February 28, 2024 • 8 mins
2GB's John Stanley and Harris Partners' Peter O'Malley dissected the current issues impacting the Sydney Property Market this week. In this interview they cover:
- auctions,
- weak clearance rates,
- the strength of the prestige market
- underquoting,
- buying pre-auction and
- strata title by-laws and handling building issues.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
On nights talking real estate brought to you by
Domain.
Download the app today and findyour way home with Domain.
Every Monday night we try andtake the temperature of the real
estate market.
Tonight we're joined again byPeter O'Malley from Harris
Partners.
Good evening to you, pete.
Speaker 2 (00:21):
Good to chat, John.
Speaker 1 (00:22):
Yeah, now let's just look at the clearances again,
because I guess we had the firstof the Super Saturdays of the
year, so how did it look?
Speaker 2 (00:30):
Very interesting day.
There were 1,007 auctionsscheduled, john, before the big
day.
145 were withdrawn, so that's aclean 14% didn't even make it
to the big day.
Of those that went to auction,110 passed in on the known
results.
So, on the clearance rate ofthe results that are known, at
(00:53):
the time of going to where itwas a 67% clearance rate, which
is pretty healthy, and that's517 sales on 772 results
reported.
Speaker 1 (01:06):
It's interesting, isn't it?
Because I see Melbourne hadover 1,200 and Brisbane and this
is what we always have thiscontrast, don't we?
Because Brisbane had 101 andcleared 51%.
But is there a reason whyBrisbane and Queensland doesn't
have as many auctions as thesouthern states?
Speaker 2 (01:25):
There's a different strategy there around the
underquoting and the pricing,which has kind of been a turnoff
for the auction system.
You might say.
John, with an auction property,the real estate agent is not
allowed to display any sort of aprice guide.
It's up to the purchaser tomake their own mind up as to
where they think the propertywill sell and that's the
Queensland government's way ofmanaging the underquoting issue.
(01:47):
And underquoting unfortunatelydoes play a big role in many
auction campaigns as the agentare trying to attract people
into the bidding process.
So the Queensland governmenthave implemented a measure that
allow agents to still doauctions but don't give them the
ability to mislead consumers inthe process.
Speaker 1 (02:08):
Yeah, just on auctions, because I haven't been
involved in an auction fordecades.
Now, when a place is for saleby auction, is it worth having a
crack before the auction,making an offer if you think you
can get it?
Speaker 2 (02:24):
Absolutely, it is John.
I always tell people that askmy advice should we attend the
auction, which we don't reallywant to do, or make a bid
beforehand?
My advice to people in thatsituation is just because the
vendor wants to go to auctiondoesn't mean you have to, and
what you'll find with manyvendors, john, is the real
estate agent has talked theminto going to auction.
The vendor just wants to selltheir property for a fair price
(02:48):
and if you're a fair-mindedbuyer and you make a fair offer,
you might find in thisenvironment, which is not quite
as strong as what it was lastyear, that your pre-auction bid
will be accepted.
Can I say that last weekendthere were more properties that
sold prior to auction thanactually sold under the hammer
on the day.
Speaker 1 (03:07):
It's interesting, isn't it?
Because I'm assuming as anagent, if someone says, look,
we've got a pretty good offerhere, we'll put it to the vendor
, but if other people haveexpressed interest and they've
taken out contracts, do you thengo to them and say, look, you
should know this is what'shappening, to give them a chance
as well.
Speaker 2 (03:24):
That's your duty, fiduciary duty to do so.
Yes.
So let's say you've got a priceguide of $9.50.
You think you might have areserve of a million dollars on
it and someone offers a millionand 25.
As a real estate agent, thefirst thing you need to say to
your vendor is for me to get ahigher price for you on auction
day.
I need a second buyer nowthat's prepared to pay a million
(03:45):
and 25, and I'm not sure thatI've got that buyer.
Why don't I scan the rest ofthe buying list, see if there's
someone that's prepared tocomplete with this offer and if
there's not, you're better offgrabbing the money whilst it's
on the table because, as we'vejust said, with a 67% clearance
rate, that is, one in threeproperties are failing to clear
on the day.
Speaker 1 (04:03):
Yeah, and if you scan the papers, certainly every
Monday there's always analysisof where the market is going.
The market seems to besoftening, but you've picked up
a few little signs, haven't you?
Speaker 2 (04:16):
I certainly have, john.
The top end is dragging theclearance rate up.
So I watched the early reportsthat come in on a Saturday
afternoon about what's beenhappening around town.
The big one on the weekend wasa $9 million sale of a 265
square meter block in Paddington, and everyone has a sense of
the property markets going wild.
(04:37):
But let me tell you that inChifley, for example, the
clearance rate was zero out ofthree.
In Chippendale, the clearancerate was zero out of four.
In Croydon, the clearance ratewas one out of five.
So there's pockets of weaknessaround the city, whether it be
generic apartments in high risesor what we might call the
(04:58):
mortgage belt being underpressure as the mortgage cliff
takes hold here for manyhouseholds.
So we can't look at thePaddington market or the Bondi
Beach market and just jump tothe conclusion that that
represents what's happeningacross the city, because it's
certainly not.
Speaker 1 (05:14):
Just on the Paddington one, because I saw it
was the Paddington.
How much was the Paddington onesold for $9 million.
So I saw that.
And because I saw the story andI know the street, so you're
telling me it went for $9million.
What?
265 square meters, right?
Speaker 2 (05:30):
That's right.
Yes, yes.
So very, extremely strongresults.
And you know we service theinner west and if I'm talking
about the strong sales that I'veseen in the inner west this
year, John, they've all beensales three and a half million
plus.
It is much stronger at that endof the market than what it is
in the sort of 800,000 to 2million range.
Speaker 1 (05:51):
I'm losed to even raise this, because every week
the conversation is aboutdifferent strategies to generate
more and more houses andincreased supply.
You would look at this closely.
What is your thought on whatyou're seeing from government
and whether it's practical?
Speaker 2 (06:07):
I think Chris Min's agenda is too aspirational and I
don't think he's going to getup on it.
You can quote me on that.
I guess this is in New.
Speaker 1 (06:16):
South Wales, where he's trying to get more and more
apartments bill, isn't he?
Speaker 2 (06:20):
That's right, and high density in the inner city,
and he's going to meet fierceresistance from communities and
local councils.
It's a noble agenda, but Ican't see it practically coming
up.
And what frustrates me aboutthat, john, is that there's
developers of the medium tosmall size that are just trying
to get small unit blocks up,little townhouse developments,
(06:43):
conversions up that turn adouble front at home into two
semis or duplexes, if you like,and they meet fierce resistance
from the council and they end uphaving to go to land and
environment court to get theirapproval.
So until local councils get onboard with the need for more
dwellings, I think we're goingto struggle to get the supply
(07:04):
that we need.
The government need to askthemselves do we want to
continue pushing the same amountof people into the major
capital cities being Sydney andMelbourne as what we're doing at
the moment as well?
Speaker 1 (07:17):
Yeah, of course Brisbane goes into that category
as well, with the Olympicscoming up in South East
Queensland as well.
Just one final one.
In this conversation and thisis happening all over the
country you do hear a lot ofconversation about getting
involved in an apartment whichthen puts you into a strata
situation where a lot of whatyou do is subject to the strata
(07:37):
committee and various stratarules and even the fact you
could even have the whole placesold out from under you if
enough people want to sell.
Do you hear much of thatpushback from people?
Speaker 2 (07:50):
That's reading the bylaws before you buy in, john.
It tends to be older units onlarge blocks where the owners
will collectively say if we allcollectively decide to sell out
here, we'll all get a higherprice individually than if we
sold individually.
That makes a lot of sense whenwe're trying to get higher yield
(08:12):
out of the land in our innercity.
But if you are someone who isbuying in a new building and I
looked at something in Moortlakefor a client last week and the
building commissioner, davidChandler, had gone over the
development with a fine toothcomb, john, and he issued this
massive rectification order overthe particular apartment
(08:33):
complex which wouldn'tnecessarily have been picked up
in the strata minutes.
But I must say he was reallyreally tough on the developer
there and I just said to myselfit's about time that we're
seeing this sort of oversight onshoddy building.
That's very, very good asalways.
Speaker 1 (08:51):
great to catch up with you, peter, and we'll catch
up again soon.
Thank you.
Speaker 2 (08:54):
Thank you, John.
On nights talking real estate brought to you by
Domain.
Download the app today and findyour way home with Domain.
Every Monday night we try andtake the temperature of the real
estate market.
Tonight we're joined again byPeter O'Malley from Harris
Partners.
Good evening to you, pete.
Speaker 2 (00:21):
Good to chat, John.
Speaker 1 (00:22):
Yeah, now let's just look at the clearances again,
because I guess we had the firstof the Super Saturdays of the
year, so how did it look?
Speaker 2 (00:30):
Very interesting day.
There were 1,007 auctionsscheduled, john, before the big
day.
145 were withdrawn, so that's aclean 14% didn't even make it
to the big day.
Of those that went to auction,110 passed in on the known
results.
So, on the clearance rate ofthe results that are known, at
(00:53):
the time of going to where itwas a 67% clearance rate, which
is pretty healthy, and that's517 sales on 772 results
reported.
Speaker 1 (01:06):
It's interesting, isn't it?
Because I see Melbourne hadover 1,200 and Brisbane and this
is what we always have thiscontrast, don't we?
Because Brisbane had 101 andcleared 51%.
But is there a reason whyBrisbane and Queensland doesn't
have as many auctions as thesouthern states?
Speaker 2 (01:25):
There's a different strategy there around the
underquoting and the pricing,which has kind of been a turnoff
for the auction system.
You might say.
John, with an auction property,the real estate agent is not
allowed to display any sort of aprice guide.
It's up to the purchaser tomake their own mind up as to
where they think the propertywill sell and that's the
Queensland government's way ofmanaging the underquoting issue.
(01:47):
And underquoting unfortunatelydoes play a big role in many
auction campaigns as the agentare trying to attract people
into the bidding process.
So the Queensland governmenthave implemented a measure that
allow agents to still doauctions but don't give them the
ability to mislead consumers inthe process.
Speaker 1 (02:08):
Yeah, just on auctions, because I haven't been
involved in an auction fordecades.
Now, when a place is for saleby auction, is it worth having a
crack before the auction,making an offer if you think you
can get it?
Speaker 2 (02:24):
Absolutely, it is John.
I always tell people that askmy advice should we attend the
auction, which we don't reallywant to do, or make a bid
beforehand?
My advice to people in thatsituation is just because the
vendor wants to go to auctiondoesn't mean you have to, and
what you'll find with manyvendors, john, is the real
estate agent has talked theminto going to auction.
The vendor just wants to selltheir property for a fair price
(02:48):
and if you're a fair-mindedbuyer and you make a fair offer,
you might find in thisenvironment, which is not quite
as strong as what it was lastyear, that your pre-auction bid
will be accepted.
Can I say that last weekendthere were more properties that
sold prior to auction thanactually sold under the hammer
on the day.
Speaker 1 (03:07):
It's interesting, isn't it?
Because I'm assuming as anagent, if someone says, look,
we've got a pretty good offerhere, we'll put it to the vendor
, but if other people haveexpressed interest and they've
taken out contracts, do you thengo to them and say, look, you
should know this is what'shappening, to give them a chance
as well.
Speaker 2 (03:24):
That's your duty, fiduciary duty to do so.
Yes.
So let's say you've got a priceguide of $9.50.
You think you might have areserve of a million dollars on
it and someone offers a millionand 25.
As a real estate agent, thefirst thing you need to say to
your vendor is for me to get ahigher price for you on auction
day.
I need a second buyer nowthat's prepared to pay a million
(03:45):
and 25, and I'm not sure thatI've got that buyer.
Why don't I scan the rest ofthe buying list, see if there's
someone that's prepared tocomplete with this offer and if
there's not, you're better offgrabbing the money whilst it's
on the table because, as we'vejust said, with a 67% clearance
rate, that is, one in threeproperties are failing to clear
on the day.
Speaker 1 (04:03):
Yeah, and if you scan the papers, certainly every
Monday there's always analysisof where the market is going.
The market seems to besoftening, but you've picked up
a few little signs, haven't you?
Speaker 2 (04:16):
I certainly have, john.
The top end is dragging theclearance rate up.
So I watched the early reportsthat come in on a Saturday
afternoon about what's beenhappening around town.
The big one on the weekend wasa $9 million sale of a 265
square meter block in Paddington, and everyone has a sense of
the property markets going wild.
(04:37):
But let me tell you that inChifley, for example, the
clearance rate was zero out ofthree.
In Chippendale, the clearancerate was zero out of four.
In Croydon, the clearance ratewas one out of five.
So there's pockets of weaknessaround the city, whether it be
generic apartments in high risesor what we might call the
(04:58):
mortgage belt being underpressure as the mortgage cliff
takes hold here for manyhouseholds.
So we can't look at thePaddington market or the Bondi
Beach market and just jump tothe conclusion that that
represents what's happeningacross the city, because it's
certainly not.
Speaker 1 (05:14):
Just on the Paddington one, because I saw it
was the Paddington.
How much was the Paddington onesold for $9 million.
So I saw that.
And because I saw the story andI know the street, so you're
telling me it went for $9million.
What?
265 square meters, right?
Speaker 2 (05:30):
That's right.
Yes, yes.
So very, extremely strongresults.
And you know we service theinner west and if I'm talking
about the strong sales that I'veseen in the inner west this
year, John, they've all beensales three and a half million
plus.
It is much stronger at that endof the market than what it is
in the sort of 800,000 to 2million range.
Speaker 1 (05:51):
I'm losed to even raise this, because every week
the conversation is aboutdifferent strategies to generate
more and more houses andincreased supply.
You would look at this closely.
What is your thought on whatyou're seeing from government
and whether it's practical?
Speaker 2 (06:07):
I think Chris Min's agenda is too aspirational and I
don't think he's going to getup on it.
You can quote me on that.
I guess this is in New.
Speaker 1 (06:16):
South Wales, where he's trying to get more and more
apartments bill, isn't he?
Speaker 2 (06:20):
That's right, and high density in the inner city,
and he's going to meet fierceresistance from communities and
local councils.
It's a noble agenda, but Ican't see it practically coming
up.
And what frustrates me aboutthat, john, is that there's
developers of the medium tosmall size that are just trying
to get small unit blocks up,little townhouse developments,
(06:43):
conversions up that turn adouble front at home into two
semis or duplexes, if you like,and they meet fierce resistance
from the council and they end uphaving to go to land and
environment court to get theirapproval.
So until local councils get onboard with the need for more
dwellings, I think we're goingto struggle to get the supply
(07:04):
that we need.
The government need to askthemselves do we want to
continue pushing the same amountof people into the major
capital cities being Sydney andMelbourne as what we're doing at
the moment as well?
Speaker 1 (07:17):
Yeah, of course Brisbane goes into that category
as well, with the Olympicscoming up in South East
Queensland as well.
Just one final one.
In this conversation and thisis happening all over the
country you do hear a lot ofconversation about getting
involved in an apartment whichthen puts you into a strata
situation where a lot of whatyou do is subject to the strata
(07:37):
committee and various stratarules and even the fact you
could even have the whole placesold out from under you if
enough people want to sell.
Do you hear much of thatpushback from people?
Speaker 2 (07:50):
That's reading the bylaws before you buy in, john.
It tends to be older units onlarge blocks where the owners
will collectively say if we allcollectively decide to sell out
here, we'll all get a higherprice individually than if we
sold individually.
That makes a lot of sense whenwe're trying to get higher yield
(08:12):
out of the land in our innercity.
But if you are someone who isbuying in a new building and I
looked at something in Moortlakefor a client last week and the
building commissioner, davidChandler, had gone over the
development with a fine toothcomb, john, and he issued this
massive rectification order overthe particular apartment
(08:33):
complex which wouldn'tnecessarily have been picked up
in the strata minutes.
But I must say he was reallyreally tough on the developer
there and I just said to myselfit's about time that we're
seeing this sort of oversight onshoddy building.
That's very, very good asalways.
Speaker 1 (08:51):
great to catch up with you, peter, and we'll catch
up again soon.
Thank you.
Speaker 2 (08:54):
Thank you, John.
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