This week we have combined the council wraps. There is little to report within specific council areas, and for those who normally just read one wrap we hope you will benefit from looking at some data graphs across the council areas that confirm what we have been saying so far this year.

Hopefully, this will help you as buyers to see what you need to do to buy the right home in the next six months.

Please note: Data comes from REIV, Valuer General (Government) and our own records. There is a time lag in some of the official data.

Confirmed: This year has been a bumper year in terms of $M+ transactions.

Confirmed: It has also been abnormally high stock wise.

We have used Boroondara as an example, but the stats show the same trends across the board in Port Phillip, Stonnington and Bayside.

Confirmed: It is part of a longer term trend of increasing $M+ sales.

Only the GFC got in the way in 2008/2009, as the above graph shows. Most of us froze and stock dried up. But that stock shortage, combined with the FIRB changes and the Chinese community kick-starting the Melbourne high end market in March 2009, meant that prices didn’t stay down for long.

Ignoring for a moment the Toorak chart, which shows a flat trend (we don’t understand the Toorak chart), prices across $M+ Melbourne went up in 2007, then down in 2008, then up late 2009 and then back down again in May 2010. In our opinion the charts of Kew, Brighton etc show what is really happening. And these charts confirm our James Price Wormie (which estimates price movements in the $M+ market).

The latest statement released by the REIV show a significant market price drop in the June quarter. That again confirms our Wormie.

So what’s happening right now?

A LOT LESS THAN A MONTH AGO – look at the auction numbers below. You may have read our analysis in this weekend’s Market Insight showing that only 1 in 4 homes for private sale in our market sold during the 6 week period June 7 – July 18. With fewer auctions coming up, it’s probably good for overall market health and may allow the overhang to be mopped up.

There is a choice – it’s just hidden.

Overhang: A hundred more properties went in to the Boroondara $M+ market than went out (sold) in April to June 2010. That’s a lot. It’s similar in Bayside and less dramatic in Stonnington and Port Phillip councils (they are both smaller in size).

How that overhang is mopped up could well determine the price trend in Spring!

The next graph below confirms that you currently have a 1 in 5 chance of  buying a home at auction. This is eerily close to our stats of last year where we bought 80 homes in the $1m to $5m range and only 15 were under auction conditions within 20% of the agent’s price. Over the last few weeks things have been changing a bit – but it is an interesting stat for those that think buying a home is always just about putting your hand up at auction. You need a number of different negotiation skills and techniques – as this graph below proves.

Overall what do these lovely pictorials tell us buyers?

1. There are homes for sale out there – but you need to look
2. There may well be a reduced amount of stock coming onto the market in the next few months, so you may need to look beyond the auction alerts to find your best option.
3. Prices at auctions may improve slightly, which could lead to claims of big improvements in the market by sellers over the next few months. But that may not necessarily be the case. We acknowledge that at times perception does become reality and that the market may well improve on the back of some highlighted results. But the fact is that there is still an overhang of unsolds out there. That means that, across the board, price hikes seem unlikely when Spring comes. If we had to bet it would be on flat to falling prices for some time – although our get-out clause is that if the overhangs are mopped more quickly than anticipated then Spring could see price improvements, as long as current demand is not affected by outside influences.

Buyers: you have choice and opportunities now –  if you know where to look and how to assess and negotiate.

We only buy homes