Sydney auctions selling 12% above price guides

The gap between real estate agent price guides and actual auction results has jumped this year in Sydney, according to a survey by Intelligent Property Services.

There is now a 12% variation between auction price guides and actual results.

The 2013 survey analysed 39 auction sales so far this year ranging from Sydney’s eastern suburbs, to Burwood on the outer fringe of the inner west with a few sales on the lower north shore – all traditional auction hotspots in Sydney. The sales range from late February to the end of July.

In 2012 there was an 9% variation and in 2011 an 8% variation.

Head of research at Intelligent Property Services, Joe Kotevich, says the surges comes more as a result of buyer demand than any deliberate lowballing by agents.

“The average variation for 2013 is quite high and dramatically elevated compared to the results recorded for 2011 and 2012,” Kotevich says.

“The year to date is also consistently high (rather than having a few outliers that throw the average) and we believe this is a function of a large number of buyers, fuelled by positive market sentiment, low interest rates and decreased stock on the market, surpassing both vendor and agent expectations in heated auction environments.”

None of the sales recorded sold for below agent expectations.

The sale with the greatest gap between price guide and actual result was a very tired 1900-built three bedroom terrace in Newtown, at 182 Denison Street (pictured below). The pre-auction guide suggested a price of $600,000, but it actually sold for $800,000 in May – a price difference of 25%.

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And 74 Sophia Street, a dilapidated terrace in Surry Hills (pictured below), sold for $894,000 in July with a price guide of $700,000 – a 21.7% difference. There were reportedly 18 registered bidders at the auction of the 105 square metre block. It was bought by a builder in his 20s.

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And 9 Marian Street, a newly renovated terrace in Enmore (pictured below) sold for $1.004 million in June with a price guide of $800,000 – a 20.32% difference. Before the auction Sydney Morning Herald tipped it offering “good bang for your buck” with its low price guide.

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Intelligent Property Services obtains the price guides after the first week of showing the property, allowing time adjustment of expectations. The auctions are monitored following inquiry from its buyers agent department.

The results are in line with the recent price discrepancies recorded in Melbourne from a Property Observer survey.

A Property Observer analysis of 68 auction sales since the end of the July school holidays found more than 90% sold for above the advertised price guidance bracket – with an average price variation of 11%.