Last Saturday was what we traditionally call “Super Saturday”, the final Saturday before Melbourne Cup and typically the busiest auction weekend of the year.
Across Jellis Craig, we conducted more than 100 auctions with a clearance rate of 75%, a welcome improvement on what we’ve been seeing over the past month or two.
It was also the second weekend under Victoria’s new reserve price disclosure laws, which have certainly caused a bit of a stir.
Personally, I’m in favour of greater transparency. Buyers shouldn’t spend weeks inspecting properties, organising finance and paying for building inspections, only to discover the vendor wants several hundred thousand dollars above the advertised range.
That said, there are a few things worth understanding.
Firstly, a reserve price isn’t necessarily the price a property will sell for.
At 20 Emo Road, Malvern East on Saturday, we had a reserve of $1.98 million, around the top end of our quoted range. Three bidders competed and the property sold for $2.16 million.
At another auction, we had a reserve of $1.8 million, attracted just one bidder and ultimately sold for $1.79 million.
And at a third auction, the advertised reserve was $2.2 million, but with four bidders competing, the vendors elected to put the property on the market below reserve. It eventually sold for $2.16 million.
Three auctions, three different outcomes. Just to keep everyone on their toes.
The point is that properties can still sell above or below reserve. At least buyers now have a clearer idea of whether they’re genuinely in the running before auction day.
Where I think things get interesting is at the higher end of the market.
Under the new rules, auctions and fixed-date sales, including expressions of interest campaigns with a closing date, require the reserve to be advertised seven days beforehand.
Open-ended expressions of interest campaigns don’t have the same requirement.
I suspect we’ll see more agents and vendors favouring this approach, particularly where price expectations are difficult to pin down or vendors want to retain some flexibility.
We may also see fewer properties actually making it to auction where the vendor’s reserve is considered unrealistic. Rather than risk a public failure, some agents may recommend changing the method of sale.
Whether that improves the market or simply shifts the goalposts remains to be seen.
And finally, goodbye to the mysterious ‘price undisclosed’.
Sale prices must now be reported within seven days of a property becoming unconditional, subject to limited exemptions. Previously, buyers or vendors would often request confidentiality, despite the price becoming public after settlement anyway. A fairly pointless exercise, really.
Another welcome change for transparency and consumers.
As for the broader market, Saturday’s stronger clearance rate was encouraging. Whether the new rules had anything to do with it is another question entirely.
My feeling is that the market will adjust fairly quickly. Buyers will get used to seeing reserves, vendors will become more realistic about setting them, and agents will adapt their selling strategies.
One weekend certainly doesn’t make a trend, but after a fairly challenging spring, we’ll take it.
Thanks for reading.
David.
