By Jim Malo
Fewer buyers are bidding at auction this year in Melbourne and Sydney compared with the same time last year, a sign that the competitive capital city markets are becoming easier to navigate for potential home buyers.
Three bidders participated in each Sydney auction on average in May, Ray White figures show. In Melbourne, it was 2.5 bidders per auction, a reflection of the Victorian capital’s comparatively weaker market.
The average auction in Sydney or Melbourne had three or fewer bidders in May. Credit: Steven Siewert
The figure was 3.3 at the same time last year in Sydney and 2.9 in Melbourne. While Melbourne’s May result was below the long-running average, Sydney’s was slightly above.
It comes as new listings increased in both cities, but markedly more in Melbourne, and clearance rates slipped too, showing that sellers were slowly losing the upper hand.
Ray White chief economist Nerida Conisbee said the number of auction listings was up in both cities, which had helped to dilute the buyer pool.
“Towards the end of last year, there was a real shortage of stock and listing volumes were quite low so we did see pretty high active bidders but, since then, we’ve seen a pretty big pick up in the number of auctions so that’s reduced the number of bidders at auction,” she said.
There were 399 Ray White auctions held in Sydney in May, up from 292 at the same time last year. In Melbourne, the agency held 616 auctions which was up from 429 last year.
“We’re seeing it everywhere, there’s just a lot more properties. It depends where you are – in Victoria, it was partly driven by a return to [price] growth,” Conisbee said. “It wasn’t coming up in May, but I think we’ll probably see more properties coming to market driven by all the new taxes and [added costs].”
Weakness in Melbourne’s property market has been visible in other metrics, too; the median house price rose only 0.7 per cent in the year to March. A weak economy, high interest rates and an influx of poorly maintained investment property listings have been blamed for the subdued market.
Conisbee said sluggish price growth and fewer buyers per property made it easier for owner-occupiers to purchase.
“I think it’s a good time to buy if you’re an upgrader,” she said.
“And if you’re a first home buyer, the market’s not moving. They hate fast-moving markets, so it’s good there,” Conisbee said. “There’s still a lot of affordable markets in Melbourne, which is positive.”
Belle Property agent Stephanie Evans said she had noticed low bidder numbers in her patch of Melbourne, which includes affluent bayside suburbs like Albert Park, Middle Park and South Melbourne.
“It really depends on the property, but we’re seeing a fair bit of one-bidder auctions. But, in saying that, you get a runaway auction every couple of weeks,” she said. “So one or two, but we’re getting a lot passed in [and] a negotiation after.”
Renovated properties tended to draw more attention, Evans said. “There’s definitely a lot of properties on the market at the moment … that’s increasing the choice for buyers.”
Cooley Auctions’ Damien Cooley said Sydney auctions that were unlikely to be contested were being withdrawn or sold prior and agreed fewer buyers were showing interest in bidding at auction.
“Some properties just have stronger interest than others and I think that has a lot to do with how much the vendor is willing to take for their house,” Cooley said.
“I think it’s a great time to be buying,” he added. “So long as we don’t see interest rate increases later in the year, I think vendors will have an opportunity to sell at a good price and buyers will have a lot more opportunity to purchase come spring time.”
AMP chief economist Shane Oliver said relatively low bidder numbers were a positive sign for buyers.
“The best time to buy is when there are fewer bidders and less competition,” he said. “It’s a better time than when things were a lot stronger. It makes it far less stressful and you can get a better price. You may find [the home you want to buy] just gets passed in.”
Oliver said markets could tip further in buyers’ favour if the Reserve Bank took longer to cut the cash rate than expected, which further squeezes mortgagors struggling to meet repayments.
“If they drag the chain on rate cuts … I could see listing numbers tick up.”