Government left red-faced after Millers Point sale

August 27, 2014   Toby Johnstone


Buyers were expecting the rundown terrace to sell for between $1.5 million and $1.6 million. They were off by $1 million.

This house at 29 Lower Fort Street, Millers Point, had a price guide of $1.5 million -$1.6 million. It sold for $2.56 million.

The state government has been left red-faced after the first two houses to be auctioned at Millers Point sold for significantly higher than the price guides provided to buyers.


Onlookers were stunned at the Tuesday night auction of 29 Lower Fort Street when the derelict terrace sold for $2.56 million. The price guide earlier in the day was between $1.5 million and $1.6 million.


Last week the first state-owned terrace to be sold at 119 Kent Street, Millers Point, went for $1.9 million. The initial price guide of $1 million had been revised to more than $1.3 million ahead of the auction by Peter Starr from McGrath.

This house at 119 Kent Street, Millers Point, had a price guide of more than $1.3 million. It sold for $1,911,000

The selling agent on Tuesday night, Rohan Aalders from Di Jones, cited a lack of comparable sales in Millers Point. 

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"We had to work with what little comparables we had and rely on the market to tell us the figures," he said.


"We spoke to 60-plus people ... the highest number we were hearing was the price guide."


Edwin Almeida from Just Think Real Estate has been following the first two sales closely. He said when a property sold for 10-15 per cent over the price guide it was typically a case of buyers getting carried away.


"But when you are talking 90 to 100 per cent over the price guide, you have to raise questions," he said.


In the aftermath of Tuesday's staggering result, Minister for Finance and Services Dominic Perrottet distanced himself from the price guides given to buyers.


"The price guides for properties at Millers Point are determined by the real estate agent based on market feedback," he said. "This process is independent of the NSW government."


Millers Point: a community under the hammer


Although the state government does not set the price guide, as vendor they do set the reserve.
The state government refused to disclose the reserve price. The government also declined to share information about the initial independent valuation of the property.


Buyer's agent Patrick Bright said: "We don't know if it's underquoting or not because we don't know what the reserve was.


"Given that auctions are meant to be a transparent way to sell property, why all the secrecy around all of this? Why not just share the information?"


When a spokesperson for the Department of Fair Trading was asked whether a house sale that is $1 million above the price guide was something the department would look into, they replied: "A gap between the initial advertised price and the final sale price is not necessarily proof of underquoting."


But the spokesperson went on to say that an example of underquoting is "when a property is promoted at a price that is less than the seller's asking price or auction reserve price".


In any property transaction, disclosing the reserve is at the discretion of the vendor.


Mr Perrottet said he welcomed the strong result "as the proceeds of these sales will be invested back into social housing to assist the 58,000 people currently on the waiting list".


RESOURCED: http://smh.domain.com.au/real-estate-news/government-left-redfaced-after-millers-point-sale-20140827-108xu9.html