Auction volumes were high, but as expected, the preliminary clearance rate took a hit across the capitals this week, falling to 61.3 per cent amid continued uncertainty surrounding COVID-19.
It wasn’t for lack of innovation, however, as agents worked hard to adapt to a fast-changing environment.
This week was the first to see all auctions take a virtual turn in the wake of the government’s new social distancing measures, and many are chalking up their new technology as a success.
CoreLogic notes despite the escalating health crisis and economic fallout related to coronavirus, this week was the second busiest for auction activity so far this year with 2,539 homes taken to auction across the combined capital cities.
Collectively, they returned a preliminary auction clearance rate of 61.3 per cent, which is still substantially higher than a year ago when values were falling, but well down on the recent highs.
“This week’s preliminary auction results mark a turning point in buyer and seller sentiment, with withdrawal rates rising as vendors think twice about testing the market and buyers losing confidence or choosing to avoid public gatherings,” CoreLogic reflected.
“Prior to this weekend, the year to date withdrawal rate across the preliminary reading was averaging around five per cent across the combined capital cities, rising to just over eight per cent on today (Saturday’s) numbers.
“The largest proportion of withdrawals was in Sydney where the early numbers indicate 13.5 per cent of auctions were pulled from the market, compared with only 3.9 per cent across Australia’s largest auction market – Melbourne.
“In all likelihood we will see more vendors choosing to withdraw from the market until confidence and selling conditions improve.”
Clearance rates also reflected the lower sentiment this week. CoreLogic anticipates the preliminary auction clearance rate of 61.3 per cent will revise down to below 60 per cent for the first time since mid-2019 as remaining results are collected.
In comparison, the previous week saw 2,274 homes taken to auction returning a preliminary auction clearance rate of 70.6 per cent, before revising down to a final clearance rate of 65.3 per cent.
“While the clearance rate has fallen, it remains stronger than this time last year when 1,667 homes were taken to auction and a clearance rate of 50.9 per cent was recorded,” CoreLogic notes.
“The latest results highlight the housing market is being impacted by the social distancing measures and weaker confidence related to the coronavirus pandemic.
“To date there is no evidence of reduced housing values, however it is clear that transactional activity will be temporarily disrupted in the coming weeks and months. The extent of this disruption depends on how long it takes to contain the virus and for sentiment to recover.”
In Melbourne, a preliminary auction clearance rate of 62.7 per cent was recorded across 1,317 auctions this week, while last week there were 1,201 auctions returning a final clearance rate of 65.6 per cent. One year ago, the clearance rate was 55.1 per cent across 814 auctions.
There were 923 auctions held in Sydney this week, returning a preliminary clearance rate of 64.4 per cent. In comparison, there were 767 auctions held over the previous week and the final auction clearance rate was 68.1 per cent. One year ago, 506 auctions were held and the clearance rate came in at 52.1 per cent.
Across the smaller auction markets, auction volumes increased week-on-week across Brisbane, Canberra, Perth and Tasmania, while Adelaide saw fewer homes taken to auction over the week.
Domain’s statistics highlighted a much more subdued clearance rate, but indicated property prices remain higher than the same period in 2019.
Their results found the national clearance rate was 35.3 per cent which was down on last week (57.1 per cent) and also lower than the same time last year (50.1 per cent).
They also noted a spike in property withdrawals, particularly in Melbourne, compared to last week and last year, but indicated the median national house value was $1,071,000 compared to $981,000 last week, and $1,055,000 in 2019.
In Sydney, this included a four-bedroom unit at North Steyne, Manly, which sold under the hammer for Clarke & Humel Property Management for a cool $7 million.
Auctions go virtual
Richardson and Wrench was among the many brands going virtual, successfully selling a four-bedroom Marrickville home via online auction on Saturday.
Four parties registered for the 15 Tamar St, Marrickville auction, which was livestreamed via Auctionslive from the R&W Marrickville office, with staff on phones to bidders as back-up in case of any technology glitches.
The property ultimately went to a family who viewed it just four hours prior.
R&W Principal Aris Dendrinos said it was a difficult decision whether to move to a private treaty sale after the government ban on public auctions but the vendor was determined to proceed with an online auction.
“In hindsight it was the right call to go ahead,” Mr Dendrinos said.
“We had a lively auction that was kind of weird exciting, a vendor who was prepared to meet the market if necessary, and enough competition to produce a sale $15,000 above the $1.5 million reserve.
“Home inspections were conducted by private appointment and while this reduced the overall numbers coming through, we had quality over quantity and only those people serious about purchasing and in a position to buy booked a viewing.
“Now that we have tested out the system, we can see it works however we would still only proceed to auction if we have enough competitive interest.”
Ray White results
The Ray White Group was also keen to dip its virtual toe in the online waters, launching a new private auction platform as bidders flocked to bid and buy in the ‘new normal’ way.
The brand-new facility, that allowed bidders to still see each-other as well as the auctioneer, provided the competitive forum that was synonymous with previous on-site public auctions.
Each year the brand spends $30 million on technology and on Saturday reported a healthy 60 per cent auction day preliminary clearance rate from its 383 auctions booked nationally, with four registered bidders on every lot.
Ray White Group Managing Director Dan White said Saturday was a day for the true believers of the auction method.
“It proved that those agents and auctioneers that are adaptable and technologically talented can continue to thrive in the new environment,” he said.
“Don’t be swayed by people that say auctions don’t work anymore. Instead talk to those agents that have already adjusted and have found new solutions, and most importantly fought hard to deliver for their customers.
“There is panic everywhere, and the agency community is not immune, but great agents that stay focused on delivering for their customers continue to post great results,” Mr White said.
Mr White noted any property listed for auction at Ray White is tracked through the entire campaign, with withdrawn rates only increasing “a tad” from 15 per cent to 25 per cent this week.
“That is hardly a collapse. And when our whole network gets comfortable with the technology, we hope that percentage will drop.”
Ray White National Technology Manager Jason Alford said more than 50 Ray White offices were able to pivot to the “private auction” platform in 72 hours and deliver outstanding results for vendors and buyers looking to complete their property ambitions in these times of change.
“Many more offices executed private auctions today with digital platforms already in place,” he said.
Ray White NSW CEO and auctioneer Jason Andrew said everything the brand offers is designed to ensure they achieve the best possible price for vendors, whether that be via private treaty, tender sale or auctions.
“The wonderful thing about auctions is the competitive environment it generates – providing the unique experience of knowing and seeing who you are competing against,” he said.
“This platform is innovation at its finest. Ray White has always been built on innovation and being industry leaders in the auction space and this is just the latest example of how we can still deliver the high-quality service our clients deserve.
“Our number one goal in building this platform was to provide a system where we keep the emotional connection between auctioneer and bidder – while maintaining physical distancing.
“In an ever-changing world right now, it’s important our members and vendors know we’re doing all we can to stay ahead of the curve, and ensuring auctions are as competitive as ever.”
Using the platform, Ray White NSW Chief Auctioneer Alex Pattaro sold 804/10 Wentworth Drive, Liberty Grove, NSW on Saturday for $875,000. He sold four from seven lots himself in total.
Meanwhile, Ray White Rhodes Director and Selling Principal Jack Zhao and Sales Executive Daniel (Jia Yi) Jin said there were four registered bidders and 35-plus inquiries during the campaign.
“We’d received a lot of interest before the auction because of its proximity to Rhodes Waterpoint shopping centre – you were getting a real bang for your buck here,” Mr Jin said.
“The best offer we’d formally received before the auction was $820,000 so this is a great example of how seeing an auction campaign through is beneficial in any market .
“The private/virtual auction from our standpoint was really good and really positive and it was great to have so much information in advance of auction day.
“We had actually issued eight contracts before auction day and competition was great between the three active bidders, with a local family coming out on top.”
Ray White Victoria and Tasmania Chief Auctioneer Matt Condon said properties had sold in a number of different ways after the Government’s new restrictions last week.
“A number of agents chose to bring their auctions forward to Tuesday night with properties successfully selling under the hammer as late as 8.30pm,” Mr Condon said.
“After that, all auctions have been carried out online, with great success. It’s amazing to see how quickly the Ray White group has adapted to the new online environment.
“Equally, buyers have also adapted well to the changes and are eager to register, bid and even buy above reserve price in the ‘new normal’ for auctions.”
In Queensland, Ray White New Farm Principal Haesley Cush sold 4 Owen St Wooloowin for $950,000 with two active bidders competing during his first virtual auction which ran for a marathon one hour and 40 minutes.
“We sold to a local buyer who had actually missed out on another house during the week. I firmly believe we can sustain this style of auctioneering especially in Queensland where no-one has to stand on a hot footpath,” Mr Cush said.
“If you are a buyer now you are completely accepting of the current environment and buying for shelter or real estate as an investment.
“COVID 19 has affected a lot of people’s jobs but not everyone, and a lot of people who have jobs are supporting our communities by buying takeaway food more than ever before. Low interest rates are still a big driver of buying intention.”
Ray White New Farm and its sister offices have seven more auctions on Wednesday night.
“Ray White has had the ability to offer online auctions for at least a decade so this is not new for us, but we have all upped our game in terms of virtual inspections, Google hangouts and private inspections. Even our most tech savvy buyers have also upskilled out of necessity in minutes,” Mr Cush said.
Ray White SA Chief Auctioneer said although some auctions were cancelled, many were brought forward, and a huge amount of them were sold before restrictions began.
“South Australia is looking at a preliminary clearance rate of 61 per cent for the week, which is great, given the current climate we’re in,” Mr Morris said.
“The really great news is that I’m still being booked for auctions going forward – and that is something I didn’t quite expect after the Government announcements this week.
“It looks like we’re adjusting to the ‘new normal’ and I’d just like to take a moment to wish all of our hard working agents out there, the best of luck.”