Auction Popularity Grows - Exclusive White Paper
Strong auction activity in 2015
Going Going Sold
A highly competitive property market has seen the popularity of auctions rise dramatically. An under supply of properties on the market for sale combined with a strong buyer demand has seen the rivalry for each property listing grow.
Sellers have looked to leverage the supply/demand imbalance to build competitive tension between buyers in order to maximise their sales price.
Number of Auctions Reaches All-Time High
Auction data from CoreLogic RP Data shows just how popular auctions were over 2014 with 101,444 auction campaigns taking place across capital cities during the year. This is the first time ever that the number of auction listings has been more than 100,000 during a 12-month period.
Auction Growth Occurred in all Capital Cities
According to Australian Property Monitors (APM) the use of auctions has accelerated over the past two years with auction listings by 19% in 2013 and a further 23 per cent over 2014.
All markets recorded a clearance rate higher than its long term average in 2014 providing evidence of the strong buyer demand in place over the year. Sydney recorded the highest average clearance rate over 2014 at just over 70%, 26% higher than the 10 year average. This was followed by Melbourne at 67%, 8% higher than average.
Why are Auctions Popular?
Auctions Build Competitive Tension
An auction enables competitive tension to be built over the selling process. This tension culminates on auction day with an environment which creates a sense of urgency for buyers to take action. It doesn’t matter if it’s a falling market or a rising market an auction captures any and all current demand and interest for a property at that point in time.
Provides transparency & confidence in sales price
An auction is effectively a public negotiation. This provides transparency in the sales process and allows buyers and sellers to see first-hand the level of demand for a property. This in turn builds confidence in the final sales price as the price negotiation process is not being channelled through a real estate agent or second party.
Takes vendor out of negotiation process
An auction provides an environment where buyers negotiate the price up with other buyers. This is opposed to a private treaty sale which normally sees a buyer negotiating the price down with the vendor.
Enables seller to capture price growth during marketing period
In any market price growth and demand levels can change over the sales marketing period. By undertaking an auction a vendor is not restricted them to an advertised price sales locked in at the beginning of the sales process. This enables a vendor to capture any additional price growth that may occur during the sales period.
Provides an end date
By setting an auction date the seller can plan for the future. They are safe in knowing that the sales process has an end date while still providing the flexibility to sell prior to, or after, the auction.
Ongoing record low interest rates are expected to help keep buyer demand in place, across the majority of capital cities, during 2015. The heightened level of competition between buyers should see auctions remain the dominant choice for vendors looking to maximise the sale price of their property.