Here at McGrath, we’ve noticed a significant increase in auction bookings across our Eastern Seaboard offices for the month of March, with volumes well up on the same period last year.
We currently have 38% more auctions booked for this Saturday (March 4th) compared to the first Saturday of March in 2017 across our network. Also Sydney bookings are up 40%, with the Eastern Suburbs leading the surge with a 115% increase year-on-year, followed by the Sutherland Shire with a 64% increase.
This is a really exciting change for buyers and sellers alike. We had a significant shortage of listings for sale last year because home owners were very reluctant to sell before buying in a moving market. If they sold first, they risked having to wait several months to find a new home while prices kept rising.
Now that the market has peaked, sellers are feeling less fear and buyers are newly motivated with competition decreasing a bit. Instead of competing against five to eight bidders at auction, they’re more likely to be up against three or four so they feel they have a better chance of purchasing.
In terms of auction volumes, Sydney and Melbourne experienced a major auction day last Saturday, with about 1,500 properties going under the hammer in Melbourne and about 1,100 in Sydney, according to CoreLogic data.
It was a big day because these campaigns were the first to have four full weeks of marketing after Australia Day.
Based on our bookings to date for March, we are expecting two ‘Super Saturdays’ on March 17 and March 24 in the lead-up to the Easter weekend.
Auction clearances rates are holding up well in both Sydney and Melbourne despite both markets beginning to cool.
In Sydney, auction clearances were tracking in the low 50% range in the final quarter of 2017 but we’ve seen an upswing this year, with CoreLogic reporting clearances in the 60% range over the past few weeks, and this past Saturday even higher at 71%. Melbourne is doing even better with recent clearances around 70%.
Another interesting trend right now is the sale of properties today that failed to sell last year, when auction clearances were lower and buyers were a bit more cautious.
We had a townhouse in Randwick, in Sydney’s Eastern Suburbs that passed in at auction in December with no registrations or bids but sold this month for well over the asking price. This is purely due to heightened buyer engagement in an increasingly balanced market.
Another really exciting change in the auction market is the re-emergence of first home buyers.
Government incentives that either remove or significantly reduce stamp duty (depending on sale price) are motivating young buyers to come back to property. They’re also dealing with less competition from their main rivals – investors, who are finding it tougher to borrow due to restrictions on investment lending and interest only loans.
Sydney and Melbourne rental yields have also fallen to a point where many investors are looking at other markets, such as Brisbane, for more affordable opportunities and better rental returns. This is further opening the door for young buyers in our two biggest cities.
There are few things more exciting at auction than seeing a young buyer purchase their first home. As we prepare for a big auction month in March, I hope to see even more young people out there inspecting properties and bidding for their first homes over coming weeks.
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