How buyers can use auction results to be better buyers: CoreLogic's weekend auction preview

In many respects the Melbourne auction market last year was better than in 2013.

Auction volumes rose 19.7% compared to last year, however the clearance rate fell a small degree from 69.2% to 68.4%.

While there is a great degree of interest in data associated with the auction market, what exactly should buyers be looking at to help inform their judgement?

Firstly, when undertaking market analysis it is important to get as much information as possible and understand the data in context, after all the sale of a new home means something different to the sale of an established one.

Auctions can provide a rich source of information, even if you are not bidding.

Auctions account for around one in five sales in capital cities and nearly one third in Melbourne.

With that in mind there are three important things for buyers to look at from auctions;

• Number of Buyers:

The number of active buyers is a slice of the people you are competing against in a given area. If you go to enough open houses and auctions you will get a feel about how strong demand is in an area and that will affect the price you need to pay..

• Sale Price (or passed in amount):

Buyers will be able to compare the sale prices with their expectations of price, even if it is passed in. This information will help you make informed judgments about the market when bidding on the home you want. You can then see this data the day after, however it’s far better to turn up and see it live.

• Local Auction Conduct:

Auctions can be a high-pressure event, as a result the more you attend the more used to the process you will get which in turn will help you stick to your budget and strategy. Attending auctions in the area you aim to buy in will allow you to become acquainted with the styles of different auctioneers and the level of competition in the area.

Key facts

• Attendence at auctions important for buyer research
• Clearance Rates – in 2014 these fell to 68.4%
• Auctions increased to take advantage of rising market

January has seen a fairly typical commencement to the auction market with only 419 auctions held. The market moves up a notch this week with 800 expected across Australia and 391 in capital cities.

The volume of auctions in capital cities should rise to exceed 1,000 in the middle of February, as most real estate agents need to allow a reasonable marketing period for the property.

It is also fairly typical to see the majority of auctions outside the capital cities and that is the case this week.

The highest volume of auctions is expected in Adelaide with 97. There are 94 expected in Sydney, 80 in Melbourne, 24 in Perth and 21 in Canberra.

Before the auction market increases significantly in volume it is useful to reflect on how 2014 ended. On a national basis there 101,444 auctions held in capital cities, the first time ever the volume has exceeded 100,000.

Melbourne had the most auctions with 44,089 and just exceeded Sydney for the most sold. The most significant shift in 2014 was the growth in the Sydney auction market. If this is sustained this year it will be difficult for Melbourne to retain the title of the “auction capital”.

The highest clearance rate for 2014, 74%, was recorded in Sydney.