Private sales may increase during the traditionally strong Spring selling season as auction clearance rates fall and house price discounting grows, property experts say.
The prediction, which comes just one week out from the beginning of the Spring selling season, comes as many in the property industry believes prices will remain flat during the next few months as listings increase.
David Airey, president of the Real Estate Institute of Australia, says some buyers will choose private sales to guarantee a higher selling price.
“I think it’s going to be a trend towards private sales over auctions. In a market that’s somewhat slower, or where there is a lot of supply and little demand, people will take the private sale option and put the property on sale at a set price.”
Airey believes vendors may not want to subject their property to an auction, instead believing they can wait for a few months to get the price they really want.
“I think vendors will be happy to wait, and take a bit of time for the property to sell. Auction results are simply what you receive on that particular day, but for sellers who think they can afford to wait, then they will.”
Australian Property Monitors general manager Anthony Ishac says it is certainly a possibility that more sellers will opt for private deals. However, he points out traditionally strong auction markets like Sydney and Melbourne will remain auction-heavy.
“When looking at Melbourne, I think the city has traditionally a strong percentage of auction results and I don’t expect that behaviour to change. Instead, I think more people are going to be realistic about the price they expect.”
Ishac says the boom has truly ended, and vendors are now realising they can no longer ask for particularly high prices.
“I think what’s going to happen is what we’ve been saying – we’ll see higher volumes, and auction clearance rates will drop off a little. However, we can’t just look at auction clearance rates. We need to examine the value of the properties sold and the number of listings.”
Auction clearance rates have improved this week, with listings in Melbourne bouncing back after a quiet week due to the Federal Election. The clearance rate was 71%, based on 687 auctions with 488 sold and 199 passed in.
“The residential auction market had a pre-spring test this weekend and results showed that demand has been largely unaffected by the high volume of homes on offer,” Real Estate Institute of Victoria chief executive Enzo Raimondo said in a statement.
Raimondo also commented on the trend towards a “buyer’s market’, saying that “over the next few weeks buyers will continue to have the upper hand… with demand less than this time last year when there were 665 auctions and a clearance rate of 85%”.
In Sydney, there were 207 properties sold out of 273 on the market, resulting in a clearance rate of 73%. Total value of properties sold came to $157 million.
In Brisbane, only four properties sold out of 16 on the market, with sales at $1.8 million, while in Adelaide there were 13 properties sold out of 20 available, with total sales at $6.6 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
