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Auction volumes keep rising, but buyers are still out in force

Despite the unseasonal increase in auction activity, the preliminary auction clearance rate continues to hold above 70 per cent with a “massive” number of registered bidders showing up on auction day.

According to CoreLogic, the number of properties auctioned last week rose 13.1 per cent compared to the previous week, however, the preliminary clearance rate only fell 50 basis points to 70.7 per cent.

Auction markets were strongest in Sydney, with a 9.4 per cent increase in the number of auctions held over the weekend, while the preliminary clearance rate came in at 72.4 per cent, which was slightly down on the 74.2 per cent from last week.

Melbourne held the most number of auctions this week, continuing an unseasonal trend of increased volumes, up 24.4 per cent from last week, with 846 homes going under the hammer.

While the preliminary clearance rate climbed to 69.9 per cent.

AuctionWORKS, Chief Auctioneer and Director, Jesse Davidson said that demand was still incredibly strong at the moment.

“The market is just unbelievably strong clearance rate-wise, underpinned by a lack of stock,” Mr Davidson said.

“While stock is increasing, we’re not seeing crazy big stock numbers yet and it’s still relatively mediocre, but it is starting to build.

“But this would have to be one of the first weeks we’ve had better stock than this time last year.”

According to Ray White, the strong demand from buyers over the weekend pushed prices above reserves by five per cent on average.

Principal of Ray White Quakers Hill, Josh Tesolin sold a property at Doonside for $160,000 over reserve, thanks to the strong interest from investors.

“There was a lot of activity out at auctions today, with plenty of back-and-forth competition from bidders driving up the sale price,” Mr Tesolin said.

“Six of the registered bidders had simply walked in on auction day, almost doubling the crowd of expected buyers on the day.”

Principal of Ray White, Cherrybrook | Thornleigh | West Pennant Hills, Nathan Leuzzi said a Thornleigh property also sold for $122,000 over reserve.

“It just goes to show the difference in the property market since earlier in the year,” Mr Leuzzi said. 

“A few of the same bidders from the March auction attended today to try to purchase this property, but the successful buyers were a mother and son duo, upsizing from their current unit.”

According to Mr Davidson, one of the key indicators of the overall strength of the market right now is the number of registered bidders.

“Our registration numbers are massive,” he said.

“Over the weekend I had one property with 11 (registered bidders) and others with nine, seven and five, which are unbelievable numbers.

“When registration numbers are strong, that means there is pent-up demand.

“A registered buyer is somebody that’s done the due diligence and is ready to participate and compete and they’re the ones that really tell you how the money is running and those numbers are very encouraging.”

Mr Davidson said despite higher borrowing costs and rising volumes, he hasn’t seen any real signs of vendors being forced to sell.

“From my perspective, I’m yet to see any distressed sellers,” he said.

“Even in the west of Sydney, where there are more affordable properties and people are feeling the pinch of interest rates rises, I haven’t had much of an indication of any forced selling.

“It’s certainly not what it was like in the 2011 market where a lot of what we were selling was mortgagee stock.”

Mr Davidson said the litmus test will come when the spring selling season begins.

“When we come into spring, that’s when the Sydney market will really be tested,” he said.

Across the smaller capital cities, Brisbane hosted 174 auctions, with the preliminary clearance rate dropping to 58.3 per cent according to CoreLogic.

Adelaide recorded the strongest preliminary clearance rate among the capitals at 82.8 per cent and was the next busiest capital with 113 auctions held. 

While Canberra was host to 53 auctions and recorded a 70.6 per cent success rate. 

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Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.