Auction Clearance Rates Are Bullshit.
In September 2018, auction clearance rates dropped below 50 per cent in Sydney. But while this indicates a poor result, it doesn’t tell the whole story.
In fact, Nathan thinks auction clearance rates are bullshit.
Volume has shrunk.
It’s one thing to look at clearance rates and say that more properties are passing at auction now than they were a few months ago. But what about the volume of properties actually going to auction?
Nathan says, he has seen a lot of agents convince vendors to sell prior to auction to avoid them passing in on the day. Had they not sold prior, these properties may have affected the auction clearance rate either way.
Less properties are being auctioned.
There are plenty of properties being sold by private treaty instead of being auctioned. These sales don’t get accounted for in the auction clearance rates.
Why real life experience is better than following statistics.
While Nathan looks at statistics for entertainment purposes, he doesn’t rely on them as fact.
He relies on his own, real-world experience in the property market. He speaks with thousands of real estate agents every week about the sorts of things most wouldn’t talk freely about.
One agent recently told him the enquiry rates for properties had reached a dismal low. These sorts of interactions paint a more realistic picture than auction clearance rates do.
Plus, statistics often don’t reveal market trends until 6 or 9 months after they have started.
What is happening in the market?
Some useful indicators of market performance include:
- Fewer ‘under contract’ signs on realestate.com.au
- Price reductions happening regularly
- Selling agents actually returning phone calls and pushing for a sale.
Nathan’s kind of market.
While a lot of people buy when the market is booming, then get scared when the market subsides, Nathan sees things differently.
This kind of market is his favourite – in fact, he prefers it to a boom market.
He loves to pick up bargains, and this market is perfect for doing that. It is an acquisition market – one where you should take advantage of the excellent bargaining opportunities that are out there.
Having said that, not everyone should be buying at the moment. Some should be selling and some should have sold 12 months ago. Whatever your situation, Binvested can try to help you navigate the current market so that you come out on top again.
What do you think you should be doing now?