Stock levels have gone through the roof over the last month. The REIV released their December Research Bulletin this week and the numbers are something to behold.
According to the report, Melbourne had a staggering 5,700 auctions over November, averaging a massive 1,425 auctions across the four Saturdays in the month.
The weekend of the 28th and 29th of November saw a new national record set for the highest number of auctions held – 1,749. Saturday the 28th broke the record for the highest number of auctions on a single day with 1,648.
Sydney was well and truly in on the action on the 28th when 1,065 auctions were listed.
The market has moved to become more balanced overall which is good news for buyers. Clearance rates reached 67% in Melbourne over November, dipping when compared to the highs of the mid to high 80’s recorded earlier in the year. With far more stock to choose from, auction crowds tend to thin out meaning less competition to drive bidding and push the sale price upwards. Months with traditionally more stock such as October and November, and February and March can be generally more favourable for buyers for this reason.
However, buyers shouldn’t get too complacent during these periods. An increase in stock does assist buyers in spreading the competition, but it also brings an increase of less desirable stock onto the market.
Quantity of stock shouldn’t lull buyers into a false sense of security. Quality of stock is still just as important.
The reality is that highly regarded property is still very likely to attract significant interest from buyers and competition will still be strong.
National Property Buyers advocate, Rob Di Vita, assessed a four bedroom, one bathroom home in Murrumbeena for a client. Situated in a good location, Rob anticipated the property to reach the vicinity of $1.25million at the December 5th auction.
The property was announced on the market at $1.25 and emotional bidding amongst five parties pushed the price up to a touch under $1.37million – more than Rob was willing to pay and arguably more than what the property may have been worth.
Late Saturday afternoon, Rob discovered another property which his client had a significant interest in, located just around the corner from the property that was missed earlier.
The property had passed in and immediately attracted interest from under bidders who had missed out on other properties. Submitting an unconditional offer to the selling agent on Monday afternoon, Rob successfully secured the property for $1.203million.
As this example illustrates, just because there is more stock on the market doesn’t mean there will be thinner competition at auction. It also shows that there can still be competition to pick up passed in properties.
On the weekend of the 5th, there were 1,447 auctions listed with a clearance rate of 63% according to Domain data.
Looking at the stock numbers and lower clearance rate would suggest buyers could be in with a stronger chance of getting their desired property. But that isn’t necessarily the case.
Buyer should still do as much research of they can on the property or properties they wish to purchase in order to anticipate what the market might do on the day. There can be surprises of course, but being armed with the research and expert insight will only serve to assist buyers and prepare them for auction day.