Auction clearance rates in Melbourne are dropping but you can minimise the impact!
SOLD - 28A Taylor St Brighton East (click to view)
Last weekend, the auction clearance rates in Melbourne dropped to around 75%. This is a significant change from the almost 85% of weeks prior, so it might seem that the market is changing for the worse, right? At face value, it would appear that prices are on the decline but I think that a closer analysis reveals that things are actually simpler than they appear. Indeed, I think it is even possible to improve things (the clearance rate, that is) with the right strategy. Let me explain.
During the lockdown(s), people have had nothing else to do, so they turned their interests toward making a move to either another home that better suited their needs or to a different area. Stock levels (properties on the market) were very low because Vendors were concerned that COVID (yes, that word again) would be detrimental to their property sale, but the opposite happened. In the last Melbourne lockdown, prices went crazy! This was a clear example of the basic principle of ”supply and demand” at work. There was high demand, but very little supply. Vendors who were poorly advised to hold off selling during those times likely missed out on those high sale prices.
“Make it simple for buyers to attend and bid.”
Once restrictions were eased, the number of properties on market soared to record levels overnight. Supply was no longer an issue. Indeed, within a few weeks, oversupply was starting to become the concern! After having conducted so many successful online auctions during the lockdowns, I personally didn’t feel that going back to onsite auctions (just) on Saturdays was going to benefit sellers and here’s why…
There were 46 properties on the market in Brighton East last week but with a limited number of buyers, it’s just not possible for those buyers to get to see all the properties on the market in a short time. When there are 7 auctions on the same day, there is no way that they will all sell. Of those 7 properties, 4 (more than half!) were passed in. What is more, 3 were without any bids at all! So, how do we fix this?
Make it simple. It is easier for buyers to inspect the glut of property by holding inspections on days that other agents are not. It is less effort to attend an auction conducted over Zoom and bid from an armchair at home. Ensure that every interested buyer can come to your auction by holding it on a day and at a time with little competition, e.g., Monday night at 7pm.
“Ensure that everyone interested can come to your auction by holding it on a day and at a time with little competition.”
I implemented this “Forthcoming Auction” strategy for a recent sale at 28A Taylor St. Brighton East to great success. The property was SOLD for $75,000 more than the identical property next-door only months earlier. Of course, each property and seller benefit from a tailored approach that takes time to develop and explain. If you'd like to know more, reach out.
For now, I'd like to wish you a very Merry Xmas and a Safe New Year, until next time.
