oc | Monday 25th May

Light on the Horizon

This may have been the last of my regular, really long, walks for a while.

It’s 6.00 pm Saturday and what a change in outlook this week from last week.

We have moved from pause Pre-Easter, to part-time Post-Easter, to full-time from next week.

The phones are ringing again, meetings and walk through of homes are happening and Home Rating reports and strategies are being discussed.

There is increasingly more air in the oxygen tank as we anticipate the staged easing of restrictions from Uncle Dan! Do you see that torch at the end of the tunnel, the light on the hill, some sunshine on the horizon? We sincerely hope you can.

But please, we are smiling over the warming pie rather than any real gorging on turnovers.

Actionable is still far lower than underlying and it’s a similar story with supply.

This is our market now;

Melbourne’s Top End market  – are we on a ledge or at the bottom?

This is a real question we get asked all the time and we have no credible answer. Is it even the right question to ask right now?

Predictions on market directions have been wrong in 2018, 2019, and in January 2020 so the chances of getting it wrong again are high.

Has the virus really shocked our markets?

Has the virus market merely surprised us?

Has the market now simply changed the direction again, just like it has many times over the last 20 or so years?

Remember this graphic we put out at the beginning of Corona

A consistent thing about our Top End Melbourne market is its .

What does Volatility mean?

  • All property outcomes aren’t the same. Your result is not a linear certainty.
  • As all outcomes are not the same, by logic, blanket solutions are not the answer.
  • As you cannot rely on the macro blanket solutions then your own micro-decisions can have a real positive or negative effect on your outcome.

We think you can improve your buying and selling outcomes in the second half of the year.

So let’s start with the right question.

What can I do to improve my property outcomes?

  • Challenge what you’re being told
  • Reconsider what worked and what didn’t work in the recent past
  • Work with and exchange ideas with people who are thinking innovatively for your situation

Not since the 1990s has your micro choices meant so much in terms of your outcome as they do now.

As a buyer your of buy agent/advisor, method, timing, presentation and negotiations at Melbourne’s Top End matters.

As a seller your choice of sell agent/advisor, method, timing, presentation and negotiations at Melbourne’s Top End matters.

Your short, medium and longer-term strategies all matter.

And in 2020, be you a buyer or seller, you need some new strategies plus the good oldies (land, hold time and price paid etc.) Some agents/advisors have new strategies and some agents/advisors do not.

Here are 3 statements you may have heard in Top End Melbourne Property;

1. are a waste of money

As we’re too close to this issue, we will leave it to the thousands who have engaged us at $3m, $7m, $12m and $20m to speak for our work.

2. New ideas can’t work

One of the many ideas we put forward recently was Multi-listing. Whilst we had enquiries from , not one agent rang to talk about free advertising on their client’s unsold home on Market News or any other variations or possibilities. Wow.

Buyers and sellers –  you are in a brave new world in 2020 but seemingly, a lot in our industry still remain in 20th Century thought silos.

3. I’ve got a strong Asian buyer on it

Anecdotally, this part of the market has been a lot quieter for two plus years  (read our previous market news of 2017/18/19 if you like).

  • We reported “Asian” bidders on the first two weeks of our opening Market 100 Auction Test in 2020 as again negligible.
  • On the buying side, we haven’t been beaten by an overseas Chinese buyer since 2017 that we can recall.
  • On the selling management side, we cannot recall an overseas Chinese buyer purchasing since 2017 – happy to stand corrected but we think the last one was the buyer of Grange Road, Kew at over $11m, for our clients who went on to buy 9 Towers in 2016.

Here are some real facts for when the agent tells you they are flying to Beijing regularly; they have a Chinese speaking assistant and WeChat is a winner.

The real facts are maybe it would be better they are flying to New York or Hong Kong and it may soon be better they speak Canadian rather than Cantonese.

In 2015/16 when Melbourne had 44% (25% more than Sydney) of the FIRB residential applications our Top End markets were completely out of control.

We would offer $4,000,000 – a good solid price and two or three Chinese buyers would go past us by a $1 million and by mid-2016 nobody found that surprising.

Things have changed dramatically since then due to non-resident taxes, tightening of FIRB rules AND some overseas money will have found less taxing ways to arrive in Australia through existing citizens.

This is the “proof” you hear from us agents – Foreign Investment in Australia is increasing – that’s true.

This is what you might not hear and need to, as you work through your agent and your marketing as a seller or your bidding and negotiations as an EOI or Off-market buyer.

Yes, China still has the most FIRB residential approvals BUT they are 16% of what they were five years ago for existing dwellings. 16%.

That’s an 84% fall – PRE VIRUS.

And Melbourne has by far the greatest exposure to overseas buyers.

For existing homes for all FIRB Australian buyers, the numbers have gone from 5,876 to 1,312 in that time period.

Side note: China is now number five in terms of overall FIRB – down from number one. In fact, New Zealand and the UK combined, had more (overall $, not residential numbers) FIRB approvals, than China.

THIS IS AN ABSOLUTE POSITIVE  – FOR RIGHT NOW.

The market pulled itself up in the second half of 2019  – after the “China withdrawal fall” of 2018 –  on the backs of locals and bank lending, not overseas buyers. The 84% drop had already happened!

2020 was already a different market BEFORE the virus and will be even more different after it.

In 2020;

  • Where is your market be you a buyer or a seller?
  • What are your strategies?
  • Do you really think the same ol’ same ol’ hype will get you ahead?

In 2020 and beyond, the difference will belong to the outliers;

  • Think micro, not macro in your outcomes
  • Create bespoke, not blanket strategies/agent decisions and
  • Respond, not react in your negotiations

We really think things can be Ok going forward and you can get good results …….. but not from the dinosaurs and the thought silos, ……

So think differently and talk to those with ideas (some new) …………. consider what you want and leave what you don’t.

The Top-end market is………not……….how it was.

 

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