The importance of gauging stock levels

Property prices are impacted by many things, but the simplest of all drivers is supply and demand.

Our stock levels have been particularly high so far for 2018 when compared to the stock levels of previous years and this could be attributed to several things; vendors capitalising on first home buyer demand, lending scrutiny precluding home upgrade borrowings and causing owners to sell off investments, or owners taking the opportunity to upgrade their home now that the pace of growth in the market has stablised somewhat. 

It makes sense for our auction clearance rates to drop when the stock levels have increased drastically, and our pre-easter weekend with a bumper 2200 auctions demonstrated just that; a decline in our clearance rate.

It takes time for buyers to mop up a significant number of sales in such a tight period.

For many buyers who did either buy at auction over the two weekends wedged between Labour Day long weekend and Easter, or moreso for those who purchased after auction, some would have enjoyed some good buys. Not such good news for vendors who accepted prices below their expectations, but a motivated seller doesn’t always have a lot of choice when it comes to riding out a market to wait for a stronger sale price.

What is interesting is the relative clearance rates between suburbs when correlated with the number of listings of particular dwelling types and their respective sale prices.

Aside from searching with our client’s search-criteria, we pay careful attention to what we term “micro-gluts”. For us, this term relates to a given dwelling type in a particular suburb (or spread of adjoining suburbs) that is over-represented on the market at any one time.

For example, during 2016 and 2017 one of the star performer suburbs was Brunswick (and surrounding Brunswick East, West and Coburg). Period cottages and terraces were growing at a rapid rate and it felt like every Saturday underpinned a new sales record.

Auctions were frantic and well attended, competing advocates were face to face at many, and emotional home buyers seemed to be using all of their might to secure their dream. Period Victorians in Brunswick no longer sat in the sub-million dollar club and $1.1M became the new ‘norm’.

Fast forward to Autumn 2018 and Brunswick terraces and Victorians were over-represented on the market. 

Not only are the buying conditions softer for buyers, but the chances of a pre-auction offer being supported by the agent and vendor are higher (for those campaigns that aren’t legally obliged to sell via public auction). 

Prices are termed by agents as “patchy” when micro-gluts strike.

Some weekends when stock numbers for a given genre of property are low it is not surprising to see a sale price “fly”, but when stock numbers are elevated, buyers are diluted, bidder numbers are reduced and prices will usually reflect this.

Now, like never before is a good time for buyers to carefully monitor auction results, passed-in properties and post-auction sale opportunities.

Gone are the days where good properties are guaranteed to sell under the hammer and compromised properties pass in. Good properties can pass in too, and it would be foolish for any committed buyer to dismiss a passed in sale; even a property that has languished on the market and drifted down to page eight on the search engine.

We never assume that the new listings are the only ones to catch.

 

Our searches go to the very last page of the search engine for good reason.

Pics: Max and I above at a Brunswick auction in Feb that could arguably have faced higher competitive bidder numbers had it sold at the same time in 2017. Three bidders put their hands up (including me), however typical bidder numbers a year prior would have exceeded six for this type of dwelling and locale.

Art by Kate Bond. A gorgeous Victorian we secured off market for a special couple who had lost out at auction multiple times before they finally got their dream.