Three out of 10 properties sold by auction: RP Data's Melbourne weekend auction preview

Three out of 10 properties sold by auction: RP Data's Melbourne weekend auction preview
Three out of 10 properties sold by auction: RP Data's Melbourne weekend auction preview

Last year Melbourne saw 30.5% of sales by auction compared to 21.1% for the previous year.

The proportion of sales by auction tends to follow the market; rising when prices and demand increases and falling in soft markets.

Early indications this year are showing that new records are likely to be set. At the end of the March quarter, 30.6% of sales were by auction compared to 21% last year, and the previous high of 20.8% in 2010.

Due to a lack of auctions in January and a slow start to February, the proportion of sales by auction always rises as the year goes on.  The same will be the case this year, especially in light of the records reached in May.

This means we are likely to see a significant shift in selling methods towards auctions this year. This would be unprecedented because price growth and clearance rates are lower than in other years when this occurred.

The data points towards a shift in auctions as a selling method by Melbourne real estate agents, and one that vendors are clearly agreeing with.

This may be due to research which shows that even if you fail to find a buyer at the auction, there is a high likelihood you will within four weeks. The data shows that within four weeks of the auction, the proportion of homes sold rises to around 80% as sellers negotiate with buyers after the conclusion of the auction. This shows that the concentrated marketing and ‘sale date’ associated with an auction campaign helps ensure a timely sale.

Proportion of sales by auction in Melbourne

Source: RP Data.

There are 728 auctions scheduled this week in Melbourne compared to 719 for the same time last year. The highest number of auctions are expected in the northern suburbs of Melbourne this week with 14 scheduled in Preston and 13 in neighbouring Reservoir.

The Melbourne auction market appears to be improving with the clearance rate being close to 70% last fortnight. That is compared to the clearance rate of 67.6% this year from 18,657 auctions whilst last year the comparative number was 68.45% from 14,226 auctions.

The average time on market for houses sold at private sale tightened from 35 to 34 days. Vendor discounting softened slightly over the week, to -5.6%, compared to -5.5% over the previous week.

Key data

  • Clearance rate week ending 29 June: 69.1%
  • Melbourne auctions expected week ending 29 June: 728
  • Melbourne private sales time on market week ending 22 June: 34 days (houses)
  • Melbourne vendor discounting market week ending 22 June: -5.6% (houses)
  • Listings being prepared for market are 1.8% higher in month ending 22 June (seasonally adjusted)

Robert Larocca

Robert Larocca

Robert Larocca is Victorian housing market specialist for CoreLogic RP Data.

Tags: 
Auctions Melbourne Robert Larocca

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