Is it a good time to buy?
The lower auction clearance rates in mid 2022 are a good barometer of market sentiment and direction, but don’t necessarily reflect an equal shift in market values.
They also speak more to the housing market than apartments. In mid July 2022 in Melbourne and Sydney, apartments only represented 21% and 28% respectively of all auctions.
Research by CoreLogic this week show Auction Clearance rates fell in July 2022 by around 25% in Melbourne and Sydney compared to the same time last year. A similar pattern is reflected around the country. In that week auction volumes fell in Melbourne from 967 to 656 year on year.
At the risk of stating the obvious, if a property does not sell at auction, it simply means the owners expectation of value is above the buyers markets expectation. But thinking this through further, who is right and how do we know where the true value is? This article may help.
Markets run on fear or sentiment. Fear of paying too much. Fear of missing out. Fear of buying a bad or wrong property. Buying in a falling market has been likened to catching a falling knife. Buyers get skittish and think “why would I buy today if it is going to be cheaper tomorrow?” Until they start missing property they keep waiting.
The good news for apartment owners is that market values have remained relatively stable through these cycles. While inner city apartments didn’t enjoy the same uptick in value as houses did over the last 2 years they have not reduced in value much in the latest softening.
So yes, it is a good time to buy. But more so because buyers have more choice. More time to think. Interest rates are rising but are still relatively low and are forecast to peak in early 2023. The current market conditions also mean sellers need to ensure their marketing and presentation is first class to catch the eye of patient buyers.