MELBOURNE’S auction market got off to a fast start last year, with strong clearance rates and plenty of homes up for grabs, but early action points to a slight change in gear in 2018.
While multiple bidders fight it out in some areas, leading property experts says buyers are playing it cool in others.
There are steps both buyers and sellers can take to make sure they’re on top of their auction game in a climate where bidding frenzies might not be as common.
T HE CLIMATE
Stafford Property Advisory director Kirk Stafford said buyers were adopting a more conservative approach at auction and he had noticed properties pass in across blue-chip areas in the city’s south and southeast.
“The current mood is that people are becoming more aware, more cautious, and talk about affordability affecting them somewhat,” he said.
“It’s greatly different to the start of last year. Part of that is the market rebalancing, and it had to.”
Mr Stafford highlighted May to July last year was a peak time for the market, with a crackdown by banking watchdog APRA on lending to investors and changes to stamp duty for first-home buyers among different factors in this year’s market.
However, the demand for property remained good and the market still favoured vendors in terms of price and competition.
“I’m not saying the market is going to fall, but I think there are factors there showing buyers becoming a bit more aware. Vendors are going to have to start to meet that market.”
Bidder numbers falling in some areas, making hammer time less of a big event.
“At this stage, the auction becomes a bit of a step in the process,” he said.
CoreLogic Victorian director Geoff White said volume and clearance rates were down on the same time last year.
A clearance rate of 75.7 per cent from 1091 auctions was recorded on the week ending February 19 last year.
By comparison, the week ending February 18 this year produced a preliminary clearance rate of 70.7 per cent from 923 auctions.
But this figure was still positive for sellers.
It was also an improvement on where last year left off with clearance rates in the mid to high 60s. Mr White said the fact that volume and clearance rates had come down from the same time last year indicated the market had softened.
“The rate of growth has slowed … and it’s probably not a bad thing for it to be a more balanced market.”
Agents were still reporting multiple bidders at auctions, especially in areas where prices were around Melbourne’s median, Mr White said.
“(There are) certain pockets of Melbourne where the market is very strong and that’s in the lower to mid price bracket,” he said.
Mr White said volumes were expected to be significantly higher this weekend with about 1500 auctions scheduled for Victoria, with another big weekend to follow.
“I think that will be the greatest test for this year so far,” he said.
Property Advisory associate director Jarrod McCabe said it might be too soon to judge this year’s buying and selling climate, and agreed this weekend could reveal more.
Mr McCabe noted how agent feedback was that a wave of new buyers had hit the market and this could be having an impact on bidding.
“New buyers entering the market are notoriously hesitant to start with and will want to inspect multiple properties before making a decision on one, so that can breed a lack of bidding.”
But there was still a “reasonable amount of depth” in the pool of buyers, with many missing out on properties last year.
“So there are still a number of buyers that have got experience, they know what they are looking for and they are ready to bid,” he said.
In such an environment, negotiation could come to the forefront, it is important buyers did their research.
“Be really well versed in what else has sold in the area and what similar properties have sold for,” he said.
“You’ve got to have done very thorough due diligence on a property.”
And while sellers employed agents, buyers could also get professional help, Mr Stafford said.
“Agents are very skilled negotiators,” he said.
“If you can’t do research and spend the time understanding the market, get yourself representation.”
Mr McCabe said if buyers found their ideal property, it was essential to be first in line by being the highest bidder.
“It gives absolute control, and the right to negotiate at the vendor’s reserve price,” he said.
“No matter whether there is good competition or not, you want to ensure it passes in to you. It’s not an area to play games around; we see too often where people think they are going to get another opportunity … but they aren’t.”
Research and knowing the competition helped when buying after a home passed in, Mr McCabe said.
“Stay out front so you can have a look at what the competition is in terms of other buyers,” he said. “And know the market and know comparative sales.”
Mr McCabe said vendors should take into account price growth might not continue at the same rate as last year.
“It’s probably likely to be more measured this year,” he said.
“Being realistic with expectations is very important from a seller’s perspective; realistic doesn’t necessarily mean conceding early, though.”
And passing in a property was not something to fear, Mr McCabe said.
“Never be afraid to decide to pass a property in if you believe opportunity is there, but again be realistic with your expectations.
“It depends on how the campaign progressed and what the interest level is like.
“And if you’ve got a strong offer on auction day and leave it until after the weekend, you could leave yourself open to more properties becoming available and yours becoming a bit stale.”
Cheltenham’s Azzolina family had just one bid on their home at auction — but still got the million-dollar price they hoped for.
Their home at 130 Bernard St initially passed in on February 10, but sold within the hour for $1.05 million.
Sonia Azzolina, husband John and their two children are looking to upgrade.
Ms Azzolina said the home had attracted three main parties, but only one that planned to bid at auction.
She said it was daunting at first, but their agency, O’Brien, Mentone, helped them prepare for either outcome.
“We were quite prepared, and they were honest from the start. They didn’t try to get our hopes up too high,” she said.
“We basically thought it wasn’t going to sell, and we’d go private sale after.”
But in a stroke of luck, a new buyer arrived and bid at the auction, then negotiations got the price to which the family had held firm. “We didn’t budge,” Ms Azzolina said. “Our auctioneer did all hard the work and got them up to where we wanted. We’re ecstatic.”
Ms Azzolina said she had read up on auction proceedings. “Whatever I didn’t understand, I spoke to my agent about.”
Ms Azzolina said attitude was important, too: “Don’t give up. Have a positive attitude and present your house as best you can.”
O’Brien, Mentone, agent Brian Lewin said auctions were important to bring a campaign to a head and homes that did pass in often sold within days.
“It’s about the process; it’s a process that in four weeks’ time, we know where we’re standing,” he said.
“Find an agent that you trust and that has your best interests at heart, someone who is local and has experience.”
Planning with your agent was another key step, Mr Lewin said.
“We usually do a meeting a couple of days prior to step vendors through what may or may not occur. It’s all about transparency.”
SUBURB PROFILE: CHELTENHAM
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