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How bad is the real estate market?

By johnboy - 17 August 2008 39

The ABC reports that every single house auctioned over the weekend failed to find a buyer.

    “Home buyers were thin on the ground in Canberra over the weekend with all 21 properties on offer at local auctions reportedly being passed in.”

A blip? or part of a larger trend?

What’s Your opinion?


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39 Responses to
How bad is the real estate market?
johnboy 10:46 pm 17 Aug 08

In a hot market auctions let you maximise price, and they do it transparently.

Anyway the data is interesting because it’s today’s data.

Suggests the market is most definitely not hot though.

Jazz 10:45 pm 17 Aug 08

Aronde, I wouldn’t say agents push them on people. There might be those for whom its a preferred sales method but there would be just as many who think private treaty gets a better result. I should really come down to the individual vendors curcumstances though and an agent should explain their reasoning for suggesting a particular strategy as each comes with pro’s and con’s.

Personally, i dont think property prices are too high. They are very much a factor of those points that teepee mentions (+ a few others).

Jazz 10:40 pm 17 Aug 08

Ant,

how is a private treaty any different? isnt that in effect a silent auction which is just over a few days/weeks rather than a shorter period and out in the open?

teepee 10:06 pm 17 Aug 08

Now is probably a decent time to buy. I wouldn’t expect too much plummet in house prices because

1 Land release is still mean (witness the people camping outside the govt land sales office in just the last fortnight).
2 People don’t sell below purchase price generally unless the bank forces them to.
3 Population will probably continue to increase – in part due to birth spike of recent years and more due to significant increase in the Immigration intake in the 2008 federal budget.
4 Any stabilisation of interest rates (or even a fall) will help underpin prices at around current levels
5 The dramatic increases we are seeing in rents in Canberra will eventually spill back into demand for sales
6 New houses cannot sell for less than construction cost, or the builders will go to the wall. Prices for new houses are underpinned by “modern” (high) wages for construction workers and pretty high land prices demanded by the ACT Government.

ant 10:02 pm 17 Aug 08

When browsing properties, if I see one is going for auction, I stop looking. Auctions are just pointless, a stunt pulled by sellers and RE agents. I mean, they’re silly. If you’re selling something, then sell it. Auctions are theatre.

aronde 9:50 pm 17 Aug 08

Jazz said :

Aronde – IMO Auctions are best suited for properties that are unique in some way and don’t have reasonable comparisons with similar properties in the area.

Agreed – that is why I don’t get why ones I have seen lately have gone to auction. Having never sold in Canberra do agents ‘push’ auctions on to people for some reason?

As for the zero clearance rate maybe it has not much to do with a downturn (even though one may be apparent) but more to do with auctions being the ‘wrong’ sale method for the properties concerned. And for all we know 100 houses could have sold by negotiation last week – why the fascination with auction clearance rates?

JC 9:11 pm 17 Aug 08

Jazz, yeah know auctions are just another form of sale, that why I said it is not a true sign of how the market is going. You have to look at all sales.

Yes if prices dropped that much there would be trouble, but by the same token the prices now are way to high. Indeed you could say the high prices the past 5-10 years is artificial. With the Government unless they are selling their property then what is the issue if it drops $500m. Again the high prices have created artifical wealth and value and if people, including the governmment have borrowed against that then more fool them.

Prices are way too high. Simple as that. (and this is coming from someone who thanks to the high prices has 75% equity in my 8yo house)

Jazz 8:38 pm 17 Aug 08

Aronde – IMO Auctions are best suited for properties that are unique in some way and don’t have reasonable comparisons with similar properties in the area. Agents will make their price assessments based on the available data so if there is nothing to go on, this can be a viable strategy. Other times there may a great deal of market volatility (particularly in a rising market) where competition for the property may drive the price higher and get a better result for the vendor. Thats not the situation we find ourselves in at the moment. All that said there are other reasons. An auction may get the property to point of sale quicker in situations where the vendor might be moving interstate or OS and need a quick sale. Ultimately the sale price is going to be a result of what the buyer(s) and vendor think the property is worth, and which will move most to reach a common point

JC, Auctions are a method of sale, nothing more, nothing less. They are not a reflection on the market at all. If the market were to drop 30-40% as you suggest there would be bigger problems than housing affordability. hmm, the ACT government losing something akin to 1/2 Billion dollars in asset value comes to mind.

aronde 6:52 pm 17 Aug 08

Have been to a few auctions lately and the question I have always asked myself is ‘why’? As in why did they put the property to auction? One was almost a knock down job it was so run down, and the rest were nothing special and only had one bidder (though more seemed to have been registered to bid). One was very funny – opening bid $400k, auctioneer puts in vendor bid for $490 and then seems shocked when original bidder wont go higher then his bid! Bidders comment was priceless ‘mate why would I want to bid against myself!’. The property was passed in and took another month at least to sell.

JC 6:50 pm 17 Aug 08

Auctions are not a good sign of the market. But I say let it cool and let the prices drop. I reckon a 30-40% drop would put prices back into an afordable and realistic price bracket. I pity the first home buyer in this country and city.

grunge_hippy 6:15 pm 17 Aug 08

my friend had an auction a few weekends ago and no one turned up. they later sold privately to public housing, so another house for someone to trash… and they did a nice job doing it up too.

bigred 6:13 pm 17 Aug 08

Ainslie is starting to become affordable. I am bargain hunting.

VYBerlinaV8_the_one_ 5:56 pm 17 Aug 08

The market is definately softening, but that was to be expected. I would think this is the start of a general property market stagnation that will last a number of years.

(It’s good news for me – I’m going bargain hunting early next year!)

peter@home 5:30 pm 17 Aug 08

there is a place in buckley cct kambah that is just sitting there with a real estate shop sign on it. the owners did a complete reno, but at 379k, it appears to have been overlooked for the last 3 weeks.

the Real Estate shop photos apparently don’t do it justice.

Holden Caulfield 5:17 pm 17 Aug 08

Part trend, part coincidence I’d say. I went to an auction last weekend that achieved a good result for vendor and buyer. That said, I reckon auctions are generally in agents’ favour so I think vendors need to try and read the market better rather than get bullied into an auction situation. Auctions don’t always suit all properties, regardless of market activity, and unless you have an outstanding property I would think now is not the time you should be selling by auction.

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