Sellers defy interest rate pain and send more properties to auction

The number of properties up for auction continues to rise despite low interest rates causing uncertainty elsewhere in the market.

More and more sellers, week after week, are putting their homes in the hands of the auctioneer despite buyers facing reduced borrowing capacity and creeping mortgage repayments.

Latest domain auction report shows there are 1,324 auctions scheduled in the capitals combined this Saturday, 8% more properties nationwide than last week.

Although many aspects of the market are slowing down, including capital gains and under the hammer, sellers continue to have faith in the auction method.

Combined national auction volumes are rising each week, but the figure is lower – meaning fewer choices for buyers – compared to the same period last year, the economics and research chief said of Domain, Dr. Nicola Powell.

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Overview of the August 13 estate auction market for capitals. (Domain)

“Auction volume continues to rise this week, up 11.2% from the five-year average,” Dr. Powell wrote in the weekly report.

“However, they continue to remain lower by 13.9% per year. This corresponds to the general slowdown in housing, as liquidation rates have also remained stable recently.”

Brisbane and Adelaide saw a decrease in the number of properties under the hammer compared to last week.

Sydney, Melbourne and Canberra have more than last weekend. Sydney and Adelaide have more bids than at the same time 12 months ago, defying the overall trend.

The domain data also indicates that the number of auctions should increase in the coming weeks.

Nerida Conisbee of Ray White, chief economist for the National Real Estate Group, said in her report this week that with properties staying on the market longer in the current climate, a chance for a quick sale is highly sought after.

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First-time home buyer beats investors for $771,000 Altona North home at auction
Ray White Altona auctioneer Richard Anile takes bids during the auction at 17A Ararat Street. (Penny Stephens/Supplied)

Ms Conisbee said “overall the increase was minor from 22 days to 24 days”, but some capitals are seeing breakouts in days in the market.

In Sydney, Ray White’s data shows campaign windows have shrunk from 19 days to 24 days.

But this has been mitigated by the proportion of properties sold at auction, which, relative to private negotiation and other forms of transactions, has increased.

“Our latest analysis of Ray White’s auction results showed that right now, if you want to sell in a slowing market, auctions are the best way to get into the market,” Ms Conisbee said.

“Even with declining clearance rates, the proportion of properties sold at auction has increased, unlike private agreements or other forms of sale which have declined.

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what you can negotiate in a sales contract when buying a property
Auction is a faster way to sell than private contract negotiations, according to research by Ray White. (Unsplash/Andrew Neel)

“In 2021, an average of 28% of Ray White’s properties were sold at auction. So far this year, this figure has increased to 33%. In contrast, the proportion of private treaty sales has increased from 62% of total sales at 59 percent.

“Selling by other means also fell from 10% to 7%.”

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