Killer bids and massive budgets

Yesterday was a tough day for buyers in many cities, not just Melbourne. Our preliminary auction clearance rate sat at 90% as at 7pm Saturday; a sure sign that many hearts were broken. By any measure this is a stellar auction clearance rate and indicates a wildly heated market. Historically, Melbourne’s auction clearance rate has generally not exhibited this kind of headiness.

The intriguing thing about yesterday, however was the sheer number of auctions scheduled. March 27th 2021 was termed “Super Saturday”, a popular phrase denoting more than 2000 auctions for the state. Melbourne’s scheduled auction count exceeded 1700 and it was tipped to be the weekend that exhibited a softer auction clearance rate based on the marginal re-levelling of the buyer:seller ratio.

But to our surprise, there was no re-levelling. In fact, buyers were out in force.

The prevalence of pre-auction offers during the week prior was nothing short of astounding. Our own office auction count diminished from nine to just four. Aggressive offers were being made by the day, and buyers who were scrambling to secure property prior to Saturday were initiating boardroom auctions and competitive bidding situations in every suburb.

This chart shows a cross-section of six of the properties we were geared up to pursue for clients.

The three bars represent;

• the top of the agent’s auction price quote range,
• the offer that initiated the property to be declared “on the market, (note: one was sold at public auction), and
• the resultant price

Note: the ‘on the market’ price is not necessarily representative of the vendor’s reserve. In some of these scenarios, the strength of the bid that initiated the pre-auction sale was significantly beyond the vendor’s reserve (or expectation).

Some of these bars align, meaning either;

• the agent’s price range matched the ‘on the market’ price, or
• the ‘on the market’ price was such a strong knock out offer that no other bidders chose to participate in the pre-auction bidding process.

Property 1 was a huge surprise. With an anticipated ‘circa $1.05M outcome based on our analysis, the SMS we received days prior advising an offer of $1.22m had been received was not what we were expecting. Clearly, others felt similarly, because the property was promptly sold for this killer bid price.

Property 2 sold yesterday at auction. It was revered by plenty of first home buyers who loved the idea of four bedrooms in a value-for-money format. This cute character home in Maidstone had been subdivided and had a shared drive and a unit at the rear. Anticipated to sell in the nines, we geared up to bid for our clients but sadly we were unsuccessful. The bidding slowed in the high nines and a first home buyer couple with parents standing with them took the keys at $1.007M.

Property 3 was one that we proudly secured after someone else had triggered a pre-auction offer process. This cutie in an idyllic pocket of Brunswick captured our interest for investor clients and the ‘best and highest‘ process prevailed.

Property 4 in West Footscray was indeed a heartbreaker. This gloriously renovated period home caught more than just our buyer’s eye. After we triggered a pre-auction sale, a killer bid of $1.46M overnight tossed us out of the race. The final price is yet to be disclosed following the boardroom auction; $1.46M was merely the bid that saw us opt out.

Property 5 surprised more than a few. Access to the property had been nothing short of challenging due to the tenancy. Building inspections were problematic to arrange and after a last minute decision to postpone the original auction date from 20th March, the property did not even make it to auction the following week after some flurry on Thursday with early offers forced a boardroom auction on the eve of the new auction date. The bidding increments in the boardroom battle were huge; not at all what we’d expect at a public auction. First home buyers, again battled it out.

Lastly Property 6 was one that attracted multiple buyer’s advocates, and for good reason. This stunningly renovated 3BR family home would have represented a desirable rental, low maintenance issues and solid capital growth for in investor. However, this wasn’t meant to be. Young home owners secured the keys at a boardroom auction.

So what did all of these sales have in common?

These properties were all houses in the $900,000 – $1,500,000 price bracket; a very popular segment in the inner ring.

This heady market is being largely fuelled by record low interest rates, but we also have to credit some of the heightened buying power to a combination of;

• forced savings through COVID lockdowns, (and particularly for the first home buyer contingent, whose borrowing capacity is determined by both servicing and savings,
• heightened consumer confidence,
• Bank of Mum and Dad, and
• A huge dose of FOMO.

It is becoming increasingly difficult to anticipate just how hard buyers are prepared to stretch in their quest for a property. Most results we were privy to exceeded our estimates by a wide margin.

This high volume auction weekend has shone a bright spotlight on the fact that we are experiencing an enormous surge in capital growth within our housing market.