There are just weeks left of auctions, but the softer market can mean good news for buyers wanting to act this year.
Homebuyers hoping to score the keys to a new home in 2018 have just weeks left to do so. But while time is running out for buyers wanting to wrap up a deal before Christmas, experts say conditions are on their side as the auction market prepares for a summer hiatus.
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One or two last big auction weekends typically fell in late November or early December each year, CoreLogic Australian head of real estate Geoff White said.
Last year, between Melbourne Cup and the year’s end, auction activity peaked the week ending December 10 with 1833 homes going under the hammer. And auction action drew to a close in the week to December 17, with 1630 auctions and a 65.9 per cent clearance rate.
“Things finished relatively strongly last year,” Mr White said. But this was already down from clearance rates in the high 70 per cent range earlier in 2017, he added. Signs of change in the market became a reality later this year as clearance rates dropped into the 50 per cent range and below, Mr White said. “We can see 2018 has been a very changing year as far as the market is concerned,” he said.
Last week’s preliminary clearance rate of 48.3 per cent from 1141 auctions was the fourth week running below 50 per cent. It is expected 1319 auctions will be held this week.
WBP Group chief executive Greville Pabst said the transition from last year to now had created “a buyer’s market”. “Conditions don’t get much better for buyers,” he said.
Most vendors still intending to sell at auction before the year’s end would have launched a four-week campaign just after the Melbourne Cup, creating one last wave of activity in early December, Mr White said. “More than likely the weekends ending December 2 or December 9 will be the ones that peak,” he said.
Mr White said the last batch of properties intended for auction this year would likely hit the market this weekend and go under the hammer on December 15.
The state election next weekend could be a small interruption to activity, he said.
Mr White said most agents and vendors would avoid holding an auction the final weekend before Christmas, December 22-23.
48 Calembeena Ave, Hughesdale has a December 1 auction date as well. It has a $1.5 million price guide.
Tougher lending conditions were still having an impact on the market in the wake of the banking royal commission which will wrap up next year, realestate.com.au chief economist Nerida Conisbee said. “It hasn’t loosened up, and conditions won’t change until the royal commission is complete,” she said. But potential outcomes could become clearer soon, she added.
Mr White said factors affecting the market now would continue into the New Year.
“I can’t see a big difference in clearance rates between now and the end of the year, because nothing much is going to change,” he said. “Activity will still be there, but more subdued than last year. It’s all going to hinge a lot on the finance sector and availability of credit for buyers and access to money early next year, and that could start to stimulate the market.”
Next year’s federal election could also impact the market, Mr White said.
Mr Pabst said current market conditions put buyers in a good position.
“There’s incredible opportunity — it’s a falling market, there’s less competition, there’s less demand, and there’s the position to negotiate,” he said.
Buyers should be ready to negotiate post-auction by ensuring they were the highest bidder. “Make sure you don’t just stand there — have the property pass in to you so you do get that first right to negotiate,” Mr Pabst said.
He said while buying conditions were good, buyers had to navigate the tougher lending environment and loans applications were taking more time.
Ms Conisbee said the sense of urgency buyers might have felt about prices last year had now eased. “There’s no rush in the market and people feel they don’t have to make decisions quickly which is a real positive,” she said. First-home buyers especially were finding good opportunities in the current market, she added.
There was a sense of hesitance from sellers in the current market, Ms Conisbee said.
“People are staying put,” she said. “We’re certainly not seeing any distressed sales — there’s no evidence of a high degree of stress in the market, it’s really more people just watching what’s happening.”
Mr Pabst said sellers needed to be aware they were selling in a weaker market compared to earlier this year.
He advised buyers who had held a property short-term especially to delay their decision to sell. “For those that have to sell and have only had their property a couple of years, they’re going to be the ones most disadvantaged by this market,” he said.
Homeowners who’d held a property long-term would be less impacted. “The past 25 years of growth is probably the largest upswing of property price growth in our history,” he said. “For those people it will have a lesser effect — they’ve had good growth and if they have to drop five or 10 per cent it’s not such a big deal.”
“If people are buying and selling in the same market, that’s okay — you might sell for a bit less but on the upside you’re going to buy for a bit less,” he added.
If sellers did choose to act this year, they had very limited time, Mr Pabst said.
Ms Conisbee said while the market had slowed, blue-chip suburbs Albert Park and Hawthorn plus outer eastern suburb Donvale were still seeing good activity. Affordable suburbs were also performing well thanks to first-home buyer activity and regional centres Geelong, Ballarat and Bendigo were strong performers, she added.
Mr White said the city’s northeast was still a consistent performer, while the southeast had also been seeing clearance rates above 50 per cent. “There are areas of Melbourne performing above the overall clearance rate, and that’s driven by demand,” he said.
He said the Mornington Peninsula would be “one to watch” as summer sets in, and many agents would handle successful private sales over the holiday period.
Mr Pabst said there was a lack of quality stock on the market and prestige properties in excess of $3 million were still seeing good sales. “Good quality property is selling very well and there is still demand for that,” he said.