Two common myths have been debunked again in the last couple of months. Firstly, spring is not the best time to sell, it is the best time to buy. Excess stock has come onto the market this spring relative to demand. Whilst ones garden and home presents better in spring, the same applies to every other property on the market. Stock is held back each year in readiness for a supposed “spring selling season” that has failed to eventuate both this year and last year. Fairly priced properties have still traded but the story is really found in the excess stock sitting on the market.
Secondly, setting an auction with a “deadline” for buyers to act within as a selling strategy has largely failed in the past few months. Clearance rates are well below 50%. If you have noticed that the media are talking about a clearance rate of above 50%, that is because many agents are not reporting their failed/withdrawn or postponed auction campaigns.
“If agents only report their successful auction campaigns, of course the clearance rate will be high”
It seems hideous that we then get ‘experts’ and officials making decisions and predictions on the real estate market using dodgy figures that have been fed to them. And that’s what the reported auction clearance rate is most weekends, a dodgy statistic to make the auction sale process appear more successful than the reality.
A comforting sign for the market has been the lack of panic selling. Rather than concede to buyers offers, many sellers are taking the luxurious option of withdrawing from the market. This is a clear message that buyers still need to offer the seller a price that will entice the seller to sell.
As we move closer to Christmas the market could see the excess stock diluted as properties sell at a faster rate than new listings coming on board. Combined with the November interest rate cut, we may have seen the bottom of the market for 2011 barring any major shocks or events.
Source: Harris Partners (www.harrispartners.com.au)