The number of registered bidders at Sydney auctions has slumped to an average of just three as the flood of listings spreads buyers thin, auctioneers say.
Some vendors have also been forced to revise down their reserve price, or risk having their properties passed in at auctions, said Sydney-based real estate auctioneer Clarence White.
“We’ve seen a quite significant drop in the number of bidder registrations per auction because of a huge amount of stock coming into the market,” Mr White said.
“Throughout the lockdown, we were getting around 10, sometimes 12 or more registrations per auction, and now we’re down to three on average. There’s been quite a few auctions over the last couple of weeks when we’ve had just one or two bidders, and that’s becoming more common now. So, it’s a pretty noticeable change.”
A total of 1290 Sydney homes were taken to auction this week – the busiest week since late March, data from CoreLogic shows. This was up by 4.4 per cent from last week, and a 53 per cent jump from a year ago.
The large increase in volumes resulted in Sydney’s preliminary clearance rate falling for the fifth consecutive week, with a 75.1 per cent success rate, said Eliza Owen, CoreLogic Australia head of research.
“We’re starting to get more of an overhang and that’s gradually bringing down the clearance rate, even if it’s only a marginal decline,” she said.
‘Putting a brake’
Mr White said most properties were still getting sold either before or at the auction, but some were no longer attracting the heated bidding seen in recent months.
“Obviously, lots of bidders create lots of competition and inevitably, you get a strong sale price, so when you reduce that amount of competition, then your price growth tends to soften,” he said.
“It’s now pretty common for vendors to have to slash their reserve prices to get the property sold, which eventually trickles down to prices. I think this is putting a brake on the explosive price growth we’re seen throughout the year.”
But some properties continued to attract strong demand from buyers as evidenced by the strong result at a house in Sydney’s eastern suburb of Kingsford.
The four-bedroom, two-bathroom house at 313 Botany Street in Kingsford sold at auction for $4.55 million, or $1.25 million over the reserve, after robust bidding by 11 registered bidders, according to Ray White Park Coast’s Sam Capra and Andrew Kalaizis.
In Moss Vale, in the Southern Highlands, Aoyuan International sold 85 lots worth more than $40 million within four hours.
“Our team had expected significant interest in our land release this past weekend, but we were still impressed by the turnout,” said Aoyuan International’s president Adrian Liaw.
SQM Research managing director Louis Christopher said the absorption rate remained strong despite the higher listings.
“Clearance rates are still holding firm, although they’re slightly off from peak levels, so I’m not seeing too much weakness in the numbers as yet, but the high volumes are testing the market,” he said.
In Melbourne, the clearance rate rose 2.1 percentage points to 74.1 per cent compared with a week ago, despite volumes rising 11.3 per cent to 1556, led by a strong showing in the upper end.
However, there were also signs that the market had started to plateau, said Melbourne-based buyer’s agent David Morrell of Morrell and Koren.
“There seem to be fewer people bidding at auctions and even fewer attending open homes,” he said.
“I went through one very expensive listing this week, and I was the only person there for half an hour, which is quite unusual. Some sales are just scraping over the reserve, which is unheard of. I think buyers are starting to hold back a bit.”
Bidders in the smaller capitals appeared to be holding back as well with clearance rates falling across the board.
The preliminary clearance rate plummeted 11.5 percentage points to 79.9 per cent in Canberra and was down 8 percentage points to 77.8 per cent in Adelaide as auction volumes soared to a record.
In Brisbane, the clearance rate dropped by 4.7 percentage points to 80 per cent.
Nationally, early results show the clearance rate has dropped by 0.6 of a percentage point to 75.5 per cent.
This article is from Australian Financial Review, please click the following link for the original article: https://www.afr.com/property/residential/number-of-auction-bidders-dwindles-as-listings-soar-20211114-p598py