The successive rate hikes by the Reserve Bank of Australia (RBA) have triggered a fear of overpaying (FOOP) among auction bidders.
Apollo Auctions director Justin Nickerson said the 'FOOP' trend in some of the auction markets is resulting in low-ball offers.
“Our auctioneers said that ‘FOOP’ bidders were reasonably common, but they weren’t having much luck because of their unrealistic assessment of the current market,” he said.
While FOOP buyers are most common in Sydney, there are buyers who are keen to transact and bid at fair and reasonable offers.
Rate hikes dampen auction demand
The three consecutive months of rate hikes from May to July reduced the number of registered and active bidders.
In fact, the average number of registered bidders were down from 3.85 in May to 2.7 in July, while the share of active bidders fell from 63.8% to 55%.
“Our auctioneers are reportedly that vendors are slowly catching up with the changing market conditions, however, a fair cohort of sellers are still hoping to achieve a result that may have been possible last year but is not likely now,” Mr Nickerson said.
“Our auctioneers are reportedly that vendors are slowly catching up with the changing market conditions, however, a fair cohort of sellers are still hoping to achieve a result that may have been possible last year but is not likely now,”
|
Region |
Average |
Share (%) |
||
|
Attended |
Registered |
Active Bidding |
Sold |
|
|
Brisbane |
27.5 |
3.5 |
55.8 |
70.0 |
|
Gold Coast |
30.6 |
3.6 |
60.7 |
52.2 |
|
Canberra |
4.3 |
1.3 |
30.8 |
33.3 |
|
Sydney |
19.7 |
2.6 |
47.8 |
45.3 |
|
Perth |
42.5 |
2.5 |
80.0 |
60.0 |
Brisbane auctions lead the pack
The average clearance rate across the five biggest capital cities increased to 52% in July from 49% in June — this was due to the strong showing in Brisbane, Sydney, and Perth.
Of all capital cities, Brisbane performed the best, achieving a clearance rate of 70%.
“In Brisbane, although buyer numbers lack the depth of 2021, this smaller group have adopted an assertive mindset with many transactions occurring as a result of direct bidder-seller negotiations during the auction,” Mr Nickerson said.
The Gold Coast market is also holding firm, achieving a clearance rate of 52.2% in July.
Perth is also performing well relative to its bigger contemporaries — it achieved a clearance rate of 60% over the past month.
However, one of the most common issues why clearance rates remain low was a number of sellers not wanting to accept present market conditions.
“They are potentially hanging out for bluer skies that may be on the horizon in their minds,” Mr Nickerson said.
—
Photo by @PoungsaedCreater on Canva
