The correlation between property scarcity and auction result

This weekend’s clearance rate dipped to the lowest point so far for this year, yet two of the auctions we bid at flew past reserve and had multiple bidders striving for the keys.

What was it about these two properties that defied current market conditions?

Scarcity.

But this late spring market, plagued by finance delays and credit woes is proving challenging for buyers, vendors and agents alike. Our two auction properties were anomalies.

On Wednesday we had five auctions on the board for Sat 10th November. By Wednesday afternoon our 10.30am auction client had given us the firm instruction to attempt to purchase a sizeable, light-filled modern townhouse in Brooklyn. It was the ideal home and they didn’t want to chance heightened competition at auction in this delayed finance-approval climate.

On Wednesday afternoon our due diligence for our Fitzroy townhouse buyer revealed some Owners Corporation concerns and by close of business we’d struck this property off the auction board.

An apartment in St Kilda East remained firm for a 2pm auction time until our client inspected an alternative “plan B” apartment that she decided she actually liked more than Plan A.

So our five turned into two. Not an unusual occurrence in a busy Buyer’s Agency office.

Our 11am auction in arguably one of Footscray’s best pockets was well attended. First home-buyer energy was spread from one side of the street to the other and some had the support of parents and family alongside them. It was little wonder that this gloriously light-filled three bedroom penthouse apartment was a buyer magnet. Despite the need to climb four flights of 1970’s internal style stairs, the prize at the top didn’t disappoint, even with the damaged parquetry flooring and dated old bathroom. The room sizes and beautiful configuration of the lounge and kitchen showed off the clear city views over the enchanting Victorian rooftops.

Bidding was as fast and as furious as doubtful, nervous first-home buyer bidding can be, and sadly our budget didn’t match the winning bid of $587,000. Multiple bidders knew that the property was scarce and our own property analysis proved this. Working through comparable sales was challenging and we had to draw from sales that weren’t really comparable, in combination with back-calculations on historical prices based on capital growth in order to establish a suitable price limit.

Three bedroom 1970’s apartments with city views from most windows are indeed scarce. 

Our 1.30pm auction in Sandringham was a complete shift from Footscray’s penthouse. This original Victorian home on 579sqm in one of Sandringham’s finest pockets teased the market for months before it could officially be sold.

Documentation behind the scenes lead to delays that ordinarily would potentially hamper any campaign, but not this one. Even presenting some challenges for developers and renovators with a huge pine tree at the front of the yard and unlevel flooring throughout this magnificent site still grabbed at heartstrings. An array of buyers (mostly Gen X and Boomers) threw their hats in the ring as the bidding opened. Five bidders in total quickly overtook the two advocates in the crowd. Quoted at $1.6-1.7M, and appraised by us at $1.85M, we didn’t expect the bidding to exceed 1.9M by too much. Three were still in the race to $2M.

Two men fought it out to $2.1M; the winning bidder throwing out $5,000 bids like he was buying mixed lollies.

If nothing else, they’d established that a large family home block in Sandringham can carry land values of over $3,600 per square meter.

The rarity of such a block indeed proved to us that scarcity is is valuable, even on the day when the auction clearance rate sat at 48%.