National Property Buyers

by Antony Bucello & Catherine Cashmore

If you’ve been following the budget and numerous political highlights over the past few weeks and find yourself growing tired of fluctuating insecurity over interest rate movements and unemployment figures, then take a break and look towards the property market because it’s currently in a phase of un-changeable stability.

The clearance rate is now trending above that of last year, but the movements from one week to the next are marginal at best. Last weeks clearance rate of 62 per cent was revised to 61 per cent. This week’s clearance rate of 63 per cent is a strong result however; with 63 results yet to be reported, it may also drop mid-week.

The number of unreported results rises during a flat climate because more properties sell via negotiation than ‘under the hammer.’ Once un-reported results are collected, they go into making up the midweek revised figure. Although it’s frustrating to have a high number of un-reported results pending, agents are allowed to report properties as ‘sold at auction’ as long as auction conditions (no 3 day cooling) are applicable to the sale. Therefore late results coming in indicate the level of ‘behind closed doors’ activity occurring.

Such a climate is ideal from a buyer perspective. Under a heated auction atmosphere there is rarely a chance to take a step back and discuss budget decisions with a partner or take time out to ‘think’. A sale by negotiation allows this to happen.

The lowering un-employment rate in Victoria from 5.8 to 5.3 should be welcomed. However it should also be noted that the number has been patched up with an increase in part time work and fall in full employment. Therefore, it’s unlikely to play a part in the property market other than perhaps increase overall confidence in the economy.

The interest rate drop partially passed on from all four major banks, has helped free up disposable income and allows greater borrowing power from buyers wanting to take this option. However rates that go down below the long-term average also go up therefore it’s expected that buyers will remain cautious.

Perhaps the one dynamic factor that may bear effect on forthcoming results is the gradual drop in stock levels in the more popular suburban locations. It’s seasonal in winter to see lower stock levels, however considering there was record high stock last winter hampering the market for vendors, to see a reduction may entice competition at auctions resulting in greater numbers selling under the hammer and a possible rise in the metro median.

For the time being, power is still largely in buyer’s hands and the market broadly represents a level playing field.

The NPB clearance rate falls broadly in line with the REIV figures this week showing a rise in last week’s numbers. There is a growing shortage of quality stock with strong results evidencing themselves particularly in the inner northern suburbs. Those wanting to purchase this year would be wise to step in before prices start reflecting this trend. This is particularly applicable if your budget falls between $400,000 – $800,000. This is where the bulk of buyer demand remains.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 40 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

If the interest rates had inspired prospective buyers to head out shopping this weekend, the rain put a dampener on any marked enthusiasm. Albeit, there were a few stand out results that raised eyebrows – one auction we attended attracted 6 bidders and sold $175,000 above reserve. Situated in a coveted pocket of Ivanhoe with plenty of period appeal, it was no surprise to see emotional bidding which pushed the result into a ‘boom market’ price range (see ‘Auctions in the Spotlight’ for further details.)

This was the trend across all inner city suburbs. Properties with ‘standout’ attributes, which appeal to the major buyer demographic in the area, are performing consistently and not representing the general malaise lingering over the rest of the metro market. For example, 7/29B Hampden Road, Armadale, – a 2 bedroom apartment abundant with period detail with a quote of $590,000-$640,000 managed to attract strong bidding and sell for $737,000. It was another stand out result defying the overall trend represented in a 61 per cent year to date clearance rate.

However in view of the reality that only marginal rate drops are being passed on from our major four institutions (with a few still delaying announcement), the savings to the average mortgage holder ($600,000 and below) may provide a few dollars additional disposable income, but it’s unlikely to influence in the market in the short term. It historically takes weeks not days for rate drops to show themselves in median data.

Greater influences are issues of job security and the recent announcement by the RBA indicating the economy is weaker than initially predicted. Confidence is the biggest influence of growth in any market based on the fundamentals of tight supply and consistent demand. Therefore, if you’re looking towards a change in sentiment, it would perhaps be more apt to look at the polls rather than the cash rate.

Results so far this year are remarkably consistent as the 62 per cent clearance rate proves. It further emphasises that we’ve reached the bottom of the property cycle and in some suburbs, prices are starting to show hints of growth. However even though I don’t expect any great movement in the short-term, there’s a feeling of optimism across the industry that the news of more prospected interest rate drops may inspire those who have been sitting on the sidelines, to make a decisive move.

The NPB clearance rate is representative of the results evidenced in the ‘quality’ end of the marketplace. The increasing shortage of listings falling under this category, along with the rate drop, which will provide a benefit to most mortgage holders in the upper percentile of sales, is keeping the clearance rate consistently steady. As we mentioned a couple of weeks ago – we expect this trend to continue as we move into the winter months, during which stock levels seasonally drop to their lowest levels.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 39 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

Melbourne’s market place is growing increasingly fragmented. In an era where low interest rates are promoted by most sales agents as an indication of an imminent market uplift, it’s not proving to be the motivator for a large number of buyers who are more concentrated on their budget and own intrinsic buying requirements than speculating on a market that seems perpetually stuck on level ground. As such, it’s rare to see a buyer get carried away on emotion in this climate and as such the clearance rate remained on current trend at 60 per cent.

You can travel from one suburb where there is a clearance rate of 80 per cent and see heated bidding, to the neighbouring suburb with a clearance rate closer to 60 per cent and houses struggling to exceed the reserve.

Take Bentleigh/Bentleigh East for example where sales figures are strong and clearance figures have been beating the norm by a fair margin. (Bentleigh East’s year to date clearance rate is around 75%.) Every auction I’ve attended in the suburb this year has attracted more than one bidder and if not sold under the hammer, has managed to sell via negotiation on the day. Demand always seems to outstrip supply which is interesting because the Bentleigh and Bentleigh East market has a buyer demographic of principally ‘home buyers’ rather than investors, and more houses than apartments.

This falls in line with data from the ABS which shows loans approved for investors has fallen for the second month in a row whereas owner occupier loans have remained fairly stable.

Bentleigh and Bentleigh East tend to ripple from the more expensive suburbs surrounding them such as Caulfield and Brighton which have a higher median house prices. Both were suffering somewhat last year from low demand and significant drops in their median which was estimated by some to be close to 20 per cent as fewer top end ‘Million dollar plus’ homes sold. This year there’s been a marginal improvement but not enough to compare to the level of demand seen in other inner city suburbs and their clearance rates are below the average coming in at around 55 per cent.

Elsternwick is currently achieving the highest clearance rate of all areas that had more than 40 auctions. According to REIV its clearance rate is currently 83 per cent – consequently you won’t find any shyness from the buying market in this locality. However, the results are emphasized because Elwood is a comparatively small suburb and stock levels are tight. It’s therefore important for purchasers to understand and closely monitor the dynamics of each area before preparing a buying strategy.

The fragmentation in the market is not limited to neighbouring suburbs in the inner southeast. North of the city and in the western suburbs, the same differentiation between localities is evident. As always the good homes – quality listings – well suited to the average second home buyer demographic or young couple able to service a mortgage, are selling consistently. However, it’s hard to draw a line across the whole market and make sweeping statements of either a rise or fall in market sentiment.

The clearance rate in each suburb is an excellent barometer to gain good market knowledge of the heated interest by purchasers within a small suburban locality. It’s also important to get a feel of the percentage that has sold ‘under the hammer’ compared to those negotiated as a post auction sale. In an area like Bentleigh, most ‘appear’ to be selling under the hammer. In Elwood, properties are selling, but there’s evidence many are doing so behind closed doors (Elwood’s clearance rate is 61 per cent). The knowledge is essential from a negotiation perspective and should not be dismissed lightly.

In this week’s breakdown, results are as follows – inner city houses had a clearance figure of 68%, inner east houses 76% and inner south houses 67%. Residex released their March quarter data last week showing Melbourne’s house price had dropped 1.89% and units down 0.52%. This is in contrast to REIV figures which showed a marginal increase in the metro house price of 0.9%. Differences are down to variation in how the figures are collected and collated. However they show we have a way to go until the market – as a whole – shows overall evidence it’s transitioned from its flat platform.

Having said this, there is definite feeling of increased motivation in some areas coupled with a reduction of ‘quality listings’ in most suburbs. Aussie CEO John Symonds spoke on ‘Sunrise’ today indicating that the RBA would need to drop rates more than 25 basis points if they want the banks to pass on a proportion to mortgage holders. It further emphasizes how banks now control RBA movements rather than the reverse. As a buyer, it’s therefore essential that you employ a good broker to source the best deal available if you want to avoid the sleepless nights some are experiencing as a result of increased rate movements from the ‘big four.’

The NPB clearance rate has stayed fairly stable this week. Most properties are selling via negotiation and we have only seen a few auctions where results have pushed over our estimated opinion of value. Should the banks pass on an ‘expected’ interest rate cut by the RBA we may see a change in the prospective landscape and buyers pushing budget limits for the marginal quality stock available. This being the case, the NPB clearance rate would be expected to rise over coming weeks.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 41 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

Another weekend passes and although there was a lift in the clearance rate, which came in at 61 per cent on a reported 532 auctions, there’s little perceptible difference in the market place from the previous few weeks. An overall figure of 921 properties sold during the week and that indicates that the market is holding up well despite economic data signifying Victoria’s economy is strained.

The large number of unreported results at close of business Saturday (17%) makes it clear plenty of deals are still being sealed behind closed doors. This outlines numbers sold ‘under the hammer’ are marginal compared to other methods of sale, keeping our market firmly a ‘negotiators’ domain.

It’s clear from the numbers attending the auctions and opens that people have an appetite to buy, however what is also abundantly clear is the market is stagnated with a gap between what the majority of buyers are willing – or able – to pay and what vendors are willing to accept. However, this is nothing new in the Victorian residential market place, a vendor not needing to ‘meet the market’ is one of the primary reasons we have a platform under how far prices will drop. Consequently; in some areas, there has been a proportion of listings withdrawn from sale leaving poor quality stock lingering and ‘days on market’ extended.

You’ll often hear that our market is ‘fragmented’ and when looking at the suburb by suburb clearance rates this is indeed evident, with some locations with minimal stock outperforming others where supply is in abundance. Of those where more than 30 sales have been recorded, Elsternwick currently leads the pack with an 83.7% clearance rate on a reported 43 auctions.

Markets run on confidence as well as economic fundamentals, and with little confidence to promote more sales under the hammer and lift the mood, the market remains a negotiators paradise. Having said this, there is always the odd one that stands out from the crowd as you’ll see in our ‘auctions in the spotlight’ section below. In the inner northern suburbs, where stock is extremely tight, we’ve witnessed some strong results. I’d even go so far as to say, in some areas the market has tipped into a ‘sellers domain’. However, for most other areas there’s a longer flatter path ahead.

The REIV amongst others have suggested the only way for the market to pick up would be in the form of a ‘stimulus’ such as a drop in rates. However whilst the cost of long-term wholesale debt continues to challenge bank’s profit margins, we need to face the reality that this is unlikely to happen. It’s therefore interesting that two weekends in a row I’ve heard auctioneers announce that rates are low and likely to drop further. Maybe they have inside information the rest of us are not party to, or simply think their buyers are living in a box!?

Regardless, as we move into the cooler months, stock typically drops and this could well translate into higher competition around the few good listings available. For buyers; it’s better to act on those opportunities available than try and ‘time the market’ thereby risking getting caught on the wrong side of the property clock.

The NPB clearance rate has lifted from last week, which is largely in line with results published by the REIV. Mostly made up from those negotiated post auction, it was still surprising to see such a significant jump. With fewer quality listings coming onto the market, we expect the clearance rate to remain stable over the coming weeks and perhaps rise as competition around existing ‘good’ property increases. However whether this will result in price rises is debatable.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 35 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

A 55% clearance rate is the lowest we’ve had so far this year. However, in a weekend where only 369 auctions were scheduled, an overall sales figure combining both private sales and those sold at (or before) auction of 686, is in line with expectation. This week also saw the REIV announce Victoria’s median house price has stabilized with only a marginal increase of 0.9 per cent over the first quarter. This moves us from a revised December quarter median of $530,000 to a March quarter median of $535,000. Due to Christmas and Easter both affecting turnover in the first quarter of any year, a drop in the median house price is usually expected. Therefore, prices’ remaining stable keeps us on a level playing field signifying it’s still a ‘buyer’s market’.

The Terrain ahead may be full of unknowns as far as Victoria is concerned, with news this week that we’re facing a rise in unemployment state wide, as well as further worries concerning interest rate rises as the ANZ push up rates independent of the RBA – (we fully expect the others to follow suit.) However, for those looking to purchase property, a flattening in demand is an opportunity not to miss. Waiting for the market to turn towards an upward cycle of the property clock is not wise for those wanting to secure an ‘investment’ at the best possible price thereby making the most of any capital gains when they do eventuate.

It’s also important from a negotiation stand point to understand the dynamics of who sells in a terrain where there’s little growth occurring. At the moment we’re seeing a split between those who need to sell – either downsizing into more affordable accommodation or moving due to a change of job or financial situation – and those who are just ‘testing’ the market for some hapless home buyer to materialize prepared to pay the vendor’s ‘wish price’. Sourcing the ‘need to sell’ vendors is the key to securing a good price however, expect negotiations to take a longer period of time as both sides come to an ‘agreement’.

As is always the case in times of uncertainty buyers and sellers act with caution – and in many a case, vendors will delay a move until the waters have calmed. Every agent I’ve spoken to over the last few weeks has been reporting lower stock levels than this time last year. Certainly – if you do a search through just those listings advertised – there isn’t an abundance of choice available, at least not quality stock. If we see a substantial drop in listings, the continual rise in Melbourne’s population will dictate a movement into the next phase of the oft-quoted ‘property clock’ in the inner and middle ring suburbs where land is scarce. However, it would take a period of time before this is evidenced in the official statistics.

Overall, it’s a good time for buyers and judging from the numbers attending opens and auctions each weekend – prospective purchasers are not short on the ground. For the investors out there, yields have increased and in our property management department alone, we’ve fielded numerous offers for some listings far above the advertised weekly rental. Finding a tenant for good property isn’t a difficult task in the current climate. For the homebuyer, today’s market promises stability, little movement, and a chance to negotiate favourably.

There are approximately 610 auctions expected next weekend.

The NPB clearance rate has dropped from last week, which is largely in line with results published by the REIV. This is no surprise considering the low number of auctions scheduled over the weekend and Victoria’s economic prospectus as explained in our market wrap. With fewer quality listings coming onto the market, we expect the clearance rate to remain stable over the coming weeks and perhaps rise as competition around existing ‘good’ property increases.

The full list of the 38 properties reviewed by NPB this weekend:

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine

by Antony Bucello & Catherine Cashmore

Selling Agents are buoyed up on the current uplift in buyer demand which has been palatable across the industry. It’s evident not only in buyer enquiry rates which have been seasonably strong, but also in the numbers attending open homes, numbers which have been substantially larger than previous months. For this reason, there’s been a few stand out results which will no doubt bear effect on median prices when published at the end of the first quarter.

Neither is this demand limited to the blue chip inner city suburbs, in many respects it’s been stronger in outer regional growth locations some 40km from the CBD. Recent releases from the ABS show during 2011, Victoria experienced the highest population growth country wide. Top of the list was Wyndham which increased by 12,200 people between 2010, and 2011. This signifies that overall, affordability is still a concern, however in this instance as an investor you don’t want to be ‘following the population’. With land releases still occurring, capital growth will be limited in comparison to middle and inner ring localities.

There was a record number of auctions this weekend, a total of 1006 of which 929 results were reported. Although this spreads out the number of interested and potential bidders around each listing – thereby reducing numbers and in some cases competition – most of the auctions we attended attracted enough interest to get the ball rolling and the 60% clearance rate is higher than expected. Having said this, the real key to upward movement in prices lies in those that sell under the hammer and at present, many are selling via negotiation. Therefore caution still prevails – we’re not seeing the same reckless degree of competition which can be witnessed in a boom market, however we are entering a new phase of the property cycle.

In a market like this, where negotiation is the key strategy, for the best results, it’s important to ascertain the property’s ‘real value’ as well as employing a skilled negotiator to act on your behalf.

Yesterday 1118 properties – both private and auction – were recorded as sold for the week 26th March to 1st April 2012. This is a healthy number and falls in line with expectation. But if you look at the year to date total turnover, we’re still treading water comparatively to the last three years. So far this year, there’s been a recorded 10,173 sales; however last year at this time, there were 13,210 recorded sales. Therefore it is not unexpected that at some point we will enter an upward cycle of the property clock and this is positive for buyers wanting to take advantage of current conditions.

Most areas where auction is the preferred method of sale and the number of auctions has exceeded 30, clearance rates are in the 50′s and 60 percentile. However there are a few stand-out locations ‘outperforming’. Elsternwick is one such example, from a recorded 38 sales, the clearance rate is currently 84%. It will be interesting to see if this is replicated across the market as the year progresses.

The NPB Clearance Rate for the week was 75% – which falling in line with the REIV results, is slightly higher than last week’s clearance rate. We reviewed a total of 40 properties of which 28 properties sold and 12 passed in.

Once again, the NPB clearance rate is reflective of the uplift in market sentiment. Whilst demand is still strong for quality listings, agents are still pushing for pre-auction offers in most localities which is understandable as many auctions are passing in for post auction negotiation, particularly when vendors have unrealistic expectations about the ‘real’ value of their property.

Why is the NPB Clearance Rate always higher than the REIV Clearance Rate?

The NPB clearance rate is a snapshot of ‘investment grade’ or ‘cream of the crop’ properties representing only those we recommend to clients. These are properties that hold the best potential for a long term capital growth and rental demand. Whilst the Real Estate Institute of Victoria include all properties scheduled for auction (as reported by their members) – including those that are poorly located and unlikely to attract demand even in a robust climate; our clearance rate is far more representative of the market that represents our client’s best interests. It’s an important part of how we assess the best negotiation strategy for your needs.

The full list of the 40 properties reviewed by NPB this weekend:

AUCTIONS IN THE SPOTLIGHT

CONTACT US

If you need any assistance with searching, assessing or negotiating your next property purchase or simply wish to discuss your property buying needs, please don’t hesitate to contact us. Alternatively, you can complete our online Help Us Help You form and we will contact you.

Regards

Antony Bucello and Catherine Cashmore

Email Antony
Email Catherine