Supply is slowly catching up in Sydney & Melbourne
It was another strong week for Australia’s two largest auction markets with 80% of homes selling under the hammer.
Once again Sydney led all markets, recording a preliminary auction clearance rate of 81.5% according to CoreLogic as the number of auctions jumped to 938 from 578.
Meanwhile in Melbourne, the clearance rate was 79.6%, with volumes surging to 1215 which was up from 717 last week.
Across the rest of the country, the clearance rate remained very strong coming in at 77.7%, suggesting that strong buyer sentiment is here to stay at least for the short-term.
Sydney - 'history repeating itself’
Leading Sydney Auctioneer, Leon Axford of Axford Auctions says it was another incredibly strong weekend under the hammer.
“It was another really good weekend for us. We had nine auctions and sold seven out of nine. The two that didn’t sell purely came down to vendor expectations. Both had strong bidders, but didn’t reach a level that the owners would accept.”
Mr. Axford feels that the current market will start to slow when vendor expectation gets too high.
“Right now properties are just trickling onto the market. So that will likely see prices continue to increase until a point where vendor expectations start to outpace the results. When that happens we could see clearance rates go from 80% to 60% and we’ll see a big rush of property come onto the market.”
“That’s when we’ll see prices really settle down. I don’t know how long it’s going to take, but it feels like it is history repeating itself,” said Mr. Axford.
“We’re already hearing from vendors who are now expecting to get $100,000-$200,000 more at auction which is unlikely. I’m certainly not downplaying the market, but it’s going to be an expectations game moving forward.”
Agents are getting nervous
Leanne Pilkington, REINSW President says results are very strong, but she’s not sure if they’re sustainable.
“We want to be careful not to declare a real estate boom because, in truth, it doesn’t help anyone.”
“Both numbers and clearance rates were strong and we expected that, but talking to agents they’re a little bit nervous about how long these results can continue as it’s hard to sustain numbers like this," she said.
“The number of houses being discounted fell by 3.8 per cent from last year and that’s no surprise given the clearance rates we’re seeing."
Victoria - ‘2019 Lag’
Top Auctioneer from The Auction Company, Paul Tzamalis, oversaw another very strong weekend, with good bidder numbers on the ground.
“It’s still very buoyant at the moment, and still a little layered. We averaged three bidders during the week and the same over the weekend," he said.
“There’s certainly depth out there and that depth is not being fulfilled with the stock that is on the market. People aren’t simply just buying the next one, so there’s a heap of rollover."
Despite the increase in volume this week, Mr. Tzamalis says that there is still more stock needed.
“I still think we’ve got a 2019 lag of buyers that didn’t buy as well as new entrants into the market place. And I think we’ve still got a long way to go until we meet demand absorption of 2020.”
“However, more vendors are clearly considering selling as values are returning to those levels of 18 months ago.”
For Mr. Tzamalis, demand is still a suburb by suburb proposition but correctly priced homes will sell.
“Some of the inner-city suburbs are still light on for stock. Somewhere like South Yarra, sold 70% on the weekend at auction, with 25% selling prior and the stock that didn’t sell was likely due to vendor expectation.
“But considering its a small amount of stock, there is clearly very high demand.”
Volumes on the rise
REIV CEO Gil King says that buyers are still scooping up the available stock with some suburbs recording 100% clearance rates.
“Preliminary records show there was over 960 auctions held last week, highest weekly figure since mid-December last year. Led by Reservoir, Glen Waverley and Doncaster East with 20, 19 and 18 reported auctions, respectively.”
“Out of the suburbs that cleared 100% of auction listings, Mount Waverley had the highest sold homes (14), followed by Blackburn and Preston, each with 10 properties.”