Melbourne's top-end property market starts the year quietly

So how have we started 2012? In a word, quietly.

By any previous year’s measurement, 2012 has been pretty quiet out of the blocks – except for agent claims of numbers through opens.

1. Only a handful of $3 million-plus buys
2. Little new stock of high calibre at this price level came onto the market in February. This is particularly so in the inner east. March may turn out to be different from what we are hearing and seeing pre-market with a number of sellers keen to get a result prior to our early April Easter. But that is conjecture until we see March new stock numbers confirmed.
3. When the market is quiet, agent turnover drops and so do agents’ incomes; unrest builds and the merry-go-round begins. During late 2011 and early 2012 agent coffee shop meetings have been up.

So yes, the market still seems a little quiet, but it’s not that bad. It’s pretty much as expected, and this weekend went as well as a selling agent could have hoped for.

What of the claimed increase numbers at open for inspections? We actually support this premise and the implication that demand may be stronger than the results show.  Our enquiry numbers are up and the number of clients looking for homes is also up on this time last year, even if we’ve seen little change in the number of clients in actual negotiation this year compared to last. Result-wise we also started OK, with buys in Fitzroy, Glen Iris and Brighton in the $1 million, $2 million and $3 million price bracket in early February. 

On the auction scene, overall demand was not too awful. At 6.pm Saturday, the James Clearance Rate for million-dollar-plus properties in the inner east and bayside was 58% on the 31 auctions we attended. The Weekly Review Bidderman, our demand indicator, began the year at 1.5 bidders per auction.

Last weekend’s numbers were low, at just over 50 in that million-plus bracket. But next weekend will have well over 100, a solid number. And we’ll see a similar number on March 3 before we have a significant drop on March 10 due to the Labour Day weekend.

Market wrap-up

• Overall the market appeared weaker on early results, i.e. under the hammer. As the day wore on though, and pass-ins were cleaned up, the indications were that the market seems to have started as well as could be expected. But it’s too soon to say it’s a clear positive trend.
• Stock levels on offer were low in number, in quality and in dollar value. Only two auctions had results over $3 million – one sold and one didn’t. So it’s still a bit foggy to us.
• A number of pass-ins were cleaned up post auction – meaning a lot of the action was not visible this weekend.
• The phenomenon that became very evident late in 2011 has continued in 2012. This weekend we counted 46 bidders at 31 auctions – so there is demand out there. But there was no evenness: five auctions had 50% of the bidders averaging almost five bidders per auction and the other 26 auctions averaged just under one bidder per auction.

‘Round the grounds:
Bayside – Low levels and mostly unexciting stock, so 56% is an even result.
Boroondara – Actually that’s pretty impressive first up – 83% clearance.
Stonnington – Solid start on low numbers  – 75% clearance
Port Phillip – Whoops – somebody forgot to tell the buyers auctions had started again – 20%

Market summary – year to date 2012

Last year was a year of generally falling prices – with the exceptions of the months of May, September and December. Yes, we finished the year off OK, but it was more a case or arresting the fall rather than any lighting of price rockets.

Last year we saw drops in market values on homes that started too high on price, with owners that then had to sell. This was particularly the case with properties that were of inferior quality or in poor positions. In many cases these drops were 20% and more off the Anzac Day 2010 high. A lot of that fall in value happened in the last quarter of 2011.

On the subject of price falls: some organisations are spruiking median price increases in the last quarter of last year as real stats, which only proves that there are dope tests that can have false positives. The market did have some strong results in December but overall it was a negative second half for many sellers (in terms of lower selling prices or not selling at all).

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.