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BFCSA: Australian Property 'Under stress': One in five auctions pulled

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'Under stress': One in five auctions pulled

Australian Financial Review Apr 7, 2019 1.50pm

Ingrid Fuary-Wagner

 

Sydney homeowners are increasingly pulling their homes from auction before the big day while some Melbourne properties are now selling for less than their council valuations.

Melbourne recorded a preliminary clearance rate of 56 per cent over the weekend from 775 scheduled auctions compared to a slightly higher success rate in Sydney of 58 per cent, albeit it from a smaller pool of 621 scheduled auctions, according to Domain Group data: But with more auction results going unreported in an unfavourable market, the final clearance rate is expected to fall to about 49 per cent in Sydney and about 52 per cent in Melbourne, according to AMP Capital's chief economist Shane Oliver.

Sydney auctioneer Damien Cooley said there was "no question" prices were still down.

"The good quality properties are still selling well but not for the prices they would have if it was in the middle of the boom," Mr Cooley said.

One of the Sydney properties that defied market conditions on Saturday was a four-bedroom freestanding home in the inner west suburb of Petersham that sold $350,000 above reserve for $2.25 million.

"To get 22 bidders at an auction in the current market is unheard of which is testimony to the number of buyers out there looking around the $2 million mark," Mr Cooley said.

However properties with just one or two things wrong with them weren't attracting interest at all, he added.

Homeowners are also increasingly withdrawing their properties from the market before auction day if they aren't receiving the feedback they want, Mr Cooley said.

Domain Group data shows the proportion of homes withdrawn prior to auction has increased to about 20 per cent, up from the decade average of about one in 10 homes.

"The rise in sellers willing to pull their home from auction has risen at a greater pace compared to other downturns, indicating the market is under stress," data analyst Nicola Powell said in her latest auction market report.

"It suggests particular homes have insufficient bidders to create a competitive auction, rather than an auction not hitting the vendor’s reserve."

Selling agent Robert Bagala, of First National Hunters Hill, Gladesville and Ryde, had no properties go to auction over the weekend and had calculated that overall there were half the number of auctions scheduled this weekend in his area compared to the same time last year.

Property prices in Ryde have experienced some of the biggest drops across the country, with values falling 14.7 per cent in the last 12 months alone.

But Mr Bagala said many vendors were preparing to kickstart their sales campaigns after the Easter school holidays.

"Our guess is there will be an influx of offerings in about three weeks," Mr Bagala said.

"Without any doubt there's been an unusual an unexpected spike in buoyancy in the market over the last four weeks, and ultimately it comes down to there being less stock."

"There’s also been a far more significant dip in prices in our area than what is widely reported as the Sydney average, which leads us to believe we'll have a more stable market [around Ryde] in the next 12 months."

In Melbourne, some houses are now selling for less than their council valuations, including two multimillion-dollar properties that went to auction over the weekend.

"It's a whole new paradigm. A lot of buyers would use the council valuation as a measuring stick for how much a property was worth but that's now been broken," Melbourne buyer's agent Emma Bloom.

The valuations, which are marked on each contract and are indicative of land value plus improvements, had previously been the starting point for bidding, Ms Bloom said.

One such example was a property that went to auction on the weekend, a 1920s five-bedroom residence at 56 Clarence Street in Malvern East, which passed in after a vendor bid but sold soon after for $2.76 million, despite a much higher valuation of $3.2 million.

The other was a two-storey brick home at 4A Burnie Street in Toorak, which passed in at $4.9 million before selling just short of the council valuation of $5.2 million.

However selling agent Tim Wilson, of RT Edgar, said the market was not nearly as bad as many commentators were suggesting and properties were transacting with strong results in his area of Stonnington.

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