The auction market is still performing strongly but vendors of higher-end properties are opting for private sales instead of risking their home at auction, experts warn.
Real Estate Institute of Australia president David Airey warns that although the Melbourne market recorded a 68% clearance rate, the top-end is still struggling with discounts a common occurrence.
“The average price was only about $800,000. People at the top end have decided the best way for them to sell is through private sales, rather than risking through auctions. That’s the same across Australia, where the lower end is moving, but the higher end is more average.”
Airey points to the sheer number of pass-ins occurring in Melbourne. The REIV figures suggest 325 properties were passed in, and Airey says more of these would have been likely in the top-end areas.
Christopher also believes the market in the top-end properties is moving slowly.
“It’s a very difficult market to read. I’d say the top end is quite patch. You could get some very good sales, but there are still records of properties that aren’t performing particularly well at all. It’s definitely a patchy market.”
However, other markets have remained strong, these experts say. Melbourne managed record a 68% clearance rate out of 1,031 auctions, according to the REIV, with chief executive Enzo Raimondo pointing out that rate hasn’t changed during the past eight weeks.
“In light of the very high number of auctions this weekend the clearance rate of 68 that was achieved is a very healthy result and demonstrates that underlying demand is good,” he said.
Some analysts predicted prices might drop due to the sheer number of listings. Auctions have backed up over the past few weeks due to the AFL Grand Final and the subsequent replay, while the upcoming Cup Weekend has brought forward some sales.
“Including this weekend’s activity, the REIV has seen average weekly auction listings increase by around 30% compared to winter; interestingly, the clearance rate for spring has not changed substantially, with around 68% of homes selling during the first eight weeks of spring.”
Airey agrees, saying the result was “a particularly solid one”.
But the rest of the country hasn’t performed so well. Christopher says Sydney’s result in the mid-50s reveals neither buyers nor vendors have negotiating control.
“That result represents a market equilibrium, where neither buyers nor sellers have control. However, that result does indicate that there could still be price rises occurring there.”
“Outside Sydney and Melbourne, and putting Canberra aside, it’s a pretty weak market out there. I would argue prices are falling in southeast Queensland, and Adelaide is looking very slow as well.”
Christopher also points out activity in the Northern Territory, which he says is becoming scarily bubble-like. “Darwin is a market that is looking very scary at the moment and very bubbly. When it turns, it’s going to be a steep ride down.”
According to Australian Property Monitors, Sydney recorded a 56% clearance rate out of 501 auctions. Total sales came to $149 million.
Adelaide recorded a 63% clearance rate out of the 48 auctions on the market, with total sales coming to $9.9 million, while Brisbane recorded a rate of 30.4%, with 57 total auctions coming to a sales total of $4.8 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
