Saturday marked the first real auction weekend of 2012 and whilst overall numbers of bidders were low there were plenty of onlookers at all the auctions we attended. REIV results have set the clearance rate for the 579 auctions at 59%. There are still about 63 results unknown. I don’t think this result will set precedence for the auction season. It is far too early to make that call. The REIV reports there are 880 auctions gazetted for next week and 870 the following. By around Labour Day weekend we will have a much clearer picture on what is happening in the market place.
More surprising, however, was the fact there were only 488 private sales called in to the REIV. This is very much lower than the same weekend last year. I thought it was also notable that of the four properties we purchased over the weekend, two were purchased prior to the weekend and the other two were negotiated after passing in.
Most open for inspections for properties under $700k were very well patronised. I think there are a lot more people out looking this year. After last year’s drop in turnover, in some market segments the numbers of sales were down as much as 30%, I believe a balance is likely to occur this year. No matter what the market is like, no matter what economic or political issues are prevalent in the papers, people still have to buy and sell a certain number of houses. There will always be births, deaths, marriages, divorces, people moving for jobs, or lack of a job. These people must change their accommodation needs and this means that sales of properties will occur regardless of external forces. This year we should see those people who had put off changing residence last year, making their return to the market this year and this will increase turnover above and beyond what market trends will allow.
Anecdotally there are more people in the market place than last year. If the supply does not grow to well above last years totals, we will see prices rise. This will have nothing to do with economic outlooks, both good and bad, it will be all about supply and demand. If price goes up, more vendors will enter the market and this will cool things off a little. If supply is flooded then prices will ease, however vendors will again withdraw from the market place and we could see prices move accordingly.
This year the market will be overall flat when looking at a macro level. Melbourne statistics and even suburb statistics will not give a full picture of the market. At a micro level I believe prices will be all over the place. The volatility will be at an area level. For example, when talking about Glen Iris and the 4 distinctly differing areas within, price will come down to choice within these quadrants. A lot more so than in the past. I believe there will be a higher level of scrutiny of the properties on the market than ever before. And it will not just be looking at comparable sales; it will be looking at the volume of sales of this type in this quadrant. In other words, if I miss this one, how long will it be before I get another chance at something like this?
Conversely, if there are multiple properties on the market at the same time that are similar, and in the same distinct area, and understanding there is a limited demand, the smart agents will be doing deals before auction. The statistical analysis we are used to seeing in the papers and online will not differentiate this. In fact the clearance rate includes all those properties that are sold before auction.
Overall there may be bargains out there this year, but more than likely if you pay a reasonable price for a good property you will do quite well over the coming years. If you are considering purchasing this year, please feel free to book an appointment. There is no cost, nor obligation at our first meeting.
JPP Buyer Advocates