auction clearance rates
Clearance rates remain strong as volumes increase
This is interesting as it concludes that whilst October is typically a sellers market, sellers will become more desperate in November, they will be more prepared to negotiate when they have been unable to sell their property, and it will become a buyers market. Timing is important for a buyer.
According to preliminary auction results, there were a reported 843 residential properties auctioned in Melbourne at the weekend, 74% or 624 of these selling. This result included 559 houses and 271 apartments, with clearance rates of 78% and 66% respectively. The balance of auctions consisted of vacant land sales.
It’s a case of déjà vu in property this week, with striking similarities between this weekend’s results and results for the same weekend last year. Acknowledging the figures quoted in this Wrap are preliminary, the number of auctions held on the two weekends was almost identical, and with the same clearance rate. Although it’s probable the clearance rate will fall a percentage point as the final auction numbers are reported, the figure confirms the stability and consistency of Melbourne’s residential marketplace. If this trend continues the Melbourne market will see yet another year of moderate growth in the residential sector.
The weekend gave host to a solid performance for both units and houses overall. Houses in suburbs such as Fitzroy North and Albert Park performed especially well. That’s because this segment of the market is supported by homebuyers and not affected by foreign or local investors or government taxation incentives.
According to REIV, the September quarter gave host to an all-time record number of auctions – 15% higher than the same period last year. While higher volumes didn’t diminish interest from buyers it’s likely to have helped absorb some pent up demand from the glut of buyers accruing throughout the year. However, demand remains strong with no signs of weakening.
The weekend’s strong performance came as a result of good engagement and participation. It’s important to recognise that clearance rates at this level typically mean there are multiple buyers vying for the same properties, with the pool of would-be buyers growing each week as they each fail to secure a property. At present, the market sits in favour of vendors, however, as spring listing volumes increase, competition will soften slightly as a result of more properties on the market, allowing for better buying conditions.
The best outcome for the market is one in which there’s balanced clearance rates of around 68-69% – a market in which property remains affordable yet provides for moderate capital growth for vendors. A market that supports participation from both vendors and buyers is the key.
WBP market wrap, 13 Oct 2014