CoreLogic figures show there was a 20% reduction in the number of homes taken to auction nationwide over this year’s winter period compared to 2017, with Sydney and Melbourne the main contributors to this decline.

Property prices and clearance rates in Australia’s two most auction-centric markets have continued to progressively moderate in 2018 and it’s spooked many would-be sellers.  

In the June quarter, median house prices dipped -1.2% in Sydney to $1,012,368 and -1.7% in Melbourne to $821,463.

At the same time, CoreLogic’s Quarterly Auction Market Review, released in late July, showed

auction clearance rates over the June quarter softened a further -7.6% in Sydney and -7.3% in Melbourne. Generally speaking, both cities are recording clearances in the 50-60% range now.  

A 60%-ish clearance is what we expect to see in normal market conditions, however, many sellers are struggling to adjust. The market has cooled rapidly, exacerbated by tighter lending restrictions; and for many sellers it still feels like only yesterday that both cities were clearing 70-80% at auction.

But there’s really no reason to panic and there’s certainly no reason to rule out selling by auction.

There’s actually plenty of buyers out there who want to make purchases and are willing to compete on properties that are priced correctly. When you have good competition, auction is always the best way to go.

Using the auction method also puts a timeline on buyers and this is becoming important in both Sydney and Melbourne, where buyers have more stock to choose from and softening prices means they can take their time.

An auction motivates people who have fallen in love with your home to get organised.

In order to make them fall in love, you must present your home well, invest in good quality marketing and most of all, hire a great agent who has proven success in the auction arena and ideally someone who has worked in cooling markets before. That’s a recipe for a good auction in today’s market.

Lending restrictions are interrupting the auction process a bit, with some buyers unable to compete either on the day or during pre-auction negotiations. Agents need to make room for this and conduct negotiations in a way that includes as many potential buyers as possible.

Equally, the auction method also provides scope to sell prior. Once again, you simply need an experienced agent with expert negotiating skills whom you can rely on to draw the best price out of the market prior to auction.

For those of you interested in stats, CoreLogic’s Quarterly Auction Market Review tells us the following:

Top 3 Auction Capital Cities

·         Melbourne 12,330

·         Sydney 9,312

·         Brisbane 1,574

Top Auction Suburbs (by volume) per city

·         Reservoir in Melbourne

·         Randwick in Sydney

·         Sunnybank in Brisbane

Top Auction Suburbs (by clearance rate) per city

·         Sydenham 86.7% in Melbourne

·         Northbridge 85% in Sydney

·         Kambah 78.3% in Canberra

So, where to from here?

Well, it’s the first week of September and we’re now gearing up for the typically busy Spring season. The number of homes for sale via auction is already increasing in line with this seasonal trend.

If you’re considering selling, I suggest attending a bunch of auctions in your area to see which agents are still successfully taking homes to auction and which auctioneers are doing the best job.

Some auctioneers are employed exclusively for individual companies while others are freelancers and can work with any agent.

At McGrath, we have prided ourselves on expert auctioneering services for more than 25 years, as we truly believe the best auctioneers can make a real difference to your sale price on the day.

Good luck this Spring!