Victoria’s recent decision to force advertised price guides could bring better-quality competition to auctions as sales slow, according to an expert.
According to an expert, Victoria’s new auction rules have “got it right”, with a disclosed reserve price giving buyers more informed data about their position in the market
“If buyers know the number a week out, lowballers stay home, and the people who turn up are serious bidders,” Price Buyers Agents director Glenn Price told REB.
Under its latest real estate reforms, Victoria requires sellers and agents to make reserve prices public seven days before an auction begins, and to publish the final sale price within seven days.
Price said that by publishing a reserve price a week before the auction, selling agents would attract more quality buyers.
According to Price, in the current market, bringing quality buyers through the door will be key.
With median days on market up to 41 nationally, and two weeks longer than a year ago in Victoria, generating strong competition has become a vital skill for agents in the state.
With sentiment softening nationwide and buyers growing wary of overpaying, agents face difficult market conditions.
“The buyers I work with all say the same thing. They want to know what the vendor is expecting before they burn a Saturday standing in a backyard for an unrealistic number,” Price said
“Too many agents run properties to auction to see how it goes. When the vendor has to put a number on it, the unrealistic ones get found out before the weekend.”
Price said that in the first weekend of the new rules, auction numbers fell while clearance rates rose from 54.8 to 56.2 per cent.
Cotality data found that Melbourne saw a decline in auction volume, with only 500 auctions scheduled compared to over 700 the week prior, the biggest drop across the country.
Price said the data indicated the market was becoming more transparent, which was good news for potential buyers.
“Cotality says Melbourne’s auction numbers dropped sharply on the first weekend. If sellers are dodging auctions to avoid showing their hand, that tells you something.”
Trouble on the horizon for Queensland?
Price said Queensland was the only one of the three where buyers were “expected to turn up blind”, with NSW passing mandatory price guide disclosure laws earlier this year.
With Domain’s preliminary auction clearance rate in Queensland at just 17 per cent, Price said the sunshine state’s property market was cause for concern.
“Based on the clearance numbers right now, Queensland’s market is in a bit of trouble; that’s due to a host of other factors. Bidding blind on top of that doesn’t help.
After the state banned price guides in 2014, Price said Queensland was unlikely to change its stance, regardless of the difficult conditions.
“Brisbane cleared at 17 per cent this week, so they may need to look at something. But my view is that nothing changes.”
In his experience as a buyer’s agent, he said purchasers are better off with a published price guide or reserve price.
“They want to know where they stand before they turn up. We already have a good idea of what a property is worth from comparable sales.”
“A reserve gives clarity on what the vendor is expecting, and whether that lines up with what the data says it’s worth,” Price said.
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