Auction activity dips, though property market conditions remain strong

After a bumper month which saw auction sales climb to record highs, auction activity slowed down last week according to the property research firm CoreLogic.

Figures show 2,041 capital city homes went under the hammer, returning a preliminary clearance rate of 78.5 per cent.

Volumes and clearance rates were significantly lower compared to the previous week, when 2,467 capital city homes were taken to auction and preliminary figures came in at 80.5 per cent (later revised down to 78.6 per cent).

In Sydney, 777 auctions took place, returning a preliminary clearance rate of 82.1 per cent. One week earlier, 919 Sydney homes were taken to auction, returning a preliminary clearance rate of 84.8 per cent, which was revised down to 81.5 per cent by final collection.

Melbourne also saw diminished activity, with 925 properties going to auction — down from 1,221 in the previous week. Of the 770 results collected so far, 76.1 per cent have returned a successful result. 

Meanwhile, Canberra returned the highest preliminary auction clearance rate of all capitals with 97.7 per cent of homes selling across 55 auctions.

Pre-auction sales pick up the slack 

Of the 1,290 successful sales recorded by CoreLogic so far, 497 were sold prior to auction. The overwhelming majority of those sales took place in Sydney and Melbourne.

Nowadays, many buyers are looking to sidestep auctions entirely, with figures from Domain showing 37.3 per cent of Sydney homes and 21.1 per cent of Melbourne homes sold ahead of auction throughout March.

For buyers, striking a deal ahead of time has its advantages and disadvantages. 

Auctions create competition and drive up prices, but the upside is you know who you’re bidding against and what they’re prepared to pay. That transparency doesn’t really exist when making a pre-auction offer.

So while you’re less likely to get swept up in the competition and offer more than intended, not having other bidders around to moderate your expectations means you might overestimate a property’s value in the first place.

If you’ve done your research, however, making an offer prior to auction could work out in your favour. Data from Ray White found that auctioned homes tend to sell for 13 per cent more than the highest pre-auction offer. 

So if you’re able to keep a property from going under the hammer, you might be able to snatch up the home you're after for a lot cheaper than expected.

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