South Australia experiences house auction boom with dozens selling for far beyond reserve price

A lack of supply and extreme demand is driving house auction prices through the roof across the state. See our list of properties sold above reserve.

South Australia’s auction market is on fire, with many sellers bagging more than $100,000 above their reserve price under the hammer.

A lack of supply and “panic buying” among buyers – fearful that they may not find another suitable home – is driving up auction prices across the state.

However, experts have warned this boom will not last forever and warned of the potential effects when interest rates rise for those who may have stretched themselves too thin and taken on an ambitious mortgage.

Latest CoreLogic data shows Adelaide’s clearance rate sits at 80.4 per cent, with 100 properties scheduled to have been auctioned across SA this week.

37 Dutton Tce, Medindie – one of many houses auctioned in the past month. Picture: Clique Creative.

Harcourts chief executive SA/NT Gregg Toyama said the market was the “strongest I have seen in my 30 years in real estate in SA”.

“Auction prices are being driven by strong buyer demand across the board by people who have missed out on a property and are prepared to pay a premium to secure a property in this current market,” he said.

Ouwens Casserly Real Estate managing director Alex Ouwens said interest in the market was “phenomenal”.

“We’re seeing properties sell for up to 20 per cent more than expected, with high numbers of registered bidders,” he said.

“It is a sellers’ market … and lots of buyers are looking for the right property.”

Ray White chief auctioneer John Morris said a fear of missing out was driving bids at auction.

“For the first time in my career, I am receiving more bids after having reached reserve than I am beforehand,” he said.

“Throughout February, we averaged eight registered bidders per auction within the Ray White group, and only 2.9 per cent of our auctions had no bidding, resulting in an 83 per cent clearance rate on the day.”

Commissioner for Consumer Affairs Dini Soulio said that, despite properties achieving high prices, underquoting did not appear to be an issue.

“For the most part, real estate agents selling properties either via auction or private treaty understand their responsibilities and do the right thing,” he said.

“However, there are those who – either intentionally or not – engage in underquoting.

“In the past financial year, seven instances of underquoting resulted in written warnings to real estate agents. Given current market conditions, it can often be difficult to distinguish between cases of genuine underquoting and strong interest in a property.”

Xiu Peng sold her Linden Park home for almost $300,000 over the advertised price. Picture: Keryn Stevens

Real Estate Institute of South Australia chief executive Barry Money said the market would likely turn in coming months.

He said any rise in interest rates would also have a dampening effect on the market – potentially causing financial hardship for those who had overspent to secure their dream home.

“My advice to homeowners is to pay back your mortgage as quickly as possible – put extra money into it so that if there is a correction, you’ll be on the front foot,” he said.

“There is certainly a component of panic buying, but we are seeing a component of considered buying.

“People haven’t travelled or spent as much of their discretionary income on things they would usually do so they have some more cash up their sleeve.”

Westpac’s latest Home Selling Trends report, released today, reflects this fear of missing out, with nearly half (47 per cent) of the SA respondents saying they are ready to sell, but are holding off listing their property, with 71 per saying they are concerned they will not be able to find a new home.

GP Xiu Peng, 58, recently sold her 10 Hughes St, Linden Park, home through Ouwens Casserly Real Estate for $1.75m – nearly $300,000 more than the $1.48m price guide.

“I never expected to get a price like this – the highest offer I got before auction was $120,000 less than what I sold it for,” Dr Peng said.