After what has seemed like an endless wave of booming prices with vendors pocketing well over reserve expectations at auction, the tide might finally be turning.
Damien Cooley said he has seen a significant change in prices and seller behaviour in recent weeks which should give buyers more confidence under the hammer.
“Absolutely the shift is on towards buyers, but I’m not necessarily saying it’s a buyers’ market right now because it’s not, but it’s heading that way,” he says.
“Although we’ve had two Saturdays in the last three weeks when our clearance rate was below 50 per cent. I would say that it is in the favour of the buyer,” Damien says.
According to the Sydney Metro Cooley Index for April the average over reserve dollar figure per property was sitting at minus $35; the first time that number has inched into the negative. While only a small amount, when put in perspective it is a sign the market is shifting. The March Cooley Index showed that the average over reserve dollar figure per property was $46,843 and 12 months ago it was a more significant $62,768.
“Properties are definitely selling for less than what they would have sold for, no question,” Damien says.
“All through this boom cycle, vendors have held their ground with properties selling above their expectations and buyers have been the ones who’ve had to really muscle up and stretch themselves to pay more. Now vendors are the ones who have to suck it up and ask themselves ‘Are we going to sell this, or are we going to have to hang on to it until the next cycle?’,” Damien says.
“As an auctioneer, I’m feeling that push back from the buyer. I’m seeing a lot more buyers walking away from a property if they’re not feeling like the owner is willing to negotiate. I think a lot of these buyers are sitting back and saying ‘Well I don’t have to buy, there’s no rush, I’ll look for something else.’”
“The urgency has come out of the market, no doubt,” he says.
Damien says vendors will now need to adjust their thinking and be flexible on their reserve price before heading into auction.
“We’re advising our vendors when they’re setting their reserves to give themselves a buffer zone of what they will set their reserve at. A lot of properties are becoming a negotiation whether that’s during the auction or straight after,” he says.
For the month of March, Cooley Auctions recorded a 64 percent clearance rate for properties sold on or within 14 days of their auction date. By the 28 day mark 67 per cent were sold.
Additional findings in the Cooley Index for April included an overall monthly clearance rate of 56 per cent, an average sale price of $1.336 million and a healthy average of three registered bidders per auction.