Caution - nervous bidders are pushing hard on auction prices: Mal James

Mal JamesFebruary 18, 20150 min read

At 6.00 pm on Saturday, on our first auction day of the year for Inner East and Bayside we have been to 13 auctions – all had bidders and all sold.

No emphasis on stats today as there were very few $1 million plus auctions , Inner Melbourne’s big auction games start next week.

I’ve really only had this week to get a “face to face street feel” on what’s happening in 2015. It appears to have started strongly and the vibe from the agents at the 20 homes which I inspected and rated was positive and “maaaate, the market continues to fire”. Heaps of people through opens.

Our company enquiry levels are up solidly on last year and we concur with what the selling agents are whispering under their breaths. We have already started with an auction win and a miss ($1 - $2 million) and the market hasn’t really got going in auctions yet. Off markets and other types of buying has also started for us.

Auction-wise, next week is different, a strong weekend with around 140 auctions over $1 million scheduled for Inner East and Bayside and the following week is a Super, Super Saturday with nearly 250. Hold onto your hats.

No we mean it – buyers should be holding onto their hats and only put their hand up if it makes sense. Every February we expect a strong start and this year is not unusual. After a six week Christmas hiatus there are a number of nervous nellies out there pushing hard on prices – it happens every year. It appears it will happen again this year.

So demand is coming from four types of buyers:

  1. New local buyers (average price thoughts)
  2. New overseas buyers (higher than average price thoughts)
  3. An array of nervous nellies (higher than average price thoughts)
  4. Last year’s wounded underbidders (higher than average price thoughts)

All these buyers are pushing through the February OFI doors like a Boxing Day David Jones Doorbuster Sale.

Every year around this time, we urge caution, 2015 will be the same. If it’s good, go for it; but once the bidding get’s past very strong, consider your competitors, consider your alternatives, consider stopping and trying on another home, another day.

Case in point (1): Last weekend on the one we missed at 14 Parliament Street, Brighton (Julian Augustini) – agent quoting around $950,000 to $1,050,000. We opened at $1,100,000 and then a guy bid $1,150,000 and then bid against himself up another $50,000 to $1,200,000. We competed against him and another bidder, until we were beaten at $1,325,000. Please, this was a good home for what it was and congratulations to the buyer – bought a good property, but the agents will tell you they couldn’t get it sold late last year around the opening bid (nearly $200,000 south of today’s price).

Case in point (2): We could have bought 8 Johnson Street, Hawthorn (James Tostevin) quietly last year circa $1,600,000. We didn’t. Today four bidders competed to just over $1,800,000.

Case in point (3): We couldn’t buy a property pre-Christmas off market, but bought it this year before auction – Glen Iris (Cameron Edgoose).

So has the market started with a bang or is this the usual February ”Berocca” effect where you wake up desperate, take a Berocca and go out there and take the world on?

Big numbers through opens in February is about as Melburnian as big numbers through the gates at the first round of the footy season.

While the market mood appears just as strong as last year, maybe even more so, any longer term market shift won’t be evident until Super Saturday 28 March and confirmed mid May.

Mal writes weekly auction reports, advice and in-depth market analysis on James' website.

Mal James

Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million.
Mal James
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