A-grade homes will find buyers, but less-than-perfect offerings will struggle in spring

At 6pm last Saturday, the James Clearance Rate for million-dollar-plus properties was 65% on the 26 auctions we attended. This was a solid result on low numbers. At these stock levels we have moved our market indicator back to balanced, however prices are continuing to ease on a number of lesser-quality homes.

Bidderman, our demand indicator, was 2.2 bidders per auction, and although this was inflated by a huge volcano at 29 Rose Street, Armadale (nine bidders) there were two or more bidders at 50% of the auctions we attended. That figure is more indicative of stock shortages than of surging demand.

The demand hasn’t suddenly appeared, it was always there (at the right price on the right home). The current market is all about the increasing shortage of new family home stock right now and in the foreseeable future.

The market has moved from an overall nothing winter market to a two-speed low-stock spring one and during this transition it has dropped in price (with a few exceptions) – courtesy of the share market malaise. If you have an A-grade home and you are priced to market then you are selling strongly and even slightly better than a month ago.  On the other hand, if you have a home that has issues with position, land content or floor plan, then your end sale result is continuing to ease and doesn’t look like getting any better this side of Christmas.

It’s not really good news for buyers as the early spring (before Melbourne Cup) market is going to be one of the leanest for million-dollar-plus transactions in many a long year.

Let’s look at some of our data. We talk often about 100 (in number) million-dollar-plus weekend auctions being a solid benchmark for the inner east and bayside. As we move into spring, when you would expect several weekends to be above that number, we are not seeing any 100+ weekends, let alone Super Saturdays (over, say, 150). Instead we are looking at around 60 this weekend, 80+ next weekend for the first week of footy finals, and 70+ the next. Preliminary final day, at first plance, is looking OK but is not quite a hoped-for or expected Super Saturday.

After that there will be only three weeks between the grand final and the Melbourne Cup, which is throwing a googly at the traditional four-week campaign (you can’t have one), thus delaying more would-be vendors going to market.

And finally this leaves about six weeks after the Melbourne Cup for much of the spring market to get on, get bought and get in/out before Christmas – not a lot of time.

As we said, not all great news for buyers. For those without professional help we are suggesting hard work instead of patience as the solution to managing the stock shortage especially if you “need” to be in a family home before Christmas.

But while the market is weaker on many homes generally, it’s not weaker on good family “trade up” homes. These homes are far removed from the newspaper doom and gloom headlines, and we expect this will continue until more quality stock comes on; hopefully easing prices on these homes and also improving buyer choice. Trading up is a good idea if you can find the one you want and are then able to beat off the hordes of similar thinkers.