Top-end Melbourne property market not as inconsistent as it appears: Mal James
From the results over the past few weeks, it would be easy to conclude that the market is all over the place – up one week, down the next. But it's not as inconsistent as it may appear. It's just very picky at the moment when it comes to stock and price.
Before Easter we had a good supply of stock and we had vendors prepared to sell at market price. The result was solid clearance rates. After Easter things got quiet again. Then last weekend we saw some solid results across the board on quality market priced stock. And then this weekend we were back to slightly weaker clearance rates. Why?
The constant stream of economic news isn't helping, but we feel that the inconsistency really is down to stock quality and seller pricing – which seems to be changing on a weekly basis right now.
In fact, there could have been some more healthy results this weekend, if more vendors had been prepared to accept what the market was offering.
Take, for instance, 61-63 Alfred Street, Kew (pictured above), which last sold in May 2009 under the hammer with six bidders for $4.85 million in front of a big crowd. This time around another 100-strong crowd saw two bidders fight it out to $5.3 million. But instead of being sold under the hammer, it was passed in. It was being marketed by Jellis Craig agents Jim Shang and Richard James.
Another case is 6 Caroline Steet, Hawthorn East (pictured above), a good little single-fronter investment home being marketed by Marshall White agents Zali Booker and James Tostevin. In 2010 this sold for just over $1.3 million at auction. This time it passed in at $1.23 million, but not without strong demand from five bidders. The seller had the chance to sell if he wanted to.
Some may look at those pass-ins and see a market in trouble due to no sales. Yet there were a total of seven bidders across the two auctions, and the pass-in prices were not too far away from the previous sale prices. That indicates that we would have had a stronger clearance rate if sellers wanted to meet the auction price on the day.
Yes, there is weak bidder interest for overpriced and/or low quality offerings. But there is strong bidder interest on well-priced and quality homes – it's just that many times the level of that interest doesn’t quite match the expectations of the seller.
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.