The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.

Category Archives For: Market and Humans

Neighbours and development

I was going about my usual swim yesterday morning when I heard an unpleasant exchange going on between a lady and a man between swimming lanes.

They were about 4 lanes apart and they were going right at it much to everyone's dismay in the pool.

Apparently they were neighbours and the man was in the process of building an extension that was going to block much of this lady's morning sun. It  was an explosive argument!

Fact is Melbourne needs to 'dense up' and the inner city areas will be under much pressure from new development as well as constant extensions for growing families that are urban dwellers.

It's important to look into this when buying. What threats exist as well as what opportunities are in store on blocks in close proximity.

You might be interested in buying a house next to a corner block. These often are prime for subdivision so don't be surprised if a townhouse gets proposed on that block.

Just think like a developer would and you might get the answer!

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Under Quoting

Following up on the quoting article yesterday, this issue seems to be a very emotional debate at the current time.

As buying property is what I do often, I must say that I rarely have trouble with how property is quoted. When you've done your research and know the market, then you can often predict an outcome for a property.

Yet, sometimes two or more people love a property so much and become emotionally invested, that the price pushes past anyone's expectation under competitive circumstances.

Lets face it. The market is back and strong. Runaway sales are happening with regularity. So is this just 'sour grapes' from potential buyers who've missed out on a property or two? No doubt some rogue like behavior exists and this needs to be rectified. However the market has a funny way of disciplining this. If agents mislead, then they'll lose potential buyers and their reputation.

Turning up to a single fronted property in Northcote quoted at $350k+ and expecting to buy this under $400k is normally just wishful thinking.

Experienced buyers often understand this and avoid these type of auctions. However the thought process of 'what if the property sold for $350k' see’s many buyers stick around.

Often a property that is quoted low, helps you as a buyer exploit other listings in the market place. If everyone is interested in the cheap one down the road (which will eventually sell over what's worth) then the other houses on the market at the same time can suffer from not having the interest they deserve. Thus allowing you to buy well.

Buying a home is one of the most emotional processes of the average Australian person. Newspapers know this and they know nothing gets good solid debate going like a story on 'underquoting'.

Variables so often exist with pricing. The market changes from week to week, some owners have low expectations and some have high, some agents are experienced others are not, buyers become emotional with one property while they neglect another.

Now I'm not saying that we don't have some poor behaviour from Estate Agents. At the end of the day they do want to sell the property to you, however they want to maximize the process.

Just to put it into perspective, average people who earn $40k per year own a house worth over $1 Million. Selling their biggest investment is not an every occurrence and this might possibly be the most stressful financial situation they have ever faced.They auction their home and their expectation changes from week to week.

This is a variable business. Each owner is different, every house is different, every buyer is different and every agent is different. Each situation has to be seen on its own merit.

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Solo Householders

It seems the trend of living alone has become increasingly more common, with more Australians than ever before going solo – and doing it in suburbs that were once considered to hold the nuclear family.

A five year study, released to The Age portrays mounting diversity of Australian households. 13% of all Australians 20 and over are living alone – almost 2 million people! Solo households represent a quarter of all households nationally.

Overall according to the study, this collection of solo householders are satisfied with their living arrangements.

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32 Vautier Street Elwood

32vautierst2I'm always interested in whole blocks of units being sold. They're getting rarer and rarer these days that you find an entire block on the one title.

The auction on Thursday at 32 Vautier Elwood was an absolute beauty. This stunning Art Deco (Pictured) block consisted of 4 x 2 Bedrooms and one 3 Bedroom apartment.

It had views of the water and was ripe for subdivision. The current rental return was $74,280 per annum however was severely underlet.

The sale price here was $2.625 Million. It was a competitive auction however it was a outstanding property to acquire.

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How things have changed

I was speaking with a client that I helped with a property transaction many years ago.

He was commenting on the change in lending practices that he noticed. When he purchased his first property, he needed a 30% deposit in order to obtain finance from the Commonwealth bank.

Comparing that to now where it has been possible to get 100% finance.

Just a little observation that I thought was worth remembering.

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A thought on Private Sales

Melbourne is the auction capital of the world.

Buyers expect property to be auctioned in our inner city areas, so when a 'private sale' is listed, a property buyer's normal response is 'was the property passed in at auction?'

The rate of vendors selling by 'private sale' has increased substantially over the past 12 months.

Many owners see a 'private sale' as a less risky alternative considering most properties marketed by this method don't have the same advertising expenditure for the owner. If a vendor doesn't sell, then there's less to cough up in terms of advertising money.

Many people ask me 'is a private sale an effective way to sell?'. The answer is yes, providing the property is priced right.

Often when a property is first fresh on the market it has it's best chance of selling well. Price the property too high from the start and a vendor can easily end up worse off as a result. The market comes through and they don't come back unless they see a discounted house.

A property buyer can do well by targeting a 'private sale' that has been sitting on the market for some time. As the price drops and the motivation of the vendor increases, a good purchase can be had.

Buyers can procrastinate when buying a property under 'private sale' conditions as well. The pressure is 'seen' as eased as no deadline looms like an auction date. However, if it's well priced and what you want. Don't wait act! Speed of making a decision to offer and purchase is paramount with Private sales.

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