SYD & MEL experience - Pent-up buyer demand at auction
It was the strongest weekend at auction that Melbourne and Sydney have seen since 2017. Buyers are still outnumbering the sellers which will likely put pressure on prices according to Australia's leading auctioneers.
Auction markets across the country have continued to gain momentum with preliminary clearance rates nearing 80% across the combined capital cities.
The latest data from CoreLogic saw a jump in both volumes and clearance rates over the weekend as Sydney and Melbourne continue to lead the way.
Sydney’s preliminary clearance rate hit 80.3%, which was the strongest February result since the boom times of 2017, seeing volumes increase week on week to 578.
Melbourne also had a very strong showing, finishing with a clearance rate of 79.2%, which was up sharply from this time last year and also the highest since April 2017.
Sydney - 'more buyers than sellers’
Top Auctioneer, Leon Axford of Axford Auctions, is starting to see high-quality stock sell very strongly at auction across Sydney.
“We had some very strong sales over the weekend. The marketplace in the suburbs is still not like it was in the boom times. In 2017 people were just trying to buy anything they could get their hands on. Buyers are still being picky, but when something comes on that is in a good location and is a good quality home they’ll compete and they’ll pay what they need to pay.”
“Properties that are overpriced or that are not desirable, are still selling, they just won’t have 25 people trying to buy the home.”
Mr. Axford says there are certain areas in Sydney that are outperforming thanks to low stock and increased interest from owner-occupiers.
“Owner-occupiers in the northern districts, from Beecroft to Berowra are very strong. There is good activity and good numbers of buyers and a real lack of stock.”
“Western Sydney is still a little bit behind. It’s in a far better position than it was 12 months ago. Back then, apartments in Parramatta were probably one of the hardest markets. And now we’re starting to see 1-2 buyers turning up and making decisions. So there’s good activity coming back in," he said.
“Sellers are really looking to capitalise on the market at the moment as we really have more buyers than sellers at the moment.”
Demand has been artificially suppressed
REINSW President, Leanne Pilkington, feels that low stock is helping keep clearance rates high across Sydney, but most auction campaigns are only just getting underway at the moment.
“If you consider that anything above 60% is a rising market, and Sydney finished with a preliminary clearance rate of 80.3%, that is a lot of property selling under the hammer.”
“Stock is still low, but we would expect that at this time of year. Most auction campaigns need 3-4 weeks, and most are starting around now," said Ms. Pilkington
“Demand has been artificially suppressed, because of the Federal election and banking Royal Commission and people just couldn’t get money. There have been a lot of people who wanted to buy, they just couldn’t get the funds. So we’re still seeing catch-up if you like.”
Ms. Pilkington feels that the data is pointing to some more strength at auction in the short-term.
“We’ve also just seen housing finance data which was up by 4.4% for December which was the biggest monthly increase in three years. And that’s important because it’s an indicator that precedes rises in house prices.”
“However, price increases and clearance rates like we’ve been seeing are not sustainable in the long term, but it’s likely here to stay for the next few months at least.”
“Vendors are seeing that prices are rising so there is more stock coming onto the market, but if a vendor can’t find somewhere else to live, that stops them from selling their current property.”
Victoria - ‘buyers are back’
Leading Auctioneer from The Auction Company, Paul Tzamalis is starting to see some areas in Melbourne beginning to fire up.
“The concept of a market within a market still applies at the moment. The inner-city fringe locations like Windsor, Armadale or Northcote are really starting to heat up and we are seeing results stronger than what we’ve seen before," said Mr. Tzamalis.
“Buyers are certainly back. People were wanting to buy last year, however, there was a lot of negative sentiment around why they shouldn’t buy. They’re now realising that banks will lend again, so the buyers are coming back in.”
According to Mr. Tzamalis, access to credit has been a driving force for buyers, particularly first-home buyers and owner-occupiers.
“We’re seeing a lot of young professionals, who weren’t able to borrow money 18 months ago getting into the market, compared to when interest rates were 150 basis points higher.”
For the time being, Mr. Tzamalis feels that low stock will keep upward pressure on prices.
“There is still a lack of stock. We are still down on stock by 10-15% on last year, so we’re seeing these pent-up buyers who have less to choose from.”
“The market for buyers is back and for the near future this is still an opportunity to get into the market as I can only see things getting stronger in the next six months.”
Strongest auction results since 2017
REIV CEO Gil King says there have been some incredibly strong results in Melbourne’s premium locations.
“The City of Yarra performed well last week, selling 96 per cent from 25 auctions – almost half of them occurred at Richmond, which sold 11 of 12 listings.”
“Abbotsford, Thornbury and Brighton were the top performers, clearing all 6 homes listed through auction," said Mr. King.
“On the western side, City of Brimbank cleared 95 per cent from 20 homes. St Albans led the pack selling all 4 listings under the hammer.”