Auctions dip as the market remains strong

Perth’s runaway property market has reportedly become too hot for auctions, with most sellers too saturated in offers to consider opening their home up to a live bidding contest.

Though the practice has been traditionally unpopular in Western Australia, the state’s capital recorded a 46 per cent bump in auction sales last December, as buyers nationwide took advantage of COVID-19-inspired stimulus cash.

According to REIWA, auctions account for only two per cent of property sales in Perth compared to 30 per cent on the east coast, where the process is lauded for its ability to achieve strong prices for homeowners.

Despite heavy demand for property conceivably leading to competitive auctions, Edison McGrath Residential Sales Consultant Richard Clucas said energy for the homeselling process had actually simmered down among sandgropers.

He said it was largely because homesellers were already overwhelmed with choice and the popular private treaty method was working just fine.

“The buyer pool is just too big at the moment,” he said. “We’re getting about 50 or 60 people through each home open and the properties are selling pretty much the week they go up.

“It’s also worth noting that auctions rule out buyers who are subject to finance, so that can also mean auctions don’t get the same level of competition as private treaties.”

According to Mr Clucas, West Aussies were further discouraged from choosing auctions because, unlike in markets over east, local auction rules don’t automatically provide an additional safety net for sellers.

In places like Victoria, where auction sales are strongest, homeowners have extra security because there is no cooling-off period or ability to back out of a deal, leaving sellers more confident with the process.

While auctions may not be ubiquitous across Perth, Mr Clucas said some segments of the market were performing well under bidding conditions, particularly properties in the $1 million to $1.5 million range.

He described these as mid-tier properties, typically bought by families who have strong homebuying experience.

“The sort of properties you see in Doubleview, bought by homebuyers who have done this before,” Mr Clucas said.

“Not first-time buyers or downsizers who tend to be more cautious with their money, but people who have bought and sold before, like the transparency of auctions and understand them.

“They would be behind the market right now.”

CoreLogic estimated there were around 1987 capital city auctions taking place during the first week of October – a 22.2 per cent jump from the 1626 clocked during the last week of September.

The number is also a giant leap from the 648 auctions bagged during the same period last year, which occurred as Australia withstood its second coronavirus wave.

Of the auctions held in October’s first week, only 13 occurred in Perth, representing the second lowest figures logged in the country, while Sydney and Melbourne recorded 778 and 779 respectively.

Despite the low rate, Perth homeowners have enjoyed huge auction wins this year, including a South Perth home that sold for $2.852 million in March.

The land, on Brookside Avenue, was reportedly first bought by the owners in the 1950s for just 1500 pounds.