Today is the first ‘full’ day of Auctions for 2011. There were of course Auctions in the past couple of weeks as well, however those properties would not have had the benefit of a full 4 weeks marketing campaign which is the norm.
I was at 8 Auctions today across 5 suburbs in Sydney: 3 sold under the hammer, 2 sold after Auction and 3 passed in.
Overall, the market is still quite solid but buyers are much more hesitant at Auctions. Vendor Bids are being used to kick-start bidding and biddings are in smaller increments than usual. Auctioneers definitely have to work a lot harder these days to extract those last few dollars.
We are finding that properties are also mostly selling very close to the agent’s quoted price during the marketing campaign. In the first and second quarter of 2010, many agents were underquoting and seeing prices skyrocket as buyers were bullish at Auctions. These days, instead of “quote ’em low and watch ’em go”, it is really more a case of “you get what you quote”. So agents definitely need to be much more accurate in their price guide in the current market.
At the end of the day, what is noteworthy is that properties are still selling one way or another (though not necessarily during the Auctions), and I don’t feel that the market is experiencing any significant downturn at this point in time.
The above property had no bids during the Auction except for the Vendor Bid at 1.45 million. It sold immediately after Auction for 1.478 million. It had been marketed at around 1.5 million.
This property with a tennis court and swimming pool had been marketed at ‘over 2.3 million’. There were two active bidders with starting bid of 2.3 million. The reserve was probably set at 2.6 million but the bidding was stuck and it seems the selling agents managed to convince the vendors (who were in London) to reduce their reserve to 2.575 million. The property was then called on the market and eventually sold for 2.625 million.
This property is in a blue ribbon neighbourhood and priced in the low 2 millions. A lot of neighbours showed up, but not too many bidders registered. When no bids materialised, the Auctioneer placed a Vendor Bid of 2 million. There was one more bid at 2.1 million from an interested party but it all ended there and the property was passed in.
There are quite a few properties in this particular neighbourhood currently for sale and it was interesting to see several agents (not from the agency listing the property) attend the Auction. It is clear that everyone (sellers, buyers and agents alike) was trying to gauge the market sentiment early in 2011.
This solid full brick house is in a walk-to-rail position and was marketed at around 1.3 million. There were three active bidders but all were reticent and reluctant to compete. Bidding opened at 1.25 million and the property was sold at 1.351 million after a slow and protracted bidding which lasted well over 30 minutes.
There are currently several other properties for sale on a parallel street which are going to Auction next week. Indeed, the agents and vendors selling those properties were watching the Auction keenly! The outcome of this Auction has now set the tone for prices in the immediate neighbourhood and expectations may have to be adjusted following today’s Auction result.
If you have any questions regarding these Auctions or the market in general, feel free to call me on +61 410 774 262 or send me an email.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.
