Auctions’ potential for success in a changing market - John McGrath

After a cool auction market this Winter, it’s been promising to see volume numbers and clearance rates pick up in the past week or two. What’s also encouraging is that these gradual increases indicate that this market is returning to the usual Spring pattern for this time of year.

In addition, Cotality has estimated that capital city auction volumes will continue to rise in late September.

Importantly for vendors considering a Spring auction, I’ve recently witnessed at least two excellent examples of how the correcting market isn’t slowing auction competition for quality homes. This type of sale can actually lift a property’s sale price well above their private treaty price, and even their auction reserve.

Strong local interest in a five-bedroom home in Sydney’s Hunters Hill resulted in McGrath agent Matt Ward bringing forward the property’s auction by one week, rather than negotiating with parties prior to the event.

There were four registered bidders at the auction, with an unexpected buyer securing the property for $6.62 million – well above the $5.5 million reserve.

At the other end of the scale, our Blacktown agent Monique Layoun took a five-bedroom home with a granny flat to auction in Prospect, in western Sydney, and achieved a $1.84 million sale price. This again exceeded the $1.7 million price guide with two registered buyers competing for the home.

Even more remarkably, the property had already been on the market for three months by private treaty, with little interest shown in it prior to the vendor committing to a three-week auction campaign.

These are just two examples of exceptionally strong auction success in a national property correction, along with a notably cool auction market in the past few months. But the fact they occurred in Sydney – where median dwelling values have fallen -4.6% in the year to August, according to Cotality – is a positive for vendors.

I expect auction numbers will continue to pick up as Spring progresses although it’s still difficult to predict individual locations’ listing volumes as there are multiple markets.

I do know buyers are starting to return in greater numbers as many feel that the market has reached the bottom of the price correction and their window of opportunity to buy at current levels is probably around 6-12 months.

Listing numbers are also coming back as vendors have re-adjusted their expectations and decided they can still make their forward plans work.

As the Sydney auctions I mentioned also show, vendors who take their homes to auction this Spring should be aware that there is not one perfect and best way to a sell a property. It’s important to consider the local market, including sale prices, as well as your property’s type and style.