November buyers go to the negotiation table.
In November more than 3,200 auctions were reported to the Real Estate Institute of Victoria (REIV). 1,070 sales were recorded. Approximately 1,383 properties were passed in, 622 of those on a vendor bid. November’s clearance rate averaged 49% – down on October’s 53%.
Melbourne Cup weekend meant a quiet start for the November auction market with 153 properties taking a punt that weekend. On the other hand the election didn’t stall the market, with a healthy 790 auctions on November’s last weekend.
Units sold better than houses across November, with a clearance rate of 55%.
Melbourne housing stock on the market is high at present with 38,730 total listings (CoreLogic), which is 19.3% higher than a year ago. This is because there were fewer buyers in October and November 2018 than last year, plus there is a trend for sales taking longer to complete. So there’s some stock build up happening in the run to Christmas.
According to new sales data (Domain), about 20% of properties passed in at auction are still managing to sell within about two weeks. In current conditions auction day is often considered just the start of a fairly long sale process. According to the study model (by Domain), in September this year, using an auction day clearance rate of 51%, after two to four weeks the clearance rate had risen to 65%. And 6 to 8 weeks later that clearance rate had risen to 68.8%.
In many cases the eventual buyer is the highest bidder at the passed in auction. Of course the buyer (or their negotiator) tries to set the bar lower in the negotiations. The seller adjusts their expectations down a bit, or, holds out until he or she gets close to the price they want. Every case is unique and skilled negotiation plays a key role. More buyers are taking this negotiation route, hammering out a deal in the post auction period. This trend has contributed to the lowering of clearance rates we’ve seen across 2018.
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