Impressive numbers at all three auctions I attended on the weekend and similar numbers at open for inspections shows no slacking pace heading into the first “Super Saturday” auctions next week.
Out of the three auctions that we bid at this weekend, there were 14 separate bidders. These larger numbers of competitors usually mean that the prices the properties end at are usually much closer to accurate market value. When there are only one or two bidders, it is sometimes possible that the final price achieved does not represent accurate market value, either too high or more usually too low. I was very pleased that we either won or were the under-bidder in all of these auctions and none of the prices really went past expectations.
This means that next week’s 950 auctions will probably see clearance rates in the mid to high 60% range. If it is a little higher then we will be in for a very hectic autumn season. Already numbers of auctions are substantially up on last year, clearance rates from the weekend are up on last year and listing presentations, according to nearly every agent I have spoken to in the last four weeks, has sky-rocketed. HOWEVER, not all vendors who are talking to agents are signing on the dotted line and putting their homes on the market.
I believe the vast majority of vendors are waiting for the first two “Super Saturday” results. If we see Feb 23rd and March 2nd results in the high 60’s or early 70’s (percentage of sold properties) then we will see many of the procrastinating vendors move towards selling their property. If we see low to mid 60’s then I foresee a steady stream of property, similar to how the year has started. To stall this increase in turnover, we will need to see low 50’s at both weekends auction results to allow mass media to push the “gloom and doom” story, and wheel out “experts” quoting the value of Real Estate in Australia will drop 40%.
Turnover is the fuel of property price increases. The stock levels increase when vendors are trading in property. It is the upsizers and downsizers that push property prices higher. They already have good equity in their property and they are not afraid to use it to get what they want. The average property owner in Melbourne through 2000 – 2010 saw at least a doubling and many suburbs a tripling of their property values. In 2010 the mass media said the sky was about to fall on prices and if you didn’t have to sell; DON’T! Turnover dried up from April 2010 and price stagnated. The Valuer General data, based on EVERY MELBOURNE PROPETY SALE, not just a small sample, showed us there was a drop in median value in the Melbourne metropolitan area in 2011. A grand sum total of 1%. Yes, I know this is close to 40%; maybe when the 2012 figures are release we might see another 1% drop, but I think it more likely to see no movement, or, due to the hectic last twelve weeks of 2012, we may see a 1% rise in Melbourne median price. These figures will not be released for some months, as the values are not collated until settlement.
If the clearance rates are up next week and the week after, and the media jump on the headlines that property prices have turned around, and then watch out for the vendors who are upsizing and downsizing. Stock will increase dramatically, but so will cashed up purchasers. Many of these prospective vendors and purchasers have been waiting for nearly two years to move. They have itching feet, and plenty of equity in their current properties.
If you are buying in the current market, you will need assistance. The Victorian State government does not allow direct access to Valuer General Data to anyone but Valuers, Real Estate agents and other professionals that need the information to do their own jobs.
If you are considering purchasing a property at the moment, think about talking to a buying agent (advocate). It will save you time, stress and more importantly, MONEY.
Ian James
Director
JPP Buyer Advocates
