Tips for property bargain-hunters as market continues to cool

Buyers might be backing off from Australia’s housing markets, but bargain-hunters can scout good deals in high-end property if they commit themselves to research and seek out auctions, one property expert says.

The comments come as auction clearance rates have continued to fall in major capital cities, with Melbourne’s rate even dropping below 70% as buyer demand plummets due to rising interest rates.

Buyers’ advocate David Morrell says the market has turned. Now, buyers aren’t putting up with such overheated prices and as demand falls, bargain-hunters are able to seek out a more reasonable price.

“We’re seeing bargain hunters in the expat community, specifically. We’re also seeing others looking for bargains. They waited while the market went up, and now are beginning to search around.”

Morrell says he was surprised at the market’s volatility, as demand has slowed considerably compared to its performance over the past year.

“The market has had a train smash. The caution light is on, and for the first time in nine months we’re not chasing vendor expectations. You’ve only got to look at the property that was passed in at the top end to see this, because it isn’t going for as much at all.”

Now, Morrell says, is the best time to find bargains. His advice is that buyers research the area in which they intend to buy, know it well, and find out what local properties are selling for.

“Clearance rates, median prices, don’t listen to it. You’ve got to go into these individual properties, see the level of interest and work out how the area is performing. Property is very area-specific, so you need to get your hands dirty.”

“The reason for this is because you may have a wrong impression of something. A house could have sold for $2.3 million, but there may have only been one buyer. If that house has five bidders, it changes things. Get out there and find out.”

Morrell also says buyers need to seek out auctions as the best method for getting a bargain.

“In a rising market, auctions hurt because you’re in such a competitive environment. In falling markets, auctions work for you because you can see what’s happening directly. You know if no one else is at an auction, and therefore can work that lack of demand.”

“This is why you’re seeing more emergence of interest programs in high-end property now. Because there isn’t as much demand and bargain hunters need to look for that.”

In Melbourne, Real Estate Industry of Victoria chief executive Enzo Raimondo said in a statement the lower clearance rates were due to a higher number of properties on the market.

“Compared with previous years there have been a record number of auctions this weekend, providing buyers with good opportunities. These conditions are expected to continue for the next few weeks.”

The city recorded 942 results over the weekend, with 638 selling indicating a clearance rate of just 68%. This weekend last year saw 540 auctions with a clearance rate of 86%, while next weekend there are 880 auctions scheduled.

In Sydney, 303 properties were put up for sale, with 212 selling indicating a clearance rate of 64%, while total sales reached $164 million.

Brisbane recorded just 11 sales with a clearance rate of 46%, and total sales of $5.7 million, while Adelaide recorded 14 sales, a clearance rate of 54% and total sales worth $6.3 million.