While housing market conditions remain strong in Australian cities, particularly in Sydney and Melbourne, auctions will continue to be a popular way of selling a residential listing, new research suggests.
Over the past financial year some 25.6% of all listings advertised for sale were taken to auction across Australia’s capital cities, with Melbourne, Sydney and Canberra showing more than one third of all listings being taken to auction, according to data from real estate firm CoreLogic.
There were approximately 380,000 dwellings advertised for sale across Australia’s capital cities over the 2014/2015 financial year, of which roughly 84,000 or 26% were advertised as auction sales.
The proportion of auction sales has broadly been rising since the 2008/2009 financial year when auctions comprised a much lower 16% of all dwellings listed for sale. According to CoreLogic RP Data research director Tim Lawless, the rise in the proportion of residential listings taken to auction should come as no surprise, considering how hot housing market conditions are in the auction centric cities of Melbourne and Sydney.
‘When market demand is high and buyers are highly competitive, the auction process is likely to provide the best possible price on a listing transaction. The opposite is true when housing market conditions are weak, auctions aren’t as popular due to fact that there is less urgency amongst buyers and the competitive bidding environment isn’t likely to be as conducive to finding the best possible price on a home,’ he said.
‘Melbourne, Sydney and Canberra have a well-established auction culture with this sale method well accepted by vendors and buyers. The other capital cities still list the vast majority of homes for sale via private treaty,’ he added.
The data confirms that across the capital cities, Melbourne is still the city where auctions are the most popular method of selling a home. Some 39% of all Melbourne’s residential listing listings over the past financial year were taken to auction, with Sydney and Canberra not far behind at 38% and 36% respectively.
However, an examination of the proportion of listings taken to auction across product types, Canberra and Sydney are both showing a larger proportion of auction listings for houses than Melbourne.
The remaining capital cities are all showing auctions to be a far less popular method for selling a home. Some 16% of Adelaide listings were taken to auction over the past financial year, while 11% were taken to auction in Brisbane and Darwin and less than 5% of listings in Perth and Hobart were auctions. It is generally the more expensive or unique dwellings in these cities that are taken to auction.
‘With auction clearance rates remaining in the high 70% range across Sydney and Melbourne, as well as values continuing to show a strong rate of appreciation, we can expect the high proportion of auction listings to remain in these cities,’ Lawless explained.
Looking across the suburbs, there were five suburbs, all in Sydney, where more than 95% of all house listings were taken to auction. The Waverley suburb of Queens Park tops the list with 59 out of 60 house listings or 98.3% being taken to auction. Across the unit market two suburbs of Melbourne topped the list for auction listings with Kew East recording 33 out of 34 unit listings or 97.1% as being advertised for auction.
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Source: Property News Spain