Melbourne weakening while Sydney steadies, and post-auction negotiations need to be cool-headed
Estate agents suggest the weekend auction result provided a clear indication that further interest rate increases by the banks are negatively impacting on demand and confidence in the residential property market.
The ANZ Bank decision on Friday to raise interest rates again dampened the mood at some capital city weekend auctions, with participants understandably increasingly confused about market conditions and direction.
Buyers' agent Catherine Cashmore, of National Property Buyers, says the two recent rate rises have been worrying buyers, especially investors.
Cashmore notes that owner-occupiers continue to target good properties.
Melbourne’s auction clearance rate was 55%, compared with 61% pre-Easter Saturday result.
No clearance rate was published last weekend due to Easter.
Sydney’s clearance rate was 55.5% which bettered the 53.8% of the pre-Easter weekend.
Both clearance rates have improved since the end of last year, but the Melbourne result was down on the same weekend last year, when it was 61% in Melbourne, while Sydney’s result matched the same Saturday last year.
Dr Andrew Wilson from Australian Property Monitors says the data might suggest a growing gulf between the economic outlook for Melbourne and Sydney.
“The trend is for a deteriorating jobs market in Victoria and an improving one in NSW,” Wilson says.
“This will affect confidence, especially when we are seeing mortgage rates increase.
“The bite of the multi-speed economy is starting to kick in,” Wilson told Fairfax Media.
Buyers who were the highest bidders for a property passed in should know how to “play the game” in the aftermath of the auction, according to the Real Estate Buyers’ Agents Association of Australia (REBAA) president Warwick Brookes.
“Just because a property has been passed in does not mean that this is market price – it’s simply a price point for further negotiation,” Brookes has advised.
Keep a cool head was important, Brookes says, with the key being to work within the predetermined price range and not waiver from it.
His tips for negotiation at auction are:
1 Stay outside the property
Unless it’s pouring rain, don’t follow the agent inside. Position yourself outside where you can assess your competition.
2 Determine the reserve
Most times, the reserve is not the price at which the vendor will ultimately sign a contract. What’s the lowest price the vendor will sell for?
3 Decide on your strategy
Do your research and estimate what the property is worth under low competition and at the upper end, where there’s intense competition.
4 Deliberate and minimise the outcome
The extent of any negotiations will depend on how much the property is passed in for. Don’t be frightened to drive a hard bargain. If there are no other buyers in sight and everybody has left, reassess how much you’re willing to counter-offer.
5 Keep a poker face
It’s a fact that 90% of all communication is conveyed through eye contact and body language. Keep a poker face – it can save you thousands.
