Property market update: Auctions get results
The Spring selling season is just around the corner and clearance rates are rising, so is now a good time to sell your home at auction?
This week in what you need to know in property, things are looking up on the Gold Coast, plus do buyers really value energy efficient homes?
Is now a good time to go to auction?
An analysis of properties sold via auction versus private sale over the past four years shows that auctions can typically achieve $20,000-$60,000 more depending on the market.
Why would this be the case? It may be that agents only go to auction when the market is red hot, so better results tend to be achieved in such situations.
It could be that the competitive situation created when an auction takes place leads people to paying more than they otherwise would. Or, it may be that the best properties go to auction and the poorer quality ones sell via private sale.
Right now, it appears to be a very good time to go to auction if you are in one of Melbourne or Sydney’s premium suburbs.
We can see from search behaviour that buyers are back, open for inspections are seeing a lot more people, and there are very few properties on the market.
This is leading to some strong results – there have been some properties going for $200,000-$300,000 over reserve in both Melbourne and Sydney over the last few weeks.
Clearance rates finally crack 80%
Auction clearance rates have now cracked 80% in both Melbourne and Sydney off the back of very low auction numbers.
This is consistent with what we have seen for some time now.
Ironically, it is now both a buyer’s and seller’s market.
For buyers, right now conditions are ideal (low interest rates, tax cuts and access to finance slowly easing) but there is very little to buy.
For sellers, a lack of selling competition is making properties easy to sell and some strong prices are being achieved. It is still very much a premium suburbs story – we are yet to see a ripple effect to other parts of the market.
Do buyers want energy efficiency?
Looking at key word searches by buyers on realestate.com.au does show a bit of variation across Australia when it comes to energy efficiency.
The search term is most common in Canberra, where it ranked in the top 10 phrases searched for by buyers.
When it comes to the property listings themselves, the term is not always included in the property descriptions. For example, in Queensland properties were the most likely to have the term energy efficient – with it featuring in over a quarter of all listings. But in Canberra, it was unusual to see the term, with it included in only 4% of listings.
Perhaps Queenslanders expect to find energy efficiency so it is included, while Canberra residents want it but it’s difficult to find.
Fundamentally, there appears to be quite a few drivers behind people wanting energy efficiency.
Part of is likely cost – Queensland living requires a lot more energy for heavy air conditioning and hence energy efficiency becomes more important.
As a result there may be a greater expectation that it is included in a home. In isolated regional areas, it is likely driven by necessity – if access to energy is patchy, then an energy efficient home becomes vital.
Many people also want energy efficient homes because they care about the environment.
Gold Coast market recovery?
The Gold Coast is possibly the most fascinating property market in Australia when it comes to search activity on realestate.com.au.
It remains the top destination for many offshore property seekers – particularly those from New Zealand and Japan.
While in the early 1990s, the Gold Coast benefitted from an influx of Victorians, right now it is Sydneysiders making their mark with this city, dominating interstate search.
It is likely driven by affordability – the majority are looking for houses priced under $700,000, something difficult to come by in Sydney, particularly close to the beach.
In terms of search, the most popular suburbs for buyers are consistently Tallebudgera, Tallebudgera Valley and Currumbin Waters.
These are locations where it is possible to buy really big homes on big blocks at an affordable price – at least by Sydney standards.
For renters, it is south of the coast with places like Burleigh Heads and Tugun regularly sitting on top.
Apartment demand is also particularly high on the Gold Coast and for Queensland, Gold Coast suburbs dominate the list – this is primarily because this cycle, there was less overbuilding than what we saw in Brisbane.
The downturn started early on the Gold Coast – primarily because of a post Commonwealth Games slump, followed by the impact of the Royal Commission.
Median prices on the Gold Coast are still going backwards, but we are seeing the same increased interest in quality stock as much of the rest of Australia.
Paradise Point and Surfers Paradise have seen double digit price growth over the past 12 months.
Like east coast capital cities, it is likely that the Gold Coast will start to see a pick up in pricing as we head into spring.