Every week, Melbourne auction results are published by the metropolitan newspapers and on industry portals. Whilst this is our standard barometer to gauge market sentiment there are reasons to doubt their statistical reliability and accuracy.
The basic method for collection of data is to phone real estate agents and ask them to provide their Melbourne auction results results of their auctions. Not all real estate agents can always be reached. Coincidentally, it can be frustrating for real estate agents to get back in touch with the data collectors too. Needless to say the data is skewed in favour of those who are all too please to confirm they have sold. Those who have not may prove more elusive.
Melbourne auction results on a Saturday are only included to a certain cut-off time. So some auctions held later in the afternoon do not get included. Statistically speaking, there are not many auctions on any given day. So the lack of consistent data is important, and of course it cannot be verified. Crucially, the Melbourne auction results are across a wide range of different areas and property types. From this merging them all together does not tell you particularly much.
Whilst there will always be negatives associated with collecting data in a manual way there are positives you can extract out of these figures.
Firstly, the data is useful to see what’s happening in the area you wish to sell or buy. Secondly it’s a tool you can utilise to compare how the market has tracked overall during the same time in the previous year.
I sometimes liken Melbourne auction results or clearance rates as they are commonly referred to as the stock market’s ‘bears’ & ‘bulls’. Generally speaking a consistent even market where buyers & sellers are on equal terms, figures tend to hover around 65-70 percent. If the Melbourne auction results (clearance rates) drop below this the ‘bears’ come out, in other words the buyers have the perceived power to negotiate prices down. Whereas figures that hover around and above 70% the ‘bulls’ or sellers have the upper hand. This is also reflected in market sentiment and confidence pushing Melbourne auction results & clearance rates higher and therefore house prices too.
A ‘flat’ or buyer’s market can be a great time to trade up to a larger home. For example if you own a $800,000 home and the market has fallen 10% your home is now worth $720,000. Whereas the $1,400,000 home you’re looking to purchase has come back to $1,260,000. Overall you are better off $60,000. And when the market rebounds there will be further gains to be made.
On the other hand when we find ourselves in a ‘hot’ or seller’s market it can be a fantastic time to scale down. That is, when it’s time to downsize to a smaller home you can reap the benefits here too.
Obviously the above examples are from a generalist point of view however it gives you an indication how you can work Melbourne auction results & clearance rates and the housing market to your favour.
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