Winter Auction Blues….

Yesterday proved that any pent-up buyer nerves about our looming election were just hearsay. Buyers in the inner-ring suburbs not only bid hard yesterday, but showed strong evidence of the effect of our recent rate cuts. For many properties, records were broken, and reserves were exceeded beyond Vendor’s and Agent’s dreams.

Right now, a shortage of properties and a strong number of cashed up home-buyers underpin our inner-ring market growth.

Amy and I had four auctions to bid at yesterday; and while I was underbidder in a busy crowd at both 31 Hardwick St Coburg and 4/1 Furzer St Reservoir, Amy was not so close.

Clearly her competing bidders didn’t agree with our comparable sales analysis.

Amy’s first auction was at a double story 2BR townhouse in Yarraville’s Anderson St; a cute development managed by an Owner’s Corporation and aptly named “Toy Factory” after it’s original function. The bidders were numerous and the crowd was also strong. Despite our ‘mid sevens’ analysis, the property sold to a couple for $810,000.

Amy’s second auction demonstrated the power of limited stock in a winter market. We liked 56 The Ridgeway in Kensington for it’s Victorian charm, generous block and opportunity for improvement, but with a rental return of circa-$450pw to contend with, our investor client had to be ccnsidered with her stretch budget. The rental return was not strong. Appraised at low to mid nines, we felt our $930,000 budget could potentially have traction but we didn’t get her hopes up too high.

Obviously the other bidders (including another buyer’s advocate) didn’t agree with us. The other advocate’s intermittent phone texts to her client appeared to increase her budget above the million dollar mark, but it was the committed buyer in the crowd who secured the property for $1,026,000.

It’s important to note that in winter months, stock is often very limited. Vendors wait until spring for two reasons; they assume that because everyone else does it, it’s the best idea. They also like their gardens to be in full bloom, for skies to be bright and blue, and for the photos to look dazzling.

What they underestimate is the power of strong demand and limited supply.

Kensington has been a perfect example of this. A quick REA search shows that the only other single-fronted, period house for sale right now is on Bellairs St; facing the train line. Typically in this large-sized suburb full of period single-fronts, a number ranging around five properties on the market at any one time is standard. With only two, buyers attended this busy auction and fought like it was the last property within their grasp.

The biggest surprise of the day was a property which we’d earlier considered for an investor client but steered away from due to limited yard space, lack of parking and the proximity to local primary school. We’d estimated that 2 Forrest St Yarraville May have pipped one million dollars, but nothing prepared me for the surprise result of $1.224M.

What this winter is reminding us to have is patience and good memory.  Spring will present better numbers of listings and buyers need to remember that in many cases, the big impressive results happen often in winter.

Vendors who are thinking of selling in spring may be best placed bringing that date forward….