By Nicola McDougall, Editor, The Female Investor
A fear of over-paying, coupled with vendors who still think it’s last year, are starting to impact auction markets, but the overall clearance rate remains firm, according to the latest Apollo Auctions Auction Report.
During July, a new breed of bidders has appeared at auctions in Sydney, in particular, with “FOOP” (Fear Of Over Paying) resulting in low-ball offers that are not in-line with current market conditions.
“While Sydney’s auction clearance rate improved slightly from last month – up to 45.30 per cent – our auctioneers said that ‘FOOP’ bidders were reasonably common, but they weren’t having much luck because of their unrealistic assessment of the current market,” Apollo Auctions Director Justin Nickerson said.
“Conversely, many buyers in most markets understand that their current lending limit won’t last forever, so they are keen to transact and are bidding at fair and reasonable price points.”
During July, the average clearance rate across the five capital cities increased to 52% – from 49% per cent in June – predominantly due to improved results in Brisbane, Sydney, and Perth, according to the report.
Brisbane continues to be the clear auction market leader with a clearance rate of 70% achieved in July.
However, the three successive interest rate rises have reduced the number of registered and active bidders, with the average number of registered bidders down from 3.84 in May to 2.7 in July, and the percentage of active bidders falling from 63.83% to 55% over the same period.
“Our auctioneers are reportedly that vendors are slowly catching up with the changing market conditions, however, a fair cohort of sellers are still hoping to achieve a result that may have been possible last year but is not likely now,” Mr Nickerson said.
“This has resulted in a number of properties being passed in, when a sold sticker could have been applied to the sign board if the vendor had been a bit more realistic about the current market.”
According to our team of auctioneers, there are still plenty of buyers’ keen to purchase by auction – especially with the lending environment changing rapidly, Mr Nickerson said.
“In Brisbane, although buyer numbers lack the depth of 2021, this smaller group have adopted an assertive mindset with many transactions occurring as a result of direct bidder-seller negotiations during the auction,” he said.
“A barrier to a higher clearance rate was a number of sellers not wanting to accept present market conditions, potentially hanging out for bluer skies that may be on the horizon in their minds.”
With a continued healthy clearance rate of 52%, the Gold Coast market is also holding firm.
The auction market in Canberra has slowed as far as the number of auction listings in the past month, but it is evident that owners who are looking for a secure deal are still heading down the gavel path, according to the report.
In Perth, agents wanting the best result for their clients as opposed to the first offer are realising that auctions are still the most lucrative and transparent method of sale for their vendors.
“Our Perth auctioneers are consistently seeing bidders turning up and bidding on auction day, and the majority of them selling on the day, with a few getting ink to paper within a day or two of being passed in,” Mr Nickerson said.
