Melbourne top-end buyers and sellers are making decisions again
At 6pm this past Saturday, the James Clearance Rate for $1 million-plus Melbourne properties was 56% on the 32 auctions we attended. However we think that bare statistic understates the quality of the $1 million-plus market, given we included a number of fringe auctions today and that current stock levels are swollen right now. All in all we think it’s a borderline balanced market.
The Weekly Review Bidderman, our demand indicator, was a healthy 1.6 bidders per auction. One in three auctions we covered had three or more bidders. However, one in threeauctions were ducks (no bidders) and the other third were somewhere in between.
Decisions are being made again. It’s as simple as that. Both buyers and sellers are making decisions again, and as a result market activity has been picking up all month.
Most agents are reporting a good March with good results and this is happening because:
Sellers are saying – OK let’s focus on meeting the market rather than getting “my” price.
Buyers are saying – let’s buy a home rather than worry about the future.
These assertions have been supported by a number of sales, particularly in the $2 million to $4 million bracket, over the last few weeks.
Other evidence is the fact that our company has been involved in four more purchases this week, averaging over $2 million in Brighton, Hawthorn, South Yarra and Hawthorn East.
Why?
Life goes on. We don’t believe it’s any more complicated than that. Children are still being born, growing up and leaving home. These things aren’t going to be stopped by the Greek economy – and Melbourne is a healthy place at the top end to be and in which to own a home in March 2012.
The last fortnight has had limited auction results on low quantity/quality offerings. However, this weekend with around 100 auctions $1 million-plus Melbourne inner-east and bayside regions we have seen the continuing public signs of positivity in the market of late February. Sure, this weekend’s clearance rates weren’t stellar, but then the number of auctions were up significantly.
Next week, the last auction day before Easter, is a super Saturday with around 150 scheduled auctions over $1 million in Melbourne inner east and bayside. This is our first for the year (which just shows how the market has contracted since last year). The market really only has one more hurdle before spring before we can confidently say that some positive life has returned. That hurdle is the late April to late May market – really the last run before things quieten down for winter.
Yes, there is increased activity, but if you think that necessarily means prices have increased then as a buyer you may be overpaying and if you are a seller you may not be selling. Increased activity in early 2012 means more buyers and sellers agreeing on price and those agreements are largely occurring because sellers are meeting the market.
Many buyers don’t take risk into the equation when buying. However, this market must surely be showing observant buyers that risk is just as important an element in home buying as cashflow and capital growth.
Mal James is principal of James Buyer Advocates, which advocates on behalf of buyers of property over $1 million. Mal writes weekly auction reports, advice and in-depth market analysis on James' website.