The auction market set a new record this past weekend, with 2,550 homes going up for bids. This surge in listings did not hamper efficiency, as the national preliminary clearance rate increased by 1.9% to a solid 72.0%. Sydney and Melbourne weren’t left behind either – the former saw a 1.9% rise in its preliminary clearance rate, landing at 74.4%, while Melbourne’s rose by 0.9% to 70.5%.
Despite these strong results, a well-known Sydney auctioneer warns that the growing volume of stock throughout the year might put a strain on the market, potentially suppressing price growth. It seems that while the market is still in good shape, the heat is starting to dissipate as stock levels rise faster than buyer interest. This trend is predicted to continue, with an increasing gap between stock levels and buyer growth as we approach the year’s end.
Sellers should be prepared to accept offers close to their reserve price, as this is the smartest approach under these market conditions.
However, it’s crucial to exercise caution when interpreting preliminary clearance rates like these. Described as the “first set of results,” these figures are based on “auctions collected,” which essentially refers to the properties agents have reported to data companies during phone calls. Uncollected auctions, on the other hand, consist of properties that were supposed to be auctioned but went unreported, usually because the agent didn’t have the chance to respond or felt uncomfortable providing the information.
This means that the actual auction results could differ considerably from the preliminary results released over the weekend. Typically, the real numbers come out by midweek, and they’re often lower than the initial estimates, indicating that the reported weekend results aren’t an entirely accurate reflection of the market’s actual performance.
Analyzing the market trend reveals that auction clearance rates have generally been declining as volumes rise. If this trend continues and the number of homes listed for auction keeps increasing, we could start seeing a noticeable softening in price growth.
Nonetheless, there are still some factors that could help support the market. Record net overseas migration will continue to buoy the situation, and if the Reserve Bank of Australia (RBA) opts to cut interest rates next year, we might see another spike in market activity.
In conclusion, while the auction market has demonstrated remarkable momentum, it’s wise for sellers to be prepared for changes in the landscape as stock levels rise. Keeping a close eye on the market trends and understanding the intricacies of the data will be vital for making informed decisions in this ever-evolving space. So, stay updated, make smart choices, and enjoy the ride as we navigate the world of real estate auctions.
