Auction Clearance Rates Continue to Dive

Despite reductions in mortgage interest rates and the big increase in the first-home buyer's grant, the business of auctioning houses still seems to be in trouble.

As we have already reported Australian property auction clearance rates dropped along with most of the world's stock markets. Improvement doesn't look imminent either. Figures out today make interesting reading: so long as you are not trying to sell a property - then they are depressing.

Sydney had a 39.6% clearance rate on Saturday down from 49.2% the week before and 63.8% the same weekend in 2007. Melbourne fared slightly better at 45.5% (52.6% previous week, 77.2% 2007). Brisbane was the worst at 22.9% (30.9% previous week, 51.9% 2007).

Beach House for auction

The exception was Adelaide with a 56.3% rate a substantial improvement over the previous weekend of 40.9%, but still below the same weekend a year ago when the rate was 74.6%

Comments from agents include:

People do not want to rush into an over-inflated market with an expectation that they are going to lose their jobs

People are worried because of everything they are hearing and there is a lot who are panicking but if you find the right property then there is no reason why you shouldn't buy as soon as possible

The market's definitely changed. I don't think people are as confident as they were

It would seem to me to be an ideal time to be checking out auctions - but I wouldn't be bidding - instead when the property was passed in I would be making a cheeky cash offer with a short settlement period. Auctions are the right marketing method for unusual or very expensive properties but I have seen plenty of ordinary family homes: the type which appeals to first home buyers or investors marketed by auction. Its crazy because neither of these groups are likely to be pre-approved and prepared to make an unconditional offer. First home buyers typically don't have the confidence to bid and in the current economic environment and are unlikely to have a blank cheque pre-approval. Investors aren't wasting their money on pre-purchase checks unless they have a contract on the property.

No doubt there is a commission structure in the Eastern States which encourage the agents to keep on promoting auctions even though its obviously not the marketing strategy which is best for the seller in this environment.
Photo Credit yvettiefred