Herald Sun - Melbourne Market

HERALD SUN, Tessa Hayward 14 SEP 2019

Properties that sell $100,000-$200,000 above reserve are again becoming a feature of the Melbourne auction market.

Low stock levels and strong buyer demand are driving competition — and higher sale prices — under the hammer.

So, how do buyers figure out what a property is going to sell for in this changing market?

Advantage Property Consulting director Frank Valentic said stock levels were 30-40 per cent lower than last year in many Melbourne suburbs.

“Buyers have FOMO (fear of missing out), you are going to have to pay more for the next one,” he said.

He said sale prices above reserve in today’s market were more likely the result of the forces of supply and demand rather than underquoting.

“Price guides are only an indication, no one has a crystal ball and you don’t know what other buyers are going to go up to,” he said.

Nelson Alexander Fitzroy agent Roland Paterson said it was very difficult to establish values at the moment.

“It is directly attributed to the unforeseen circumstances of lack of supply,” Mr Paterson said.

“We are looking at recent sales rather than sales data that is four to six months old.

“The complication with that is less turnover in the market means less sales to reference.”

He said it was difficult to forecast whether the recent uplift would be a short term trend that would taper off as supply increased, or if it would continue to Christmas.

“We have buyers standing at auctions today that were in a market three months ago where they might have been the only buyer in the crowd and decided for some reason not to do anything about it,” he said.

“Now they are going to auctions and there have five to six buyers competing for it.”

Hocking Stuart Albert Park director David Wood said agents were being responsible in setting price guides but it was hard to predict where some prices would land.

Mr Wood recently sold 145 Park St, South Melbourne for $1.435 million, which was $335,000 above reserve.

“That one was really difficult to appraise, it was an old bakery,” he said.

“There have been a few runaway results where the market has been particularly strong, especially if you’ve got something unique.”

Mr Wood said many vendors had been reluctant to list homes for sale while the market was down.

“But they are seeing the evidence of prices improving and that might be the catalyst,” he said.

Mr Valentic recommended buyers do their own due diligence on a likely sale price.

“As a rule of thumb, properties that have wow factor like Art Deco homes, period homes, villa units and renovated homes are selling above the top of the price range by 10-15 per cent,” Mr Valentic said.

“If it is a modern apartment in a big high-rise building, you won’t see the reserve get smashed.

“Every property is different.”

A California bungalow in need of updating recently sold in Box Hill South for $1.721 million, a hefty $371,000 above reserve.

An Ivanhoe family, which missed out on another bungalow in the area when it sold for more than $2 million, won the keys to the five-bedroom house at 381 Station St.

Another dated family home at 20 Brinsley Rd, Camberwell smashed its reserve by $310,000 when seven bidders pushed its sale price to $2.41 million.

Mr Valentic recommended buyers attended as many auctions as possible, looked at comparable sales and accessed a sales database, such as those from realestate.com.au, CoreLogic or the Real Estate Institute of Victoria.

“Look at comparable sales and compare apples with apples, look at land and add and subtract the value of a renovation compared to another house,” he said.

Mr Valentic said talking to experts, including real estate agents and buyers’ advocates, was a good way to learn more about a local market.

“Don’t be scared to reach out,” he said.

“Whenever I am buying a property I contact a couple of agents in the area and ask for their professional opinion and I also speak to the agent that is selling the property.”

He also recommended asking as many questions as possible, including how many groups had inspected the home, how many had inspected it more than once, how many contracts had been requested and how many building inspections had been done.

Mr Valentic said inspecting a property as many times as possible would allow a would-be buyer to check out the competition.

“You can see how many groups attend and you can listen to dialogue to hear what they’re thinking,” he said.

“Do as much due diligence and arm yourself with as much information as possible so that you’ll be in a good place to go for it.”

 

Herald Sun - Melbourne Market