Doom and gloom time! - latest auction figures

[ger]

From The Age Domain Section Today
Quote:
Melbournes ajusted auction clearance rate droped to 44% after 121 of the 359 properties sold under the hammer. Yeasterdays auctions brought in $66 million compared with $230 million the same weekend last year.......
it is a sort of sleepy hollow says buyer advocate christopher koren of Morel & Koren. He said a renovated two bedroom art deco apartment at 9 Bluff st elwood passed in at $380000 yesterday. 18 months ago an unrenovated appartment in the SAME building sold for $454000
end of quote;

same time last year clearance rate was 72% with double the stock available
I would have thought with the shortage of stock the price would NOT go down
looks like I was wrong
Been to a lot of auctions latelly not many bids at all to stock over $350k
under that there is still some movements

 

[Aceyducey]

The lower stock figure may be misleading....

What's the total stock - auction & via other mechanisms?

The lower auction stock may be an effect of auctions going out of vogue as the means most promoted by agents to sell properties based on changes to the auction rules & the lower clearance rates.

Lower clearance rates are more likely an indication of the market being off the boil...personally I expect auction stock levels around the country to keep falling as people choose other tactics for sales.

I don't expect stock levels across the board to fall until winter & I then expect them to stay depressed next spring

This is across markets, so of course many local markets will vary!

Cheers,

Aceyducey

 

[Peter 14.7]

Hi Ger

Thats about 18% drop. It shows the crazyness of the boom. Buy at any price!

I wonder if in 5 years time we will look back and say "yeah it was obvious it had to drop 25%" like we did after the Tech crash?

Acey, I acknowledge they may have sold for more after auction but comparing auction result for auction result it is still bad.

Wish I could find a way to measure how many unwise investors there was in the same boat?

IMHO the bust still has legs subject to:

Interest rates - going up how much?
Forcing unwise investors to sell
Inflation rising - driven by fuel and drought

Regards, Peter 147

 

[Aceyducey]

Acey, I acknowledge they may have sold for more after auction but comparing auction result for auction result it is still bad.

That wasn't my point Peter

I was commenting on supply not price.

Cheers,

Aceyducey

 

[peelsman]

Spoke to 2 agents that I trust and one said "this market is s@#$" the other said "this market is f@#$$$".
I said to him I havent seen it this bad in the 7 yrs I've been buying property, he reckons "forget 7 yrs, the market hasnt been this bad since 1990, there are NO buyers for some property!"

HT

 

[House_Keeper]

What market are you referring to peelsman, which area & type of property?

 

[peelsman]

I beleive the cheaper flats are not bad (first homebuyers) but the expensive townhouses, houses and especially flats have copped a huge walloping. He gave me the example of a townhouse purchased new 6 yrs ago for 580k went to auction and they got no bidders on a reserver of 490 or something....
Tru A grade stuff is ok however

The area im referring to is the bayside of melbourne

 

[mmerlin]

This article has a "property economist" saying that Sydney high rise apartments are going to go into freefall.

 

[Aceyducey]

mmerlin,

I can't find a website for a 'Alpha Economics'. Or any references on the web to a 'Akis Haralabopoulos'.

I have no idea who he is or what the article means by 'property economist'.

Cheers,

Aceyducey

 

[mmerlin]

Yes same here, that's why I quoted "property economist"

Actually, the article bills him as "Experienced property economist Akis Haralabopoulos, from Alpha Economics"

I searched whitepages.com.au and cant find his business name, but if you search for his surname under residential NSW you can see his address and phone number: (02) 9570 8446

Suburb is Mortdale 2223, although this could be his home address, unless he works from home.

 

[mmerlin]

I searched ASIC's website and found no record of his company or business name or surname.

However, a google search found this page which might be his email address:
akis { a t symbol } pronet.net.au

 

[Aceyducey]

mmerlin,

Give him a call

Just to verify his existence as an experienced property economist, rather than a Greek Historian

Cheers,

Aceyducey

 

[mmerlin]

I found his mobile number at the bottom of this page
http://www-atm.physics.ox.ac.uk/rowing/trireme/ttpress.html

Tried calling him but only got a messagebank so I didnt leave a message.

Also referenced on this page
http://www.ihatebanks.com.au/behave.htm

And finally more googling (gotta love Google!) finds:
Akis Haralabopoulos, Chief economist at GIO Australia
on these pages (from 1998!)
http://www.expressindia.com/fe/daily/19981005/27855774.html
http://www.expressindia.com/fe/daily/19981027/30055014p.html
http://www.indianexpress.com/fe/daily/19981031/30455294.html

And two more recent PDF's (from 2001, and December 2002) bill him as
Akis Haralabopoulos, Manager of Research and Policy, REINSW
http://www.propertyprofessionals.com.au/flyer.PDF
http://propertyweb.com.au/research/pdf/pfocus-febflyer2.pdf

So yes, maybe he has some cred after all

 

[XBenX]

This article has a "property economist" saying that Sydney high rise apartments are going to go into freefall.

Hopefully - I need a new PPOR and Ive been thinking of making a move into the inner city.

 

[Aceyducey]

And two more recent PDF's (from 2001, and December 2002) bill him as
Akis Haralabopoulos, Manager of Research and Policy, REINSW

So yes, maybe he has some cred after all

Working for the Real Estate Institute!

Does that qualify as cred? After all - they are an interest group.

Cheers,

Aceyducey

 

[mmerlin]

Working for the Real Estate Institute!

Does that qualify as cred? After all - they are an interest group.

Cheers,

Aceyducey

Wouldnt the REINSW be more likely to talk the market up rather than down?

How would the REI benefit from talking about a CBD highrise unit "freefall"?

 

[Aceyducey]

Wouldnt the REINSW be more likely to talk the market up rather than down?

How would the REI benefit from talking about a CBD highrise unit "freefall"?

REAs buy up all the cheap units & then sell them after announcing that the market is strengthening again.......



Cheers,

Aceyducey

 

[mmerlin]

LOL good one

I suppose you could say it would benefit the REI's members if they can "condition" the vendors into accepting that their apartments are not worth as much as they want to sell them for. Plus motivate "bargain hunters" looking for a good deal to get out there and start buying...

It's one way to bring more economic stimulus to the market... more sales for the agents... sales = commission, even if reduced in price.

 

[Peter 14.7]

Don't you hate it when anyone can offer a "sound bite" like freefall and get publicity! Don't the reporters care at all?

Why dont they just interview Humphrey the Bear? Oh sorry...thats right, he does not talk.

Peter 147

 

[Aceyducey]

I suppose you could say it would benefit the REI's members if they can "condition" the vendors into accepting that their apartments are not worth as much as they want to sell them for. Plus motivate "bargain hunters" looking for a good deal to get out there and start buying...

It's one way to bring more economic stimulus to the market... more sales for the agents... sales = commission, even if reduced in price.

Think of it this way.

REAs are middlemen. Just like car salesman, stock brokers & retailers.

For all of them there are two ways to make profits...

1) Sell high margin products....you only need to sell a few.

2) Sell lots of low margin products.

Normally due to competition & the market (1) is hard to achieve unless your product is exclusive and/or unique.

Thus most middlemen make most of their money by using the lower margin / high turnover approach, except for a few lucky souls who own Porshe dealerships, have a reputation for selling million + property or sell exclusive label fashion & jewelry.

So for REAs it's normally best to sell as fast as they can....the additional profit from getting an extra $50K (say 5% or $2,500....or which maybe 50% is kept by the agent) is not that much compared with the effort they have to exert to get that extra money.

This is exacerbated by the fact that REAs, unlike other middlemen, have to work harder to procure 'stock' to sell than most other types of middlemen!!!

So they need to use their energy to locate new vendors & convince them to use their services.

Thus unless if a REA has a solid salary behind them & the principal has a solid cash position, most REAs look for faster sales rather than best prices....which isn't to say that they don't try to do right by the vendor, it's just that there comes a point where the REA has to think about keeping their own children fed & mortgage paid!!!

No sale = no money, so any no sale is a waste of a REA's time!!!

Slow sale = cashflow issues for many REAs.....

Cheers,

Aceyducey