Great Ocean Report with Marty Maher
Welcome to our Spring Great Ocean Report. Currently there is no amountof superlatives that can do justice to the active state of the property market at present and in particular, the coastal property market.
If you have dealt with us at Great Ocean Properties previously, either as a buyer or seller, you will know that the methods of sale that we use are very transparent but also very good at capturing any upside that is available in the market for our vendors. We understand our vendors expectation and quote a price range to match this.
When we have multiple buyers meeting the vendor’s expectation, we move to an online private auction via Zoom. At times we have had up to 20 bidders on these Zoom meetings and we keep going until the second last buyer dropsout, leaving the final buyer victorious. Currently, most of our private sales are ending up in this format.
In this very buoyant property market, it is safe to say that we have been genuinely shocked on many occasions as to where we have ended up at the end of these online private auctions.
Psychologically there is a lot going on in these private auctions that makes the format so successful.
Firstly, they are very transparent and as a buyer all you want is transparency. You want confirmation that the other buyers exist and at what level they are offering at.
You also want the ability to adjust your offer easily if another party increases theirs. Some agencies believe in a “first and final offer” approach, where the buyers only get one chance to offer and need to put their best offer in and thereis no further opportunity to negotiate.
To us this method is incredibly flawed. Buyers hate that method as it leaves them completely in the dark as to where they stand price-wise, how many they are bidding against and even that other bidders exist.
Secondly, as we have mentioned many times in our past Great Ocean Reports, human nature dictates that everyone wants what everyone else wants.
By being able to see everyone, it psychologically supports the buyer’s intention to pursue the property because clearly others want it too.
Thirdly, although the vendor is our client, we have an obligation to act fairly with buyers we encounter. With this method, a buyer pulls out or proceeds on their own will without us telling them they weren’t successful.
We have had some disappointed buyers through this process but none who have felt that they had been treated unfairly. Many move straight on to our next listing with a clear understanding of the process.
We used this exact method to recently produce a new Surf Coast record price with the sale of 4 Ocean Boulevard Jan Juc. Although the price is undisclosed, it substantially exceeded the previous record of $7.25 million for a Surf Coast residential property.
The other interesting aspect of selling during COVID lockdowns is the number of properties that we are selling without the buyer physically inspecting the property prior to signing the contract. Typically, we are doing a virtual inspection (often via FaceTime), they are then sending a building inspector and/ or a family friend (but not always) and then proceeding to make an offer.
It seems the psychological search for freedom while in lockdown in Melbourne is a powerful motivator, and many of our vendors have benefited significantly from this.
Besides the search for freedom via a coastal property, many buyers are motivated by affordability. It’s not the affordability of the property itself; rather the affordability of the finance. A buyer can get access to finance at about 2-3 per cent and fix it for two to three years, and when it comes to the final decision to pursue a property, these repayment calculations are the final ingredient.
The argument we hear regularly is “what is going to happen when rates rise?”. The RBA has publicly stated many times that they don’t intend to raise rates until 2024. Paradoxically, even when they do, with the amount of debt in the community now, it will only take a very small rate rise to slow the economy generally.
The RBA and the government want the public to spend, and they are loathe to do anything that will curtail this too much. What we are more likely to see is restrictions on lending increase, like we saw in the previous cycle when APRA (who regulate the banks) stepped in and limited funding to investors.
Looking forward, we get asked regularly how long this buoyant market will go on for. Our feeling is that next year a return to normality in our post vaccinated world will likely take the urgency out of the market.
We saw this briefly between lockdown 3 and 4. People started going to the footy again, children went back to school and all the normal distractions of life started to return.
We noticed that some registered buyers that had previously been very active were now distracted by the relative normality of life and the urgency for a coastal property had somewhat dissipated.
We are expecting a busy spring and summer before this normality returning, and if you are a prospective property seller, this may be the time to consider pressing the go button.
We hope you found this Great Ocean Report informative and if we can be of any assistance in any real estate matter, please do not hesitate to call.