Auctions return to favour as bidders return to auction rooms
As the market turns just in time for spring, we are seeing auction returning as a popular method of sale.
As the country’s housing market experiences a cautious uplift in September, auctions are on the rise, Trade Me Property’s just-released State of the Nation Property Report has found.
Auction is number three (19%) as the the most popular method of sale in August after, by negotiation (28%) and asking price (26%).
Harcourts’ National Network Auctioneer, Aaron Davis says he is seeing auction clearance rates up threefold from six months ago. “The momentum is coming back, and good agents are having real success with auctions,” he says.
CoreLogic Head of Research, Nick Goodall says Auckland has especially seen an uplift in properties being listed by auction recently.
“When the market is stronger and prices are increasing, fewer properties are being listed with a price,” explains Nick.
The CoreLogic Head of Research says something to talk about with vendors is the fact that an auction provides an extra boost of fervour with live, in-person bidding. He says the direct competition in a strong market can raise the price to beyond what it would have gone for otherwise.
Over a third of Ray White properties auctioned in August
Ray White National Auctioneer Sam Steele is well equipped with stats for his agents to go and talk to vendors about the strong argument for selling by auction.
“I would say to agents (talking to vendors) that evidence always beats fear. The data we have around auctions are emphatic,” he says.
Success rates of auctions are up 14% compared with the same time last year, he says. And the national average number of registered bidders per auction is up 48% to 3.1, he adds.
“September is looking very strong and certainly building toward what will be a very busy end of the year. There’s a lot more confidence out in the market than people realise, “ says Sam.
For buyers, the auction is a transparent process in a market where no one can say precisely what a home will sell for. And they can put your hand up or down at any time, he says.
And for vendors who dread the idea of their property languishing for weeks on the market, the auction is a more certain method of sale, and with a shorter marketing period, than other methods of sale. You just have to get the registered bidders in the room.
It’s also important to share with vendors that a property that doesn’t sell on the day of the auction is highly likely to sell within a few days. For those homes that don’t sell under the hammer on the day, a very high percentage sell within a week following the auction, he adds.
“The benefit of auction is you have nothing to lose and everything to gain,” he says.
Auckland stats to take into vendor conversations
Auckland auctioneer Campbell Dunoon, from Barfoot & Thompson agrees that Auckland is seeing a surge in auction activity. This method works well for buyers who want to make decisions, he says.
“I think there’s a bit of urgency on buyers getting in before Christmas this time,” he says.
And the proof that auctions are a good option right now is in the pudding. The auctioneer says he’s even seeing some auctions being brought forward in the Auckland market.“Auction success is up, as are numbers of registered bidders, participation at auctions and open home numbers,” he says. One Pt Chevalier property had 50 groups through at its first open home, and the vendors were talking to him about bringing the auction date forward. This would mean it would have just been marketed for 2.5 weeks, but he told them it was worth considering.
The typical four week marketing period is being shortened by seven days for properties in sought-after locations, he explains.
A renewed confidence in auction sales
Bayleys National Auction Manager, Conor Patton, says that he’s seen a renewed confidence in selling by auction in Auckland, thanks to strong auction attendance and activity, he says. The percentage of properties that received bidding at auction has increased from 71% to close to 100% over the last six weeks, says Conor.
Bayleys has also seen a flurry of auctions brought forward in Auckland recently. This speaks to buyers who are not happy with the level of stock and want to make a decision, he explains.
“We’ve seen an emergence of some buyers who will make a purchase and feel comfortable enough to ask for a longer settlement and back themselves to get their property sold by Christmas,” says Conor.
Once they are successful in their purchase, they’ll sell their own home by auction because they want certainty and as few days on market as possible.
“With a slow couple of months of listings, there hasn’t been a huge increase in stock, so we’re going to see a pretty active buyer pool out there,” he says.
October is looking noticeably busier for auctions lined up at Bayleys, even with the election in the middle of the month. And it’s only mid September, so there will be more to come, Conor adds.