Vendors and sellers now have more realistic expectations of auction prices, according to one group.
Director and independant auctioneer of Jason Andrew Group, Jason Andrew, said there had been better results in the market during the last two weeks of June, as vendors began to more strongly moderate their expectations on auction day.
“Many vendors coming to market this year have held on to inflated price expectations, largely driven by media reports of a market recovery that is yet to appear and is not evident on the horizon,” he said.
“In May, the average shift a vendor was willing to make from their original reserve price to achieve a sale under the hammer was three per cent. In the first two weeks of June, the percentage had risen to 5.1 per cent and by the second half of June,it had increased further to 6.8 per cent.
“Correspondingly, in that second half of June, the clearance rate rose substantially to 55 per cent.”
Mr Andrew predicted an ongoing increase in the clearance rate if buyers remained active and sellers continued to moderate their expectations on the understanding of current market prices.
According to Will Hampson from My Auctioneer, sellers were more realistic and educated about market prices. He said vendors that sold via auctions had a clearer perspective of the market compared to private treaty sales.
“Auctions remove price and don’t make price a barrier, therefore the vendor is much more prepared in the auction process. In contrast, with a private treaty sale often they can sit there and they won’t necessarily have had offers and feedback in regards to price,” he said.
“With the auctions, they know on the day that within four weeks they will have offers and they will have a decision to make around price, so there tends to be more feedback for a vendor. A vendor that runs their property to an auction probably has a more intense level of feedback than a private treaty vendor will receive from the marketplace because there’s no end date on their sale.”
Director of Map Real Estate Michael Furlong said buyers in general were still expecting to pick up a bargain.
“There’s a lot of stock on the market but I wouldn’t necessarily say that everybody is dropping their prices, particularly in new developments," he said.
However, principal of True Property Brayden Walters, vendors and buyers in his inner-city market lacked realistic expectations on prices.
“Vendors are almost expecting their auctions to go well above what the market value is, so they’re almost banking on the fact that it’s going to be an unbelievable price, which I think is a false expectation,” he said.
“We are seeing a few owners who are a bit over the market, when instead they really need to be realistic and understand that the auction will determine the value.
“We are finding that even buyers are pushing against auctions because they’re selling so well. Buyers are trying not to buy anything at auctions because they may have missed out in the past.”