Auction Clearance Rates

[CHam]

I am frustrated by the ongoing media coverage surrounding decreasing clearance rates for residential property auctions, and the resultant doom and gloom that the market is crashing.

Again in todays Herald Sun an article claims that the residential housing market is in dire straights, because clearance rates in Melbourne were 59% - a level not seen since the GFC.

However, the article also goes on to say that there were twice as many homes up for auction as at this time last year. This means that there are twice as many homes on the market, and more being sold than last year, and therefore there are also more people buying than last year! This however also means buyers have more choice and better bargaining power. Simple supply and demand.

How does this relate to a market that is in trouble? As soon as people realise that they aren't getting the prices they want, they take them off the market, supply dries up, demand increases, prices go up....

Now it will simply depend on how long the general public, with their herd like mentality, take to realise that the market is oversupplied, and now is the wrong time to sell, for the cycle to turn.

 

[simo74]

Again in todays Herald Sun an article claims that the residential housing market is in dire straights, because clearance rates in Melbourne were 59% - a level not seen since the GFC.

However, the article also goes on to say that there were twice as many homes up for auction as at this time last year. This means that there are twice as many homes on the market, and more being sold than last year, and therefore there are also more people buying than last year! This however also means buyers have more choice and better bargaining power. Simple supply and demand.

How does this relate to a market that is in trouble? As soon as people realise that they aren't getting the prices they want, they take them off the market, supply dries up, demand increases, prices go up....

Are you serious? Of course "people" would never lower their prices to meet the market.

 

[CHam]

Are you serious? Of course "people" would never lower their prices to meet the market.

I did not say that people would would not lower prices. I am simply stating that once they figure the market out there won't be as many properties for sale, hence creating more demand. The current selling spree has been created by a combination of recent property price increases and now fear that the market is going to crash (both driven by media).

 

[b simpson]

Get used to the fact the market is going through a correction.

Sometimes the cycle is in your favor, sometimes it's not.

 

[AngelMoo]

I did not say that people would would not lower prices. I am simply stating that once they figure the market out there won't be as many properties for sale, hence creating more demand. The current selling spree has been created by a combination of recent property price increases and now fear that the market is going to crash (both driven by media).

Sounds like a self fulfilling prophecy - media says market is going to crash so people hold off buying, thus causing somewhat of a crash... better not start a media rant