Super Saturday auction results solid

By Leith van Onselen

The weekend just passed was dubbed “super Saturday” for the large number of homes for auction in both New South Wales and Victoria. In both markets, solid results were recorded, with more than 60% of homes offered for auction selling based on preliminary results published by the prospective real estate institutes.

In New South Wales, a preliminary auction clearance rate of 62% was recorded from 608 auctions reported to the Real Estate Institute of New South Wales (REINSW). This compares to a provisional clearance rate of 61% recorded last weekend on 497 auctions. However, the number of homes auctioned was still below the same weekend of last year when 736 homes went under the hammer.

In Victoria, 1180 auctions were scheduled to take place over the weekend, which was the highest number of auctions held on one weekend since the middle of December in 2010. According to the Real Estate Institute of Victoria (REIV), The highest number of auctions ever recorded on one weekend was in the middle of March in 2008 when 1,351 auctions were held. And of the 22 weekends over the past decade with greater than a 1,000 auctions, the clearance rate has varied from 85% in March 2010 to 45% in December 2003.

This weekend’s auction clearance rate was in the middle of the above range, with the REIV recording a provisional clearance rate of 66% on the 1,053 auctions reported to the Institute. This compares to a provisional clearance rate of 62% recorded last weekend on 695 auctions, which was later revised down to 60% once late results were captured. Once the 100 or so missing results are counted, this weekends Victoria’s auction clearance rate is likely to fall somewhere in the low 60s.

Given the large number of homes auctioned, the weekend’s result is solid. This time last year, a clearance rate of 50% was recorded on only 424 auctions reported to the REIV, so this weekend’s result is certainly a big improvement.

That said, the auction results published by the various real estate institutes continue to overshoot those published later in the week by RP Data. Last week, the REINSW and REIV reported clearance rates of 61% and 60% respectively, which was more positive than those reported by RP Data, where clearance rates of 54% and 58% respectively were recorded for Sydney and Melbourne:

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

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Comments

  1. You would hope that its only investors and not home buyers buying these things. I would feel very sorry for the people who got sucked in by government only to find their property devalue sharply in the future.

    • I used to be a bear – now I don’t see houses falling until interest rates are at zero percent and the government has such large deficits that it can no longer provide any credible guarantees to the housing market or foreign investors.

      Until that happens our Australian Government will work against all those aspiring to own a home, and will use every taxpayer dollar (including the dollars from the people that are locked out of the market) to fuel their No 1 bipartisan policy – that being keeping housing from falling.

      It is an unwritten policy, but one that if you look at most government decisions you can’t help but think. As a policy it is the one that has been brilliantly executed with multiple policies on multiple fronts. Compared to others like the MRRT for example it is the governments one standing success.

      • I am also growing tired of this. I think it is time to pack up and ride out the storm in a Northern Europe that despite all seems to be recovering at some levels. Still enough work and very decent living costs. It’s not Oz but everyone has the opportunity for home ownership.

        • We are also doing the same thing. Sell out of a bubble before it bursts, and buy in where a bubble has already burst.

          There is something seriously wrong with Australia when a visiting German friend was saying how “cheap” Berlin was compared to to Melb.

        • Yes Saco, and also the opportunity to buy nice villas 2 hours from paris in great wine couuntry with an acre of land for maybe 50% of what you would pay for a small place on 400sqm a similar distance from Melbourne. How the freak does that make sense? There are 300 million people in Europe? bubble bubble bubble

        • A decision to move to another country may be influenced by many factors, so I wouldn’t try to influence anyone either way on that, but I don’t see the market as bullish – it’s just not falling universally although there are sporadic good buys and areas where genuine falls have occurred.

        • USA is the outlier on house price to income ratios.

          They speak English and you have a reasonable chance of integration into a similar community to your current one.

          With sufficient funds you are likely to get residency or even citizenship.

          From http://www.immigration.ca/us/investment.asp

          “E-2 Treaty Investors

          Owner or Developer of the new enterprise from a treaty country (see list of treaty countries) has 50% or more ownership in a substantial US employment creating investment. As a general rule substantial means $200,000 or more. Although smaller investments are often approved the risk of denial increases as one heads south of $200,000.

          Eb(5) Immigrant Investors.

          Individual invests $500,000 in a high unemployment area (150% of national unemployment rate) or $1,000,000 elsewhere and hires 10 persons within 2 years, or invests in a Regional Center and may use job multiplier studies instead of direct employment. Because this category has been controversial INS processing times are slow and unpredictable.

          None of the investor categories have language, education or business experience requirements.”

      • Yeah it’s pretty disappointing. I couldn’t believe that Residex report posted here this morning. Rents up 20% over the year, sales volumes up 5% over the year, house prices rising, now auction clearances rates hitting highs too (assuming those can be believed). It just shows how much Aussies love to gamble on property, as soon as interest rates fall, they all pile back in. Much as I’d love to believe in the ‘slow melt’ theory, it just doesn’t seem to be playing out that way. I feel as if I’ve just wasted yet another two years waiting for things to change. Seriously tempted to pack the bags and head to USA where house prices are cheap, if I could get a visa.

        • Rents up 20 percent? Where do they get those figures – my rent actually fell in the last 12 months and I’ve seen a lot of anecdotal evidence that rents have been falling across Melbourne simply because there’s thousands of apartments being completed every month.

          I don’t know who or what to believe anymore –

          • Asking price for rentals in my area of Adelaide have been decreasing. Houses not rented after months on the market are now advertised with lower rent.

          • In 18 months Darwin rents have gone from $550 to $750 for a 3 bedroom apartment.

            Darwin maybe an anomaly that is twisting the figures for the rest of the country but the population here may not be large enough to do that.

        • I totally agree AK, I think government is going to keep intervening and I also think ZIRP is going to have mixed results. Either way, it’s YEARS away.

          Yes, rents up 20% in some areas. In my building, tenants left paying $670, new tenants paying $900.

          I don’t get it at all.

      • What’s going to catch everyone out, the Govt included, is a rise in interest rates. We are at historic lows that can’t be maintained forever and a small increase in rates will push highly geared borrowers over the edge.

        • “We are at historic lows that can’t be maintained forever..”

          Sorry, but have you looked at a chart of interest rates over the past 20 years?

          With a financial sovereign issuing it’s own fiat (non-convertible, non-pegged) currency they can mathematically reduce official interest rates by 1% (or whatever other number you like) each month ad finitum ie 5%,4.95,4.905,4.851495 just keep multiplying each result by .99 and ring me when you get exactly 0 as the answer.

          The impact on cash flow is that everytime the interest rate gets reduced borrowers win and savers lose.

          • Moving on from the maths lesson, what’s your call on the low-point SVR we can expect and how long will it last?

        • Terms of trade crisis will cause an inflation issue and a rise in rates. This is one factor that could happen as a “black swannie event”

        • Stuff the govt. Banks set their rates on the basis of funding costs + the max margin they can get without becoming non-competitive…. Will slower wages growth, we won’t be able to fund the same rampant increase in credit growth that we saw over the past 20 years…. cue margin increase

          It’s not that rate increases are going to catch the market out (investors without a clue don’t count), it’s that the market is trying to catch knives, hoping to get out before it all hits the fan.

          (…one of the same reasons there is still a massive amount of $AUD flowing towards hedged, high quality US bonds etc. It’s bananas)

  2. AK – I am with you. Whilst I dont think the chance of a crash is small, I do think thqt govt will continue to sacrifice young families and savers to keep the bubble inflated via low rates, continuation of tax friendly policies and most worryingly high immigration (to me high immigration is the worst, as it is a real long term factor to keep prices elevated, not a short term bubble condition). It is clear who our govts serve, and it aint “battlers” or even middle clas households trying to get ahead. Its banks and the established elite.
    But as I’ve said many times, with 2-3% gross yields on stand alone ppty in Melbourne you need a very good cap gain to break even. I’d rather put my money in a bank that pays 7% franked dividend, and like housing is also govt guaranteed.

  3. Using those figures the contributions to the NSW 62% were as follows:

    Prior 19.7%

    At Auction 40.6%

    After Auction 1.6%

    Almost 20% of those taking a property to auction chose to take the money and run rather than test the ‘gavel’

      • dumb_non_economist

        in addition if you add the 87 no result the rate is 60%. Would love to know the withdrawn rate when RE was booming and who would pull out of an auction after the cost paid up front?

  4. And according to the APM auction results, the Sydney median auction sale this week was almost $900K. Nine hundred thousand bloody dollars! I assumed the punters should be tapped out by now, so where are people getting that kind of money?

    • It could be rich Chinese. They government are deliberately hiding the FIRB figures. I might have to get myself to an auction next Saturday to see who’s buying.

      I bet I’m right, as suburbs like Castle Hill are faring poorly at the moment, they’re probably seen as too crass and bogan for the rich Chinese.

      Instead of running away to the US or Europe, you could vote for the Stable Population Party, being an underground financial smartie pants isn’t working for you lot is it?

    • $900K. That is nuts.

      Right there is your #1 suspect in the hunt for the productivity killer.

      • …aided and abetted by his partners in crime, record low interest rates and lax macro-prudential regulation.

        Stop this madness. Stop cutting rates.

    • Upgraders?

      I’m only an average income earner, yet with my very small mortgage and large chunk of equity, I could easily afford to move into a flash new half-million dollar plus pad, so long as I could sell.

      But I think I’ll say where I am. I like the place and don’t really see any point in spending money just to keep up with the Jones’s (read: trying to impress ****heads I don’t even like).

      • If you were thinking about upgrading the time to sell was about three years ago. That’s what we did and then rented. Since our rental house got sold from under us we decided to get back in before the spring rush. We came across a Chinese citizen who failed to obtain permanent residency and had to sell before his student visa expired. To my surprise he accepted our low ball offer. I was not too excited about buying at this stage but taking into account price differences and the interest earned from deposit we are ahead some $150K-200K. I was really surprised that virtually every RE agent that I told our story to commented that we were the only people they met who “shorted” their property this way.

        I think that our house bubble deflation will be a very slow process particularly painful and frustrating for first home buyers. The only event that can speed it up will be a deep recession.

  5. Once again I attended three auctions this weekends, and they were passed-in and they were NOT included in the Reported Auction list!!
    They were:-

    – 1 in the Boxhill, victoria areas!
    – 2 in the Blackburn, victoria areas!

    Do not believe these propagandas!! Shame shame, how the Australian people are being misled and lied to!!

    • Attend a Auction at R/E office in Port Douglas this weekend.

      5 properties all handed in with only one bid on one property. No phone bids either and all where locals.

      The crowd (16 people, 7 registered bidders) giggled and rolled our eyes as Auctioneer (local R/E guy and Principal) was trying to explain that the properties where not on a fire sale.

      On the ground PD is still running downhill with some decent % drops judging by the recent sale histories.

      R/E guys bitching they can’t advertize mortgagee sales blaming the banks for restricting from them from disclosure.

      The Banks have lost alot of faith about loaning in our area for R/E, CRE and business.

        • This is just off the top of my head as we’ve been watching PD pretty closely since 2006.

          From peek(2007) weve seen about 10%-15% across the board over the last 4 years for houses.

          On the housing side some individual properties have taken hits of 25%-60% drops.

          I don’t really follow the unit market but at a guess 20% decrease.

          Units, the market is flooded and has been like this for the last 2yrs. Unit holders in particular have been hit hard here with dramatic rises in Body corporate fees, insurance 100%-300% rises, rates.

          I sometimes I use onthehouse (free) for the sold histories. The unit(apartments) sold prices are messy but local knowledge sorts them out easily. House sold prices are straight forward.

          Link onthehouse
          http://www.onthehouse.com.au/property_research/

    • +1 Newport 3015 and Williamstown 3016, 14 auctions Saturday, on REIV website none recorded, via list in Domain one sold. This occurs every auction weekend……. The belief in dodgy clearance rates does not say much for the statistical literacy of journalists, etc. A good idea would be to force real estate and media to work from the total available stock…. approaching 50,000 in Melbourne with loads of apartments due to hit the market……

  6. I think if you are a would-be FHB waiting for a crash this must be a frustrating time. But a property crash was always an unlikely scenario.

    But there is one inescapable fact: the system needs fresh money from FHB and FHB can only oblige if they can save a deposit. Most still can’t at these current levels. New entrants unable to join the party is the reason all ponzi schemes eventually come to an end. That is an undeniable problem for the bulls and any hopes they have for a new surge.

    The RBA can keep the game going for a bit longer by cutting rates but the Governor has almost run out of bullets. With each subsequent rate cut the banks will pass on less to borrowers. The Guv says he has plenty of ammo left but he doesn’t. That game is almost up.

    The mining boom will continue to unwind as more mines come on-stream and supply ramps up. Australia will take a pay cut. The resource boom is the only thing that’s distinguished Australia from other countries where housing bubbles have burst.

    No market falls in a straight line. The RBA might be able to produce another bounce or two yet. But for the reasons I’ve mentioned, I think the primary trend for Australian house prices is still (gently) down.

    • Indeed Dr Watson!

      We are already starting to see the horns of the dilemma.

      Govt and RBA want to keep ‘asset values’ up and credit growth rising.

      But Govts are starting to see employment softening and the mining boom cooling.

      Solution – cranking housing construction – NSW and QLD are both heading in that direction.

      But the solution to softening employment will undermine the ‘asset value’ bubble.

      That’s where rapid population growth comes in – the old standby – to add pressure on housing demand.

      But as population growth is not very popular (particularly via migration) it is important to pretend it is not happening (just seasonal factors) or shout ‘racist’ if anyone questions the strategy.

      • “But as population growth is not very popular (particularly via migration) it is important to pretend it is not happening (just seasonal factors) or shout ‘racist’ if anyone questions the strategy.”

        Gold.

      • But as long as both parties run the migration tap (which they are) it doesn’t matter if it isn’t political since you have no alternative anyway. It is a bipartisan policy.

        Another way the young family is squeezed of course – they can barely afford a home as it is and now they have to pay more for childcare, healthcare, deal with traffic and over congestion on their way to work, etc all as a result of higher migration.

        I feel sorry for the young today – their life quality is being severely eroded all for the sake of “keeping house prices high”. Like I said in the previous comment all government policies (bi partisan) are directed to this end goal and the young are footing the tax bill to fuel policies that make their lives harder.

        • “Big Australia” policies are only politically acceptable whilst the economic conditions allow. The mining boom is in place and the demand for labor is there. But once the unemployment rate begins to rise sharply and competition for jobs intensifies the electorate won’t tolerate it. The mood will revert to what it was in the 1990’s when Howard was scoring points by cutting immigration. The downsides of a Big Australia have a negative impact on home-owners and renters alike.

          • If both parties are one and the same re running things until they dont work you dont really have a choice even if it is politically unacceptable.

        • I would beg to differ about issue of the bipartisan “migration tap” which has worked pretty well since federation. Most of the so called “migrants” are not at all but merely temp residents such as international students, temp workers and dependents (12/16 rule). However, various interest groups have leveraged this perceived issue for their own benefit i.e. “runaway population growth”, synchronicity for both the real estate complex and the anti immigration lobby. However, one must be careful when the language and seeds for this issue were sown decades ago by people associated with the KKK…. (then claim they are under attack for racism when they only showing concern for the environment, “carrying capacity”, social cohesion, property shortages, employment, security etc..). Anyone with some statistical literacy knows that permanent migration has stagnated, like property prices, while unethical fudging of auction clearance rates continues and is believed…… postcodes 3015/3016 14 auctions, according to REIV no results but not included in data……. but anyway get in now before you miss out to all the immigrants, Chinese buyers etc. etc. running to Australia, la la land?

    • FHB don’t need a deposit! They need income.

      Their homeowning parents put up the title deeds to get them sufficient security to get a risk free (to the bank) loan to get them on the treadmill/escalator.

      You guys need to talk more to baby boomers aged 55 to 65 with 25 year old kids with decent jobs or with a moderate job and a partner.

      Another alternative for kids without partners is to put up the house or an investment property as security and go halves with your kid, taking the income from the rented second bedroom as your share of the income to help pay off your additional mortgage.

      The “whole of family” gearing remains relatively low and we’re working for our kids ultimate benefit anyway. They can’t/won’t save at 3% (inflation) of $500,000 anyway until they get the discipline of a mortgage.

      Got help the low income children of renters without savings! (unless there is a huge rise in unemployment, but that typically hits the lower qualified unskilled, not the graduates.)

      • If they have parents willing to do so – a lot of families are incapable or unwilling.

        For these people the deposit presents a huge barrier to entry . In their case the absolute value of the debt matters just as much as serviceability due to LVR requirements and mortgage insurance. If houses don’t fall (i.e investors take up the slack where FHB can’t) the FHB being removed and the stamp duty applying will only make the problem worse for these people.

    • The big risk will be in 5 or 10 years when first builders grants have caused a huge build of relatively new stock and the ratio of houses to households and new family formation shows excess housing availability.

      A crunch in employment then will really hurt home prices.

      I remain of the slow real melt school.

      • “I remain of the slow real melt school”

        Same here. We’re in the same lobster pot that was used to warm the Japanese to their current thermidor-esque state.

        • Human behaviour being what it is, I expect the “slow melt” scenario is perhaps a little optimistic….

          Macro picture is a not great. BoT, inflation, wages & credit expansion to contract (or slow)….

          Cue a national lesson in what “negative gearing” actually means. Then carnage.

  7. reusachtigeMEMBER

    All this does is inspire me to want this to all crash much much harder and for it to be much more devastating so that “the players” really do learn a lesson.

  8. I’ve been doing a lot of research on the inner Melbourne areas in recent times and in my view the market is still weak, notwithstanding a few very good results for a limited number of vendors this weekend.

    I’ve been chatting to buyers and vendors alike and have made the following observations:

    There are a lot of bargain hunters out there, but they aren’t budging on their price expectations. Every weekend I see familiar faces walking away from auctions when it becomes apparent that the vendor has unrealistic expectations.

    Vendors seem genuinely shocked when their auction bombs without a bid and this is happening a lot. Agents seem to forget to mention this as a possibility during the sales process.

    The vendors I’ve spoken to all seem to have a price floor they won’t breach, generally the price they paid for it three-four years ago or the break even point for developers. Ego is a powerful thing.

    Result is stalemate and without a game changer I can’t see this ending soon. The best properties always sell but there are many more in limbo. Any price rises reported by the property agencies are noise and/or statistical error.

    • Would generally agree. Plenty looking and many auctions are surprising in that despite 80-100 people having looked over 4-8 opens, there are so few bidders. Agents aren’t helping with bait pricing tactics either.

      There’s still an element of stalemate there, but you wonder whether the fear will start creeping back in the minds of impressionable buyers.

      Agents are also treading a fine line. I think seasonal listings have been lower this year and whilst they might flesh out a few more listings with the ‘positive’ stories, they risk vendors moving back to 2010 expectations or beyond.

      The one thing that has really shocked me is the number of 60+ yr olds looking. SMSF? They’ve replaced (or is that displaced?) families and the odd FHB in my neck.

  9. Doesn’t the ‘clearance rate’ indicate that sellers are meeting buyer expectations (which could mean falling prices), and not necessarily signs of a rising market?

    No-one anywhere seems to make mention of this and use clearance rate as a ‘strength of the market’ indicator

    • I been to a couple of auctions in Melbourne’s inner east last weekend. I notices that the vendors are more realistic now. and that’s the reason why 5 out of the 6 auctions that I’ve been to have a ‘sold’ on the board.

      another surprise is that the price range that the RE agents gave actually covers the reserve price- never hear of before.

  10. Nobody saw Louie Christopher’s tweet? That a day later, 35% of the results had not been reported (Melbourne I think).

    35% is a very large chunk of uncertainty to declare an outcome upon.

    Actual results for Sydney and Melbourne likely in the 50’s I think.

    • True. I always consider “not reported” as “no sale”. If the property sells, the agent will declare it as soon as possible.

  11. I am still tracking homes in Adelaide that have been sold recently for less than the buying price paid a few years ago.

    • Me too. I’ve seen properties sell for 40% less than what they sold for in 2004, in areas that are touted to have “risen 40%” in the last 12 months.

      Pickpockets abound, hold tight onto your wallet. 😯

        • I have similar observations from Melbourne but there is definitely more market activity than a few months ago.

        • 9 Stanley Street LEABROOK SA

          (Sold 06/08/2008 for $838,000) onthehouse.com

          (Sold at auction 27 October 2012 for $750,000)

          Pretty good price drop for the owners.

          6 Williams Avenue Dulwich SA

          (Sold 10/02/2010 for $1,150,000) onthehouse.com
          (Sold at auction 27 October 2012 for $995,000)

          Another good price drop in a short time.

          • Lower price bracket is falling a bit slower

            1 Railway Ct Walkley Heights SA

            Bought ~2.5 years ago $520k

            Just sold $495k

    • The guy opposite us started his property on the market for approx $450K last year. Asking price now $360K ish (still no takers). Eventually people just want to move on, and have to accept a lower price, which sets the new median, which leads to lower prices etc etc.

  12. The national obsession continues… they say a watched pot never boils and this may just be a classic example. The more polarised opinions of spruikers and the sky is falling crowd only serve to keep people frothing at the mouth.

    My advice just ignore it, dont go to auctions, dont buy the Sydney Morning speculator. Take the flyers in your mailbox from RE agents and shred them.. they can be used in rabbit cages as for some reason Shit seems to stick better to them.

    Just leave those people to wallow in their own bullshit. this whole thing continues to exist purely because its been elevated beyond obsession. Heck even Jesus was a tradie in his former life… probably was doing a nice line in kitchen renos before his dad told him his true “calling”

    Ignore it, dont talk about it and let it do its own thing, if you have been on this site and others that provide you all the information you need and you still want to buy a house then buy one and live in it but dont be then whining about how banks dont pass you 0.2% interest rate cuts. I come by here mostly for the EU articles but I do sometimes read the odd article but I think there are better things to do in life than blowing your horn wishing for property market to crash or spruiking to all your friends that they are mugs for not having at least 5 IPs

  13. Certainly seems to be a buzz back in the inner west of Sydney. People seem oblivious to the fact that they are paying crazy prices by world standards for very mediocre properties. The trouble is that most of I people I speak to wouldn’t be aware of that because they can’t afford overseas holidays – because they have to pay their inflated mortgage.

    Prices may well continue to rise further for a while longer but to me it looks like a “back to normality” on the asset bubble graph. Things are far from “normal”.

    Just because “the herd” thinks its a great time to buy doesn’t mean in is. It is said in 1929 that shoe shine boys were giving stock tips. Everyone expect stocks to continue to rise forever. The commentators all said this was correct. The rest is history.

  14. Last week, when I arrived at my apartment block from office there’s a RE agent distributing brochures into the mailbox. He asked me whether I am an owner (he prob want to know whether I want to sell), I said I am just renter. Then, he asked again whether I have considered to buy in the area ? I told him that I am happy renting. He looked tired and hopeless.

    The thing is usually the suburb in the SYD North Shore where I live is always busy for RE agents but in recent years the transactions have dried-out due to stalemate between vendors and buyers’ expectation. But, I never think that the RE agents would be that desperate…asking people on the road for any business lead.

    • MsSolarFelineAU

      Wait until UE is bleeding, and over-leveraged people can’t afford the lease on the Mercs/BMW’s etc. I am!

      • Mining BoganMEMBER

        Yep, I’m waiting to buy toys from the not-so-well-off-anymore-now-that-the-credit-has-dried-up-and the-nice-bank-manager-has-a-stern-edge-to-her-voice types.

        1984 Porsche 911 Carrera and an Aprila RSV on the list if you nice folk will keep an eye out for me. Thanks.

        • Mining BoganMEMBER

          Oh, and a Studebaker Golden Hawk as well. That would be kind of you all to watch for one of those.

          They’re as rare as chicken lips.

    • Wait for all those briefly-loved but heavily-discounted dual cab hiluxs to hit carsales.com

  15. Hey don’t worry its alright ….
    One more property will be hitting the market in November, someone close to me is to off load a property that has sat vacant for the last 2 years.
    3 more bedrooms to be filled, rents to fall…

    re MV indicators, new MV sales are up… generally means savings will be reduced … leading to lower lending on properties

    Wait and see…. wait and see

  16. I met someone recently who relies on charity because their mortgage repayments are eating all their money. Part of me felt sorry for them, part of me admired their commitment, and part of me was slightly outraged that charity is being used for this purpose.

    Does anyone know where to find stats about Australians reliance on handouts – food baskets and so on?

    • Thats blatant robbing!!

      There should be a “asset-testing” done and some sorta “poor-card” (like pensioner’s car) issued in order to avail food-coupons!!!