Why it’s harder to buy a home at auction than it looks this spring

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Conisbee said Sydney’s sharper shift in bidder numbers is because the city is further along in its market downturn than Melbourne. Meanwhile, in Brisbane, where prices only recently started to fall, bidder numbers were lower than earlier in the year – an average of 2.1 active bidders last week.

Sydney auctioneer Michael Garofolo, of Cooley Auctions, felt buyer sentiment was improving. He had a string of strong results last Saturday, including two properties, one of which was brand new, that each drew more than 20 registered bidders and about half a dozen active bidders.

Buyers had become accustomed to rising interest rates, Garofolo said, while most sellers had dropped their price expectations. Auction volumes were also down, spreading buyers out across fewer homes. Recently built or renovated properties were attracting the strongest demand, amid increasing build costs and delays.

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Cooley Auctions had an average of six registered bidders across 47 auctions last Saturday, up from 3.8 in August, but still well down on 10.7 last September.

“The clearance rate still stuck around the 60 per cent mark though … but it was encouraging to see more activity, and more buyers,” Garofolo said.

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Domain Group recorded a preliminary auction clearance rate of 62.1 per cent on Saturday, while Melbourne’s was 62.6 per cent, down from the 80 per cent levels reached last autumn and likely to be revised down further as more results are reported. A rate of 60 per cent is considered the threshold below which prices are likely to be falling.

The median property value in Sydney has fallen 7.6 per cent, while Melbourne is down 4.9 per cent as the market declines.

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Melbourne auctioneer Simon Gowling, director at Jellis Craig Port Phillip, had also seen a little improvement in bidder turnout.

“In June and July it was very quiet, by late August … it went down to one buyer on everything, and now we’re back between one and three bidders depending on the property,” he said.

“I think most people have adjusted to the rate rises, and they’re doing their sums on where rates might go to … and factoring all that in.”

Reduced housing supply was also helping to prop up competition and support prices, Gowling said, estimating stock levels in his market were down about 30 per cent year-on-year. A-grade homes were still attracting strong competition, but there was less demand for other properties.

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“If it’s a little B or C grade, there’s not the same sense of urgency, prices are going down, rates up, [they] don’t need to buy anything in a rush,” he said.

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