Based on Reported Auction Results*

Auction Success Rate Finds Stability

The volume of property on offer at auction this autumn was down considerably on past years, while new levels of success at auction are appearing. Those of us who have been around the industry for any length of time would just shrug and say it’s back to the “good old days”….

Property has enjoyed an exceptional twenty years. A healthy economy, low unemployment, strong demand from migration and record low interest rates have created the perfect environment. How long will it continue? Are we simply encountering a breather now, or is this slow-down a longer term thing? Many will have an opinion, but who knows? What we do know is that the lending environment has changed considerably, making access to finance far less of a certainty. This alone has applied the brakes noticeably. Interest rates however remain low and may even get lower, but that is not the issue. A much tougher qualifying regime has meant many are not able to buy now that may have a year or two ago. Resultingly, the auction success rate has slipped and now regularly sits in the 50 to 60% range. This means properties are passing in – even some “good ones” that everyone would have considered a guaranteed sale.

The percentage success rate referred to above is indicative of a market which broadly is slightly in decline, values wise. This is a broad brush stroke interpretation but holds good as a general market comment. Different areas and types of property will infuse to create the variations within the overall picture. Taking location out of the consideration, we like house on its own block of land as the preferred solid investment choice, with new apartment or even less preferred “off the plan” apartment, as least desirable.

The tighter regulations imposed on selling agents in relation to “auction quoting” will now weigh more heavily on the selling market. Like it or not – and a buyer-turned-seller might almost encounter a religious experience change of view on this subject(!), it can make selling a property at auction more difficult. The reasons are straight forward and only apply to a seller of real estate. There is a considerable limitation on marketing freedom. Agents however conducting auctions of paintings, race horses, antiques etc. are not governed by “accurate price guideline” rules… Obviously there are more house buyers than thoroughbred buyers registered to vote. Oh dear, how cynical of me.

If there are no world dramas, we anticipate the property market will maintain this course for 2019. A Labor victory has likely been anticipated and any possible implications that may bring with it. Any time is a good time to use buyer’s advocate experience when buying, but in any event the market will be an easier one to navigate this year.

Successful house hunting.

Bruce Renowden