Low clearance rates present opportunity

by Rebecca Pike30 Oct 2018

A buyer’s advocate as seen on TV series The Block said he has seen auctions with only the auctioneer in attendance, demonstrating a lack of competition, but also a great opportunity for buyers.

Auction clearance rates released by CoreLogic for last week look once again to remain below 50%, despite the highest number of homes taken to auction since March.

Out of the 2,919 auctions across the country’s capital cities, Melbourne saw the highest number of properties as the state prepares for the Melbourne Cup slowdown.

Preliminary results show a combined clearance rate of 50.9%, but experts are expecting this to drop to below 50% for the fifth consecutive week.

For Melbourne, preliminary results show a clearance rate of 49.8%, up from a low of 45.7% the week before.

The dropping figures did not put a dampener on one of the most high-profile Melbourne auctions of the week, however.

Despite concerns the property market would affect it, all apartments were sold in the finale of TV series The Block on Sunday night.

But reflective of what auctions are seeing across the country at the moment, many of them sold for less than expected.

Buyer’s advocate Greville Pabst, from PropertyDuo, has been a regular face on eight seasons of the show, providing advice and bidding on behalf of clients in the final shows.

While he was prepared to bid over $3million for each penthouse apartment, he produced winning bids of $2.8m and $2.9m.

Speaking to Australian Broker, Pabst said the “bargain” came from a lack of competition, which is being seen across auctions everywhere at the moment.

Although he was “surprised” the apartments did not sell for more, he said this environment provides a great opportunity for buyers.

They can use the lack of competition to their advantage and “negotiate harder”.

Pabst added, “I have been to auctions where the auctioneer is the only one there, so this is a perfect time for buyers to negotiate hard.

“Like I stood up at The Block auction and negotiated hard. I didn’t have too many people bidding with me so I put in a £1000 bid or a $2000 bid, I wasn’t going to put in money unnecessarily and in these scenarios we can get a very good result because you can negotiate harder in this market.”

Speaking to the property market at the moment, Pabst said it was not a problem with property.

He added, “It demonstrates that good property will always sell in any market. In a very good market these penthouses would have sold anywhere between $3.2m and $3.5m. We got a bargain at $2.8m and $2.9m, but that’s the market.

“We don’t have a property problem. We have a credit problem. That’s the issue.

“I’ve got no shortage of people that want to buy property, it’s just at the moment it’s very hard for them to get a loan so that’s the issue right not, it’s not property. The fundamentals of property are as strong as ever.”