Significant shift in the use of auctions in 2013

There was a remarkable shift in 2013 towards the use of auctions. Based on all sales until the end of November approximately 30.6% of sales were by auction compared to 21% in 2012.

This is an interesting fact for vendors to consider as they face the choice of by what method of sale to sell their home. This is a choice best made in consultation with the real estate agent contracted to sell the home and there is some broader data that helps explain the market trends that can influence the decision.

As anyone who has attended an auction will tell you they deliver the best outcome when there is competition between buyers. For that reason auctions work best when there is a unique quality of the property that can drive competition or there is a rising market.

This can been seen in two sets of data.

Firstly is the overall clearance rate. The clearance rate tends to rise when prices do. For instance in 2013 the house price index for Melbourne rose by 8.5% and the clearance rate was 69%. In 2012 the index fell by 2.9%% with a clearance rate of 55.8%.

The second set of data is the proportion of sales by auction. Over the years auctions are used to sell between 20 and 30% of homes in Melbourne with the balance sold by private sale. The use of auctions is far more prevalent the closer the suburb is to the CBD.

It is important to note that even if you don’t sell at auction the chances are that due to the investment in the marketing you have made should will find a buyer soon after.

RP Data tracks the outcome of homes passed in at auction and has found that over the months of September and October last year an additional 11 to 19% sold. For example, for homes auctioned in the week ending October 13 the clearance rate was 70.2%. Once the sale outcomes over the next 30 days were taken into account for those passed in it rose 11.9 points to 82.1%.

Robert Larocca is Victorian housing market specialist for RP Data.

 


Robert Larocca

Robert Larocca

Robert Larocca is Victorian housing market specialist for CoreLogic RP Data.

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