The media loves reporting real estate. The only catch is it seems that it’s not a story unless the angle includes the market either going up or down. Before Easter, the reports were optimistic with some journalists going so far as to suggest South East Queensland property was beginning to boom.
More recently, the tone has been far more subdued with one report even saying auction numbers are flat-lining as vendors become “gun shy” in a tough environment.
It might make for compelling reading, but in reality, it’s pretty far from the truth.
Firstly, compared to the same period last year, the overall auction clearance rate YTD in 2012 is up from 34% to 42%, which is encouraging. Further, for the first full week post Easter, JAA tracked a 48% clearance, quite the opposite to the media picture of a post-Easter crash.
Breaking it down, we can see there have been more buyers around so far this year – average registrations per auction are up from 94% YTD in 2011 to 123% YTD in 2012. Buyers are also more willing to act – last year, only 53% of those registered actually made a bid, while this year that number is 68%.
Interestingly, although we tracked a higher clearance last week than the YTD average, the number of active buyers was actually down. Average registrations fell to 93%, with the percentage actually making a bid rose to 72%. But the other piece of the puzzle relates to vendor motivation. Across the first quarter, the percentage of forced sale vendors was exceptionally high at almost 80%. Last week, that number dropped to just 58%, with an average shift on auction day for sales under the hammer of just over 5%.
Extrapolating the real story (as opposed to the news-worthy version), we can see that the market this year has been relatively healthy in the first quarter compared to last year, without showing any real signs of a boom. Total buyer numbers have dropped off post-Easter, but those buyers still in the market are more inclined to act. Team that information with the fact that vendors are clearly increasingly prepared to accept current market value and we have a market which has been fairly consistent throughout 2012.
Lastly, in direct response to the wild claim that vendors are deserting the auction method, JAA has called almost 40% more auctions YTD this year. This is not just because our business has grown – more agents and more vendors are turning to auction as days on market for private treaty blows out to more than 100 days. With 42% of properties selling within 35 days, it’s a compelling argument for the auction method of sale.
We’re beginning to track a wide sample of private treaty sales and the average days on market across major cities, and look forward to bringing you the true picture on that front in the coming months.
Until then, pay little attention to the stories of boom and doom – the media does not determine the market.
Source: Jason Andrew Auctioneers 18.04.2012