Sellers look to close prior to auction as buyer numbers dissipate.

Forget what you’re reading in the weekend media about auction results, they provide an inaccurate assessment on the performance of the auction market as many agents will hold back their unsuccessful sales, which then need to be followed up and added into the more accurate outcome that is released by SQM Research like clockwork every Tuesday. While we accept there is consistency in the weekend reporting as it’s done the same way each week, there is one major variable, and that is how agents report their data. In a heated market when agents are selling a higher percentage of property ‘under the hammer’ they will be swift to report the outcome, however, as auction conditions soften, agents will pull up the handbrake and take considerably longer to report their data. As a result, the weekly consistency of reporting auction results on a Saturday afternoon can have significant swings simply down to the overall mood of the auction market and agents’ willingness to provide the data.

Reviewing recent Sydney auction results, the weekend media is reporting a clearance rate in the 70 to 75 percent bracket. However, SQM research provides more accurate data with clearance rates between 50-55 percent in recent weeks. As we drill further down into the data, we take away even more findings that indicate that approximately 25% of property that is booked and scheduled to be auctioned actually sells under the hammer. This low outcome provides insight into why the disparity between the high weekend clearance rate is so far away from the truer outcome. We’re currently seeing a 25-30 percent lower auction clearance rate than what is reported over the weekend, which is a misrepresentation of the performance of the market and provides a false narrative.

A clearance rate north of 70 percent places the market firmly in favour of sellers, reflecting modest price growth and decent competition at auctions around the city. However, if we told you of 829 auctions scheduled in a week, just 225 made it all the way to sell at auction, would you have a different perspective of the market? What if we then said that another 213 sellers sold prior to the auction, would that information be useful? The total sold either prior to or at auction from 829 properties reflected a clearance rate of 52.8%, which meant 88 were rescheduled for a second attempt at auction, 30 properties were withdrawn from market and 238 were readvertised as private treaty sales. In our view, this is critically useful information for buyers and sellers as it correctly outlines how the market is performing.

If a seller is aware when entering their sale campaign that just 25 percent of properties are currently selling under the hammer, this information can greatly assist them when it comes to consider interest prior to the auction. For a buyer, if they knew the true auction clearance rate was closer to 50 percent and only 25 percent of properties were selling under the hammer, they may prefer to roll the dice and try their luck waiting for the auction to assess how genuine and solid competition may be.

SQM research data is considerably more helpful for buyers and sellers and paints a far better overview of how the market is performing on a week-by-week basis. Moreover, their data reflects what we’re seeing at the coalface as sellers are currently using the auction method to locate a buyer and close a sale quickly. However, the data is accurate that while properties are trading the conditions are evenly poised between buyers and sellers. It’s a market for all parties to be sensible, it’s what we’re seeing playout across our regions and supported by the data.