Auctioneer Jake Moore during a recent auction in Bellevue Hill. Picture: Tracey Nearmy
A lot of fuss is being made about the faltering auction market.
Clearance rates have hovered around 40-45 per cent for much of the last four months and many fear they could slip even lower.
The clearance rate for much of 2016 and 2017 was 80 per cent. Further back, clearance rates averaged about 65 per cent over the decade prior to 2015.
This would suggest going to auction is risky for current sellers but I think an important caveat needs to be made about these numbers. They don’t show us the types of homes going under the hammer.
Not every property is suitable for auction.
They typically work best for rare and high-quality listings. The idea is to amplify competition for the listing into a high pressure, albeit transparent, process for buying the home.
Auctions don’t work nearly as effectively for cookie cutter-type units. If buyers feel they have a large choice of similar homes, it may be better to sell by private treaty.
And that’s the thing. Just a casual look at the homes going to auction this weekend suggests many are run-of-the-mill units. They’re not bad homes, just similar to so many other properties.
I’m not seeing quite as many truly remarkable homes up for grabs at auction.
Going to auction isn’t ideal when the home is similar to many others.
And it makes sense. Few owners of these homes need to sell in a hurry: they already own great homes and can wait for the market to improve.
I’d suggest Sydney’s low clearance rates, while pointing to a cool market, may also signal that sellers need to more carefully consider what sales method is best for their home. Auctions can be an effective way to get more for your home but you have to make sure your property is right for the process.