Late February is always the first litmus test of the new year market.
Saturday was our first proper auction weekend of 2023, with 83 homes going under hammer across the Jellis Craig network.
I was surprised, pleasantly, when the results emailed popped up in my inbox on Saturday afternoon.
Our clearance rate was a very buoyant 82 percent.
Furthermore, the average number of bidders per auction was high – three in Stonnington, and close to four in Boroondara, Bentleigh, Doncaster, Monash, and Whitehorse.
There were nine auctions with five or more bidders.
This is stiff competition, when you consider that we were averaging between one and two bidders per auction for much of last year.
Mal James has mentioned the “Feb Pep” numerous times in his Market News recently.
The Feb Pep is real. Every February we see an imbalance between the number of buyers versus the number of new listings.
The buyer pool is replenished over the summer hiatus, and listing volume takes a while to pick up until March. That is, more buyers per property than any other time of the year.
Call it ‘pent up demand’ if you will, a phrase popularised during the COVID affected market of 2020 – 2021, where seemingly everyone in Australia wanted to move, and cheap money was flooding the market faster than governments could print it.
The Feb Pep seems to be particularly strong this year, driven by far lower listing numbers than usual.
The statistics on listing numbers range from 20, 30, 40 or even 50 percent below the same time last year.
To take one recent data point, the REIV reported 557 auctions on Saturday compared to 1162 this time last year. That’s a 52 percent reduction.
Clearly, the current tightness of stock is driving our high clearance rate and the number of bidders per property.
Great news for sellers. Not necessarily great news for buyers on face value… Or is it?
Paradoxically, confidence from buyers and the social proof this imparts is infectious. Bidders beget more bidders.
Any auctioneer will tell you that the first bid is always the hardest to get, but once you get that initial bid, further bids generally follow.
More bidders and more competition leads to stronger results. Stronger results entice potential vendors to go to market.
More transactions beget even more transactions. Many buyers only become sellers once they buy. It’s a snowball effect.
Of course, it’s a little early in the year to get too excited.
The economic and financial climate is far from temperate. The heat waves of inflation, immigration, and strong employment are clashing with the cold fronts of tightening monetary policy, rising living costs and geopolitical uncertainty. It’s a bit stormy out there.
But as I see it, we are already sixteen months into this property price correction (since the October 2021 peak) and we are nearing the end of this aggressive interest rate hiking cycle, so clearer skies might be a lot closer than you think.
Last week we sold a two bedroom, one bathroom, single fronted home in Armadale without parking for just shy of $1,800,000 in a competitive pre-auction process.
It’s results like this that get the neighbours excited and thinking that perhaps it’s not a bad time to sell?
Perhaps, given the auction success and bidder activity we saw on Saturday across Melbourne, it’s actually a good time to sell while stock remains tight?
You never would have guessed it by reading the news. But it’s difficult even for the naysayers to dismiss Saturday’s results.
Feature Property: 67 Chomley Street, Prahran