Auctions market finishes 2010 with a fizzle as experts predict more private sales in new year

The last weekend of auctions for the year was a disappointing one, with clearance rates either remaining steady or falling in the major capitals as sellers take their properties off the market with the intentions of trying again next year.

But the Real Estate Institute of Victoria believes the state may see a lower amount of properties go under the hammer in 2011 as some sellers opt for private transactions instead.

“Our members don’t believe there will be as many properties on the market next year,” spokesman Robert Larocca told SmartCompany this morning. “Based on their knowledge of the market and what they are feeling, they don’t believe there will be as many.”

“This time last year we had lots of auctions, and low private sales, whereas the inverse is going to be true now, that after weeks and weeks of these clearance rates, that will encourage some people to go into private sales. This is what happened in 2008 after the strength of 2007.”

There were hundreds of fewer properties up for auction this weekend. Some experts such as SQM Research principal Louis Christopher and REIA president David Airey believe these properties will reappear next year, putting downward pressure on prices, and Larocca says prices certainly won’t be moving anywhere fast.

“We don’t believe that prices have really changed that much over the past six months and they’re unlikely to change that much over the first six months of next year.”

“They have reached a reasonable level after the lows of the GFC and the market is a far more balanced state than it has been in for some time. It does mean that we might see more private sales in January.”

These comments come after the REIA said the median house price fell during September.

“Both house and other dwelling median prices declined by 0.5% to $533,447 and $424,499 respectively”, president David Airey said.

In Victoria this weekend, the hottest auctions market in the country, clearance rates moved up to 64% compared to 61% last week, according to the Real Estate Institute of Victoria, but listings also fell from over 1,000 to just 605.

According to Australian Property Monitors, the clearance rate in Melbourne was only just above 52%. Chief executive Enzo Raimondo said in a statement the increase in clearance rates to 64% is an ultimate validation of the strength of the market.

“This weekend is the last for auctions this year. Including this weekend’s results the overall clearance rate for the year is 71%, lower than last year’s 81% but higher than in 2008 when it was 63%.”

“The clearance rate may be lower than 2009 but this obscures the fact that 30% more homes have been sold at auction this year. More vendors have been successfully selling their home at auction, highlighting the overall healthy state of the market this year.”

Elsewhere in the country, Sydney recorded a clearance rate of 50.6%, with just over 400 properties listed for auction. Adelaide recorded a clearance rate of 45%, while Brisbane recorded a clearance rate of just 28.6%.