Question regarding auction clearances

Hi all,

Regarding auction clearance rates, I am curious to understand why the number of auctions listed in cities outside of Sydney/Melbourne are significantly lower compared to the population.

For example, for yesterday's auctions, we got 991 scheduled auctions in Sydney, and 1163 scheduled auctions in Melbourne.

However Brisbane has 98 scheduled auctions.

Sydney's population is around 5.3 million, while Brisbane's population is around 2.3 million. This makes Brisbane's population around 40% of Sydney

However Brisbane had only around 10% of the number of auctions compared to Sydney (i.e. 98 versus 991). On paper the number of auctions in Brisbane should have been around 400 or so.

I realise each city if different, so I wanted to understand what the reasons were for Brisbane's significantly lower proportional auction listings.

Thanks.

 

You switched from auctions to listings halfway through. Brisbane just does more sales as private treaty?

 

I am referring to scheduled auction listing only.

Ok, any particular reason Brisbane sticks more to private treaty?

 

Auctions in Queensland are generally reserved for;

• Properties that are unique and hard to put a price on due to lack of comparable sales
• Higher end properties
• Development sites
• Hot markets (like now).

 

You should have 2 or more interested parties for an auction to be a success, but the more interested parties, the better. Brisbane region... when it's not a hot market, sometimes even attracting 1 qualified buyer in a 4 week campaign may be problematic. Depends on the house and location though. In Sydney, historically auctions would be just for houses in the more expensive areas, but it's spread to pretty much all suburbs.
I feel Brisbane buyers may not be so used to buying at auction, and maybe even properties with good interest levels may not be suggested to be sold via auction by agents, simply because the buyers are not used to it.

 

I think it's more about demand. Buyers are probably not used to it because the demand for auctions in Brisbane historically has never been as high and widespread until now.

When agents/sellers saw this kind of widespread demand in the markets, it didn't take them long to say goodbye 'For Sales' and come hither you sexy auction!

Just another clear example of how supply and demand really rules all.

 

Sydney & Melbourne are the main competitive markets for auctions, they don't like auctions in the country towns unless it's for livestock or as @Sackie notes the properties are unique.

 

Ah ok - understand. That's interesting, thanks everyone.

 

Brisbane city council has a population of around 1.1m people and this is the area where auctions mainly take place. It's easier to think that Brisbane is 40% of Sydney population but in terms of metro population, I think Brisbane is only 20-25% of Sydney metro.

There should still be twice as many auctions as the current number and I think the answer lies in abundance of low quality stock even in BCC that brings auction worthy stock to less than 20% of all stock. You have loads of flood prone, ex-housing commission and structurally compromised properties even in prestige suburbs of Brisbane and as a result you only see 1 out of 5 properties going to auction even in inner ring. Compare that to Sydney and Melbourne, you will see every 2nd property being taken to auction in most suburbs.

Lastly, it's the quality of buyers as well. For an auction, you need 3-4 parties with solid finance to compete it out and buyer competition is still not as fierce in Brisbane though getting very close.

At the current trajectory, I see 200+ auctions by the summer peak in Brisbane and that would be getting close to Sydney numbers as a percentage of population.

 

Auctions are for drongos. Why would u stand in a crowd and give away any advantage by directly competing against emotional purchasers who are wowed by fittings and fixtures? Why would u reveal your highest price in public to an agent ..... who is vested in switching u to another property?

The only auction worth attending is one that passed in.

I know the public trustee do them and have an obligation .... but everyone else is taking Joe public for a ride. So Sydney and Melbourne can keep ‘Em.

IMHO

 

over the last 18 years I've bought probably more than a dozen at auction and most of them have had stellar returns to date.

Imho the most important thing is to know the value, have a plan where you don't go over your highest point and stick to the plan.

 

So in Brisbane u can buy good property not at auction. I don't think the return is dependent on the nethod of purchase. If u had said some reason for the method of sale being good it might be more compelling.

If i buy a great tea pot via auction does it follow that u can only get great tea via auction? No. Method of purchase has nought to do wi' it

 

In Sydney there are a ton of properties you can likley only acquire through an auction. To discount their opportunities just because they are being sold via auction doesn't make much sense to me. At the end of the day, each to their own I guess.

Re method of sale, there can be advantages if your able to shift the balance of power to your side. Which Is very possible at times.

 

In Melbourne searching and buying PPOR from 1 to 3 Mil (budget changed over last 15 years) all my potential buys have been auctions. Just the way it is even in the 5 mil plus market for in demand properties (3+ bidders) they just do boardroom as opposed to a public one.

I think the idea of auctions is to flush all the potential buyers out within 4 weeks (enough time to check it out and get finances clear to go unconditional) and if doesn't sell then market has spoken and some revisions in expectation may be required and then go private and wait for that 1 buyer the price appeals to.

Auctions are great for agents as puts pressure on buyers and sellers (on auction day) and through this pressure agent can get their commissions.

 

Yes i can see in Sydney and Melbourne how u r compelled to the auction through weight of numbers.

In Brisbane auctions are infrequent, so buying via auction only makes sense in a fire sale.