While last week saw Australia’s auction volumes push close to the 4,000 mark, new research suggests numbers like that could soon be a thing of the past given the current condition of the Australian real estate market.
According to sales analysis by CoreLogic RP Data research head Tim Lawless, the proportion of dwellings in Australia sold by auction has been on a steady climb for the over the past two-and-a-half years.
Over the 12-month period to September 2015, auctions accounted for 19.2% of all capital city dwelling sales, with 20.4% of houses and 16.5% of units going under the hammer over that period.
“As market conditions heat up, more real estate agents and vendors will choose to auction a property due to the increased level of buyer competition which generally improves the chances for a home to sell at auction and obtain the highest possible price,” Lawless said.
“Prior to the current growth phase, only 8.9% of dwellings were sold at auction,” he said.
But as clearance rates start to trend downwards among other signs of a cooling market, Lawless predicts auction numbers fall too.
“As growth in the housing market slows we anticipate that the proportion of properties selling by auction will also slow as more vendors and agents choose to sell their properties by private treaty.”
With Lawless claiming price growth results in auction volume growth, there is no surprise which two cities have experienced the highest proportion of sales by auction.
In the 12 months to the end of September, 31.9% of Melbourne’s house sales were by auction rather than private treaty, while in Sydney it was 30.7%.
Canberra also showed a somewhat surprising preference for selling houses by auction, with 31.7% of houses sold via that method in the 12-month period.
For unit sales, Melbourne and Sydney far outstripped all other cities; in Melbourne 28.0% of units were sold through auction, while in Sydney it was 21%.
The closest market to those was Canberra, with 5.8%.
Houses sold at auction returned a median price of $950,000 over the 12 months to September, compared to a median of $530,000 for private treaty sales.
Forty-five per cent of houses sold by auction transacted at a price of at least $1 million, while for private treaty sales the proportion was only 12.5%.
For units, auctions returned a median sale price of $680,000 compared with $460,000 for units sold by private treaty.
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