Will agents adjust price guides ahead of buoyant Sydney spring auction season?
GUEST OBSERVATION
As has been widely reported, the Sydney auction market continued its strong performance throughout August.
Clearance rates have remained strong with consistent 80% plus weekly results.
In addition to strong auction results we have also seen a continuation in the high variance between real estate agents’ auction price guides and the final sales result.
In July we reported that agents were underquoting on average by 13%, according to the auctions we have monitored over the year to date.
For the month of August IPS observed a similar level of underquoting and recorded an average variance of 17.6% (however this was skewed upwards by a few out of line sales).
This month IPS observed 19 auctions, all of which sold for more than the agents indicative guide.
The results ranged from 2.78% to 45% out and covered locations from Queens Park to Lakemba.
One doesn’t have to look far to obtain hard and fast examples of this underquoting.
While the variance is up on last month’s results, we are confident that this was skewed by a few sales that were included in the data.
The recent sale of several Department of Housing properties in Sydney’s Millers Point have raised a number of eyebrows because their sales result was so far out of line with their sales agents’ expectations.
Marketed by different sales agents both properties sold for significantly more than the official price guide quoted.
119 Kent Street sold for $1,911,000 and 29 Lower Fort Street for $2,560,000, 35.5% and 45% more than their official guides respectively.
Another notable sale was the freestanding house at 53 Alt Street, Queens Park. It sold for $2.51 million after a revised guide of $2.2 million. It was originally $2 million plus earlier in the campaign.
It’s not just renovation opportunities that are exceeding guides; this beautifully presented warehouse conversion at 13/92 Shepherd Street in inner city Chippendale sold for $1,426,000 – a whopping $426,000, or 31.5%, over the guide.
Our prediction is, that with continued record low interest rates and pent up buyer demand off the back of slightly subdued winter stock levels, we’ll see a buoyant spring selling season ahead.
It will be interesting to see which direction agent price guides trend as the public becomes increasingly wise to this practice.
Ramon Mitchell is the general manager of Intelligent Property Services, a specialist residential property advisory firm with buyers advocacy division.
