The Melbourne auction clearance rate was stuck in the low 60 per cent range at the weekend for the third week in a row, prompting market watchers to urge buyers to apply “more strategy” to their purchasing.
Just under 900 auctions were scheduled in metropolitan Melbourne on Saturday. Real estate agents reported sales results for 685 of these, giving a clearance rate of 62.5 per cent that level-pegged with the clearance rates of 61.2 per cent, 62.3 per cent and 65.2 per cent reported on the previous three weekends.
A large proportion of the homes that are reported sold each week are only transacting after they are passed in and a negotiated outcome is achieved within three or four hours of the auction.
The trend to pass-in negotiated results has shone a spotlight on the ample leverage held by prospective buyers.
But the chief executive of the WBP Group, Greville Pabst, said too few people had a developed strategy to negotiate with agents once a property was passed in.
“The market has certainly turned into a buyer’s market, so you can negotiate and not just on price,” he said.
“You can ask for much longer settlement terms. You can ask for a much lower deposit and for certain things to be fixed in the house that you mightn’t like, or you can ask to get early access.”
Mr Pabst said it was unwise for a buyer to accept an agent’s invitation to “go inside” a property after a pass-in and be contained in a room. It was better, he said, to stay outside on the street where you could see and evaluate any remaining competition.
Other buyer’s advocates reported a large number of pass-ins around Melbourne on Saturday, particularly for properties priced from $2 million to $4 million.
Woledge Hatt director Adam Woledge said Camberwell’s family home market between $2 million and $3 million was soft: “There are a lot of offerings in the Camberwell market and they are not really going anywhere.”
But Mr Woledge said land-only sales in such suburbs as Malvern and Toorak were strong, particularly when the sites could be redeveloped as upmarket apartments and townhouses.
On Saturday a knock-down site on a 480-square-metre corner block at 69 Irving Road, Toorak, sold for $4.85 million. The RT Edgar-listed property, with a 1950s house, passed in to a solo bidder for $4.425 million who then seriously upped his offer.
Another property at 16 Glassford Street, Armadale, was passed in on a $4.2 million vendor bid after attracting no genuine bids. Listing agent Marshall White has scheduled fresh open for inspections for the Edwardian home for this week.
Advantage Property Consulting’s Frank Valentic said the $1 million to $3 million segment was off the boil in Melbourne’s north: “We attended one auction in the second-best street in Coburg, at 137 The Avenue. There were two bidders there and the home sold under the hammer, but last year we would have seen five bidders jumping up for that. It was a nice Californian bungalow, quoted at $1 million to $1.1 million, and it sold for $1.14 million.”
The bids at most auctions on Saturday came slowly. Many buyers seemed content to let properties pass in and then negotiate.
In Kew, two families slowly slugged it out for the keys to a contemporary townhouse at 19 Edgecombe Street, in front of 80 onlookers.
Jellis Craig auctioneer Richard Earle jump-started the sale with a $2.2 million vendor bid. He passed in the home to one family for $2.35 million and sold it soon after through negotiation for $2.45 million.
Mr Earle said in a more challenging sales environment, vendors were turning to established and highly skilled agents with track records.
Nelson Alexander sales director Arch Staver is tracking the same trend.
On Saturday, Mr Staver had little trouble finding a buyer for a large, near-new two-bedroom apartment at 101/21 Rose Street, Fitzroy.
There were two bidders for the property and both were prepared to push to their limits. The home, quoted at $850,000 to $890,000, was declared on the market at $890,000 and went on to sell for a bullish $957,000.
Mr Staver said it was easy to understand why some vendors were a little ahead of the market, as the process of selling a house sometimes took six months.
He said a number of people in the present market had made purchasing decisions last spring but postponed selling an existing home: “They intended to sell in six months’ time, but the reality is that six months is a long time in the real estate market. Things change. Banks freeze up on lending and buyers lose their herd urgency.”
Mr Staver said even at auctions where an agent had identified three or four prospective buyers, these buyers often did not want to start the bidding.
“If somebody else bids, it all starts,” he said.
“The challenge at the moment for auctioneers is to compel that first bid. I think that if you get a bid at auction, you are going to sell the property. Vendors are attuned to what is going on and even if there is only one bid and the property is passed in, you end up negotiating an outcome.”
The highest reported auction sale at the weekend was for the sumptuously renovated period house at 56 Kerferd Street, Malvern East. The five-bedroom property sold for $6,110,000 through Thomson, while a house at 27 Ryeburne Avenue, Hawthorn East fetched $5.2 million through Marshall White.
Resouces from Domain