Sydney is experiencing a surge in auction activity as it enters a boom phase
Did you know that you need to register with the agent before you bid in NSW?
The rules governing auctions in NSW are much tighter than those in force in Victoria. As such, buyers who want to bid on a property need to know that unless they register to bid with the agent beforehand, they are unable to purchase the property at auction. This is not the case in Victoria. The other binding factor with bidding at auction in New South Wales is that when the auctioneer knocks the hammer down to you as the successful bidder, you are at that point bound to the sale unconditionally. This is not the case either in Victoria where the buyer can choose walk away from signing the contract even after winning the auction, although many people are unaware of this fact. Auctions in Sydney are generally held at the property, however more recently a growing trend is having a schedule of auctions in succession at a hall or room filled with registered bidders. This auction room strategy is not unlike the way you would purchase art or other highly sought after items from Sotheby’s or Christie’s. We’ve seen this method employed at Channel 9’s “The Block” auctions with great success in the past couple of seasons. Just like Melbourne, not all suburbs within Sydney are geared towards auction sale methods either. Areas most suited to auction sale methods are also suburbs with an unequal supply vs demand ratio. Auctioneers can then entice two or more bidders to compete pushing the price higher than if it was only the auctioneer and a single bidder. Therefore, sale methods are likely to change even within the same suburb depending on the state of the market.
In Sydney, auction season begins in early February and has a number of breathers during the year as families take school holiday vacations. The other factor affecting the auction season in Sydney is the number of sporting events on the Australian calendar. Events such as the Formula 1 Grand Prix in March, the AFL & NRL Grand Finals in late September, and the Spring Racing Carnival in late October / early November all take precedence over the auction season. Momentum with an auction campaign is very important to the vendors, so having a 4 week marketing period prior to the auction is paramount. Because of this, the bulk of auctioned properties are offered to the market in the time between the AFL and NRL Grand Finals and the Melbourne Cup. It also happens to coincide with Spring’s sunny days and flowers in bloom which help gardens look better and people’s moods brighter.
That being said, you’ll find auctions are most prevalent in seller markets which can be at any time of year outside of January. Seller markets are defined as the seller having the advantage or upper hand over the buyer. This occurs when the demand is greater than the supply. Sometimes you can also have artificial demand being led by the media. Newspapers need headlines to sell, so there’s nothing quite like talking about boom or gloom. Anything in between is of no interest to anyone. Newspapers also sell.. you guessed it.. advertising. Property sale advertising. It would be facetious of us to imply that there is any correlation between editorial content and marketing content. So we simply won’t imply that.
Just recently we’ve been witness to record auction clearance rates in Sydney with a 4 week record of above 80% selling at auction or before/after. This combined with lower than normal stock levels in Sydney, show a market heading into boom territory and clearly a seller market. Remember, demand outstripping supply is a seller market and that’s exactly where Sydney is positioned in late 2013.