Blacktown's see-sawing auction success rate suggests supply concerns

Blacktown's see-sawing auction success rate suggests supply concerns
Blacktown's see-sawing auction success rate suggests supply concerns

Blacktown's recent early spring 50% auction clearance rate blues - see-sawing at well below the overall 75% Sydney average - has highlighted growing concerns about a potential spring listings oversupply.

And some local agents are worried about the capacity to find enough buyers, especially investors.

Recent CoreLogic RP Data results suggest the higher the uptick in auction volumes the lower the success rates especially in suburbs where the auction system is not that entrenched.

Sydney's longstanding auction engine room - the inner west - continues to lead Sydney's auction property market sitting still in the high 80s, but its success rate too is down a tad on on recent peaks.

"What we’re seeing is that some investor demand has already been met in these markets, in Blacktown and other parts of western Sydney," Brian Reid, the chief executive at Raine & Horne noted.

"It would also appear that more vendors are adopting the auction process as the median price in many of the outer suburbs approaches or exceeds the $1 million mark.

"There is still some strength and value in this market," he suggested.

Brian Reid added there is an over-reliance on auction clearance rates when measuring the health of the market, "whereas a truer indicator is the number of days-on-market."

LJ Hooker agent Clair Andree-Evarts said she had a recent "great result" for her $885,000 sale of 96 Peter Street - part of her 100% success rate this year for her auctions.

Despite her success she noted APRA's crackdown especially since June had effected the market as around half the buyers "disappeared" with the biggest issue being the 20% deposit requirement.

"This led to less buyers.

"The problem is less buyers meant less competition on auction day and with the market having been so great over the last year most agents were still relying on the buyers to fight it out themselves at auctions and hoping the results would just happen."

Many offerings have the added advantage with the current rezoning under the new Blacktown City Council Land and Environment Plan as R4-High density residential, so the buy and hold and redevelop potential is possible, she added.. 

Harcourts agent Rod Nolan suggested buyer enquiry numbers and open home inspection numbers are down on six months ago.

"I put it mainly down to rising stock levels which have tripled if not quadrupled in the same period and the increase in interest rates for investors.

"Buyers have more choice now so they will take longer to make it and negotiate harder."

Agent James Sotiropoulos suggested in Blacktown most properties were still offered by private treaty and auction was not the preferred method.

"The heat has come off the Sydney market and more properties are been placed on the market with vendor expecting results that are just not there any longer," he said.

The McGrath chief auctioneer Scott Kennedy-Green has noted a big improvement - against the trend - in the clearance rate of Parramatta and surrounds.

"It saw the biggest change up in year on year figures from 65% clearance in 2014 to 81% clearance this year while the number of auctions booked increase from 48 to 61,"

"This points to a popularity and comfort with the  auction process as a preferred method of sale, further west from Sydney’s CBD into less traditional auction areas," Scott Kennedy-Green noted.

Click to enlarge

Blacktown's see-sawing auction success rate suggests supply concerns

Source September 7 CoreLogic RP Data 

Thomas Doyle, at PRD Research suggested primarily he’d put the Blacktown result down to the fact there isn’t an auction culture in Blacktown, "or the other western areas for that matter."

"Many factors contribute to auction clearance rate, including whether the reserve price reflects value at a price the market will accept.

"Buyers interested in Blacktown may lack the stomach for auction.

"Moreover, Blacktown stock may not compliment the auction mechanism.

"I’d put this down to an implicit premium that auctions are typically reserved for, which is lacking from these west markets - auctions seek to maximise buyer demand by speculating on market interest and anticipation for value – auction culture."

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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