Jonathon Dixon, managing director of J. P. Dixon, an agency servicing the high realty grounds of Brighton, Sandringham, Sorrento and Toorak, has been in the business of moving property for 36 years.
He says he has never seen the market turn down as fast as it has over the past few months."It's as skinny as I've ever seen it."
In June, Australian property statistics were saying that despite the harsh winds emanating from the US subprime mortgage meltdown, prices here were generally "flat but not falling". In the three months since, the widespread wisdom is that many metropolitan districts have come off 10-15% from the prices that were being achieved in 2007.
Last year was an odd market bubble."
Too hot," says Mr Dixon."It's a different ball game now."
But while the agents are all too aware of the slide into a "buyer's market" situation, and while suburban streets are papered with an increasing number of For Sale hoardings, they are chorusing that an awful lot of vendors are yet to catch up with the news that the wind has changed."
Last year was a record-breaking year," says Robert Namour, director of three Barry Plant agencies in the Monash belt of Wheelers Hill, Mount Waverley and Oakleigh. He too says that while the change hit Monash earlier, in February- March, "the change was so sudden it was a shock".
In this tougher selling market, the task of easing vendors into the new reality that their property is not worth what it so recently might have been, is not being helped by intensified competition between agencies touting for business. Some will, says Mr Namour, "lead buyers into being over-optimistic, sometimes by $100,000 or more"."
We've walked away from vendors who are over-optimistic, rather than leading them up the path where they get caught out."
Mr Namour's agency has watched more than a few buyers in his $450,000-$500,000 family home catchment be seduced by other agents promising $600,000 results only to see them come back disillusioned and poorer for the experience."
They put the property back on the market for $100,000 less, plus the time and money it has cost them. The time difference has also cost them in terms of market variance."
Mr Dixon says that at the tip of the top end, properties over $4 million seem relatively unaffected. But vendors selling properties priced between $1.5 million and $3 million, "probably owned by people whose shares have lost one-third of their value, are sweating".
His story of a returning disappointed vendor involves a property that lost $400,000 in the translation from an unrealistic price estimate to "what the market was prepared to pay four months later. It's not too uncommon."
Being a vendor today, says Tim Fletcher, principal of Fletchers Canterbury, is about being realistic "and having reasonable expectations".
Along with the other agents, he exhorts vendors to listen well to their chosen agent and to trust their judgement about what the market is willing to pay, rather than believing their house will sell for the same price their neighbour achieved five months ago."
If you don't trust your agent," he says, "don't employ them. If you do, respect what they are telling you."
Mr Namour says his people are working harder today to keep close contact and to educate their clients about the current market.
And Mr Dixon says: "Vendors can't afford to be deluded now, because it has been such a quick change on the market. The quickest I have ever seen."
The silver lining for vendors in this situation is, according to Mr Fletcher, "that they will also be buying on the same market".
Selling in a buyer's market
- Be realistic about price. The spring property market of 2008 is down on last year's.
- Research the local market. Go to auctions and see which properties are selling.
- Take advice from your agent, especially that on what is a "good offer" for your home. If you get two similar offers - that's where the price is at.
- Beware of over-optimistic valuations. They might cost you money and time as ultimately it is the market that sets the price.
- Do not buy before selling your own house.
Although 60% of properties are selling at auction, others take longer to sell.
- Follow the golden rules about presenting your property well.
- You will probably be buying on the same buyer's market. So any vendor price disadvantage is ironed out when you buy.
The Age | Jenny Brown | 10 August 2008
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