middle park – one of the most attractive locations in the suburb – was attracting a large horde of people but not a sniff of money, as buyers – obviously not inspired by Channel 9’s ‘The Block’ – tromped through the un-renovated Victorian. Quoting 925-975K the auctioneer was forced to open and close with a vendor bid of 900K, setting a healthy reserve of 980K.
The action was just a little livelier at 11 Woodstock St, Balaclava (although advertised as ‘St Kilda East’) Quoting 800-880K a large crowd filled the streets with cars and made themselves comfortable on the grass verge outside the home. The preamble was an Oscar speech in length with the auctioneer heralding Carlisle Shopping strip as the best in Melbourne and wasting no time telling the crowd he’d enjoyed breakfast there with friends only a short while ago. Not only did he disclose this little nugget of information, he also disclosed that 5 of his 25 favourite restaurants are located on Carlisle St and today is his son’s birthday! However despite the entertainment and much encouragement from the auctioneer declaring he could have got over a Mil for the property last year, the auction passed in with only one bidder offering a genuine bid of $800K. It later sold via negotiation for an undisclosed reserve towards the top end of the price range.
6 Walstab St, Brighton East was another entertaining auction – mainly because the Hodges auctioneer during his well-rehearsed pre-amble patter, came uncomfortably close to telling the crowd they were from ‘Hocking Stu…’ before – with apologies, giggles and embarrassment – he corrected his mistake. It lightened the mood, but didn’t inspire any bidding. Quoting 1.7 – 1.85Mil he opened on a vendor bid of 1.750M. The crowd was large enough to indicate interest – however after a short while and a quick chat to the vendors, he passed the property in on his vendor bid. The agents were approached by two interested parties after the auction – however nothing transpired and the reserve has been disclosed above the quoted range at 1.950M.
10/1D Tovan Akas Ave Bentleigh also struggled to move towards its reserve. Quoted in $550-$590K the auctioneer asked for an opening of $520K however got (and accepted) $500K from the one loan bidder. The property was passed it in for negotiation with the result yet to be reported.
Catherine Cashmore
