Is it a better time to buy a house at auction now?
By Jim Malo
Home buyers at auction are likely to face less competition this spring than earlier this year, as an increase in homes for sale gives buyers more choice.
But an expected influx in distressed listings has so far failed to materialise, keeping property markets relatively stable and the chance of a bargain low.
Nationally, the average number of bidders taking part in each auction has been hovering just below three since February, on Ray White data recorded and reported by their network of agents.
In Sydney, 2.6 bidders were active at each auction on average for October so far, down from 2.7 in September and three in August. The number had hovered either side of three for about a year, however.
Melbourne’s average for this month so far was also 2.6 bidders per auction, and has edged down since it held steady at 2.9 bidders from April through to July. Melbourne has not averaged three or more bidders at auction since April last year.
When there are more than 3.5 bidders per auction, the strong competition tends to push prices and auction clearance rates up.
Ray White chief economist Nerida Conisbee said the numbers, though stagnant, indicated prices should remain fairly steady.
“They’ve definitely plateaued. We did see them get to high levels in early winter and that’s the period where the number of properties for sale were at low levels,” she said. “They have calmed down but they’re not falling rapidly.
“There are still people saying prices will fall but this shows to us that they won’t fall, but the increase in stock has made a difference.”
While the number of listings was edging up, it paled in comparison to a usual spring, Conisbee said.
“The thing we are seeing is there is a shortage of properties for sale again,” she said. “That’s something we think will keep prices elevated.
“What happened was the level of distress has been a lot lower than what people expected. The weak parts of the market are holiday home destinations … we thought we’d see more investors selling. It has happened but not to the extent we’ve expected.”
The bidder numbers are showing in auction results. Auction clearance rates edged lower in Sydney and Melbourne in September to hold below 70 per cent, and have been similar for October so far.
Conisbee said Sydney activity was buoyed by the upper end of the market.
Cooley Auctions’ Michael Garofolo said bidder numbers were climbing. Credit: Peter Rae
“Sydney’s strong. Particularly in the upper end of the market,” she said. “Some of the mortgage belt areas … there’s not as much positivity in those areas.
“They’re younger and they’re earning less which has made them a lot more sensitive to the cost of living.”
Cooley auctioneer Michael Garofolo said the number of homes for sale had risen and the number of buyers was up, which was helping to keep the market balanced.
“There’s definitely more buyers coming through and more numbers at inspections and more bidders at auction,” he said. “The supply has improved… The first half of the year was really low on stock … it’s come through, but it hasn’t been that spring selling season we’ve been used to.
“That’s definitely helping.”
Conisbee said the outlook was more gloomy in the Victorian capital.
“Melbourne’s definitely weaker. We’re still seeing price growth year on year but it’s not as strong as everywhere else,” she said. “I think it’s a bit of a hangover from the pandemic and the Victorian economy isn’t doing that well.
“There’s a lot more negativity and that’s flowing through to housing demand.”
Jellis Craig Stonnington director Andrew Macmillan said the spring selling period had been more subdued than usual, but agreed the number of buyers and sellers was maintaining balance.
“If you’ve got a renovated period home … they’re going really well, and you get multiple bidders on those ones there,” he said. “Where vendors’ expectations are realistic, and they’re prepared to meet the market we’re getting strong competition and multiple bidders and if they have high expectations, auctions are struggling.
“There’s still the odd auction that goes nuts. Outliers are still there, but they’re less common than they were two or three years ago.“