Auction volumes continue to decline as buyers and sellers move online
Over the weekend, the number of auctions continued to fall, with nearly half being withdrawn prior to auction. The good news is that people are still looking to transact as a number of Australia's top auctioneers are adopting new remote auction techniques.
There were only 853 homes sold under the hammer this past weekend, in what has traditionally been one of the biggest weekends of the year across the country.
Half of those homes going to auction were withdrawn with a number of vendors choosing to sell by private treaty, push back the auction a few months or even take their properties off the market for the time being.
A significant amount of homeowners are also choosing to sell their properties prior to auction in a bid to lock in some certainty at a time where there is little to be had.
Across the country, the preliminary clearance rate according to CoreLogic came in at just 48%, with Sydney clearing just 48% and Melbourne 54%.
Auctioneers and real estate agents across the country have been forced to embrace new online auction techniques since the Government introduced wide-spread social distancing measures to slow the spread of COVID-19.
An unconditional transaction
Leon Axford from Axford Auctions in Sydney has moved his auctions to a remote system and is still finding it effective for both buyers and sellers.
“We’ve been doing remote auctions and we’ve found a system that we think works really well. We stream the auction online and the buyers and seller can watch us doing the auction.”
“We use telephone bidding. It’s known to us and it’s been around for years so we’re confident in the system. We have the buyers register via telephone with the agents and then the agents can relay the bids to me.”
Mr. Axford believes that one of the key advantages of auctions, which is an unconditional transaction, which makes auctions a very valuable tool.
“In the current environment, there is still a real benefit in that we can let our clients sell unconditionally at auction with a 10% deposit. And our buyers can also purchase confidentially.”
“It’s still allowing the same process to take place, it just looks different. It’s not an onsite auction, so you’re still not there and the excitement and street theatre that surrounds the auction is not there. It’s more of a negotiation and a transaction.”
“An onsite auction is a big show with the core focus of getting the home sold at the best price. They’re very exciting and energetic.”
“With online auctions, they are a little bit slower and they take a little bit more time, but the reward is an unconditional transaction. Which in uncertain times is what owners should be striving for. Not sitting in cooling-off periods of five days, wherein the current environment things can change rapidly in that time.”
Paul Tzamalis from the Auction Company is seeing both buyers and sellers trying to get a grasp on what has been happening over the past few weeks in the real estate industry.
“Last week and this week, is very separate to when the news first broke. There was still relatively good success during that period when the news was breaking.”
“What we’ve seen since then is that volumes have decreased and that’s a reflection of vendor sentiment and them getting a grasp on what the market is doing.”
“There are still plenty of people that are having a discussion where they decide they do want to sell. But it’s also logical for them to ask ‘what are we selling in?”
“Buyers still what to buy if they have been looking for a while. However, newer buyers are asking themselves, ‘what does my own livelihood look like’ and ‘what does buying in this market look like form a value perspective.’"
Mr. Tzamalis also thinks that there is a steep learning curve taking place at the moment in the entire industry.
“Online auctions are an education process. Like anything new especially something that has to be adopted overnight. So it’s an education process for all parties. So naturally, we’ll see a softer period for auctions.”
“Online auctions will never replace a people business, which is onsite auctions. What it’s forced us to do is accept a new way of selling online. Which has proven itself time and time again in the last week.”
Despite the slowdown in auctions, Mr. Tzamalis feels that this could ultimately be a positive for the auction market.
“Looking forward, I think it will attract a new audience to public auctions that hadn’t been given a chance.”
“Other industries like art, jewellery or automotive have been conducting auctions online and in-person collaboratively. We are being forced to do both, but only online at the moment. So going forward, we might find our industry aligning itself with those types of industries.”
“This is not a forever, but there are some things that will change going forward that could be a good thing going forward for the process of auctions.”
People still want to transact
Leanne Pilkington, President of the REINSW said that despite a large number of withdrawals, people still want to transact which is good news for the industry.
“We had 1,437 auctions scheduled for Saturday. 45 per cent of them were withdrawn prior to auction and of those that sold, 84 per cent of them sold prior, so that’s an interesting stat.”
“We had a prelim clearance rate of 46.9. Last week we had just over 1,200 properties go to auction and the clearance rate was around 40 per cent.
“So obviously we’ve still got auctions scheduled for the next few weeks. But we can expect to see volumes dwindling and obviously clearance rates are relatively low. But the good news is there are still people wanting to buy and sell, and that is good news for all of us."