The idea that Australian real estate is in a boom market leading up to the Christmas season is little more than a myth, according to a candid market assessment by Century 21 owner and managing director Charles Tarbey.
Speaking exclusively to Real Estate Business, Mr Tarbey said the idea of a residential housing bubble is an interesting concept; however, it is not one Aussies could say we are in at the moment.
Mr Tarbey said typical boom conditions have only really surfaced once of late, and that was last year.
“A boom, really, is when you have clearance rates, on a national level, in the ‘80s’ on a consistent basis and that has only happened once – last year – and it hasn’t happened since,” Mr Tarbey said.
“If you look at last weekend’s clearance rates, which has been probably the most successful way of viewing how our market is going, you’ll find that they have been mostly in the 60s and 70s on a national basis for some time.
“Certainly, in some suburbs vendors are experiencing a higher price than they were hoping to get, but the realistic part of it is you only ever hear of some properties going at hundreds and thousands over the reserve price but this is because supply has been an issue.”
Mr Tarbey said when you have a national clearance rate of 70 per cent, that means 30 percent of property did not sell and possibly hit a ceiling – something that now requires the hard work of an estate agent to negotiate.
“People listing properties at higher prices soon hit the ceiling between buyers and agents to reach an agreement,” Mr Tarbey said.
Director and auctioneer at Auction Services, Rob Trovato, said these days the agent has to work to make a sale due to a mix of vendors saying they are in the best market they have ever seen and want top dollar and buyers thinking the market is going to go bust soon.
Mr Trovato said some auctions today reap "crazy" results.
“I host auctions that are also thin on buyers, which indicates vendor expectations may be too high, but it generally comes down to their motivation and if they have already bought they will meet the market… it comes down to vendor motivation,” Mr Trovato said.
“Any clearance rate around 60 or 70 is very good in a normal market and we are now seeing it as ‘bad’ because we are comparing it to a clearance rate up around 80 per cent and I think people may be panicking a little bit as the perception is about to burst – this time last year we were seeing a change.”
New figures from RP Data show clearance rates nationwide show a preliminary weighted average clearance rate of 68.5 per cent across all capital cities compared to 67.8 last week and 70.4 per cent this time last year.
RP Data housing market specialist Robert Larocca said these figures are consistent with current trends, adding that the year-to-date clearance rate for capital cities was 68.3 per cent before last week.
“Despite the Sydney clearance rate not being higher than a year ago, the auction market has improved with more homes being sold,” Mr Larocca said.
“Next week will prove an interesting test with a record of around 1,800 auctions scheduled.”