27 September 2023

Under the hammer: How social distancing is changing real estate

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Melissa Heagney* says with auction withdrawals at record levels, private treaty has become the new favourite way to sell property.

The number of properties being withdrawn from auctions is at levels never seen before as the effects of coronavirus-related restrictions play out across the country.

New data from Domain showed the number of properties withdrawn from auction weighed heavily on the clearance rate, with more properties being sold prior to auction than under the virtual hammer.

It’s important to note that rather than withdrawing from the market altogether, sellers are simply changing their method of sale — of the 2,723 auctions originally scheduled on 28 March, a whopping 54.7 per cent were changed to private treaty.

Prior to the new restrictions on public auctions, Sydney had 1,058 auctions scheduled.

Its preliminary clearance rate was 37.3 per cent, from 394 reported results and 547 withdrawals.

Melbourne had 1,400 auctions scheduled with its preliminary clearance rate sitting at 35.3 per cent, from 470 reported results and 807 withdrawals.

Domain senior research analyst Dr Nicola Powell said withdrawals were at levels never before seen as people become far more cautious during the pandemic.

Melbourne’s withdrawal rate was just 6 per cent in February and Sydney’s 11 per cent.

Online auctions were more difficult under the circumstances, as people worried about their job security and having the money to buy a home, she said.

But Dr Powell said there were many positives people could take from online auctions, including the fact they allowed for more research to be done from the comfort of home.

“I think the market would have eventually adopted online auctions in the next five to 10 years because everything is being done online nowadays,” Dr Powell said.

“It’s taken a pandemic for us to adopt this method of online sales.

“Especially South East Queensland, which has a lot of interstate buyers.”

“It will break down the barriers for people to see the auctions online, rather than having to be there in person.”

While overall clearance rates were well down, some regions fared better than others.

Sydney’s Lower North Shore and Waverton, Wollstonecraft, Mosman and Cremorne enjoyed the highest clearance rate for the weekend of 28–29 March, with 55.8 per cent of properties selling.

However, this included 52.9 per cent of homes selling prior to auction, and only 2.9 per cent selling under the hammer.

A further 41.3 per cent were withdrawn from auction.

The Northern Beaches and suburbs including Avalon, Newport and Manly had the next highest clearance rate with 48.1 per cent.

All of those properties, however, sold prior to the scheduled auction, with none selling at virtual auctions.

A further 49 per cent were withdrawn from sale.

In Melbourne, the north east region and suburbs including Mernda, South Morang and Mill Park recorded the highest clearance rate of 45.1 per cent, with 43.1 per cent of those selling prior to auction.

Only 2 per cent sold in a virtual auction while more than half were withdrawn from scheduled auctions.

The next best was the inner south’s Brighton, Beaumaris and Sandringham, which had a clearance rate of 42.4 per cent, with 40.8 per cent of those sales prior to auction and 1.7 per cent sold via online auctions.

A further 56.9 per cent were withdrawn from auction.

Despite few of the auctions going ahead, there were still some good results, auctioneers reported.

In Melbourne, a stunning home built in Ripponlea in 1917 — two years prior to the Spanish influenza outbreak which saw the state shut down — was auctioned online.

Marshall White Stonnington director and auctioneer John Bongiorno said it was the first video auction he had undertaken in 40 years in the business.

“It’s amazing the way that everybody’s adopted and adjusted to online auctions,” Mr Bongiorno said.

“Things are actually quite busy at the moment because people are rushing to do deals — vendors and buyers are rushing.”

Marshall White has changed many of its previously public auctions to expressions of interest sales, although properties with more than one interested buyer would be auctioned online.

It was a similar story in Sydney, where a four-bedroom home in Kellyville passed in with a bid of $1.175 million before selling for $1.21 million.

Scerri Auctioneers Chris Scerri sold the home on behalf of Sciberras Group Real Estate.

“There’s a trend of properties still coming onto the marketplace,” Mr Scerri said.

“I have booked more online auctions for this weekend.”

* Melissa Heagney is a senior journalist with Domain in Melbourne. She tweets at @heagney_melissa.

This article first appeared at www.domain.com.au.

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