Disclosing the price of auction results the key to boosting market confidence
Agents are being urged to report their results from weekend auctions in a bid to allow both buyers and sellers to acclimatise to the new price landscape.
Now that the price recovery is possibly under way, there is one key to a sustained boost in market confidence.
It is improved sale price transparency after weekend auctions.
Many owner-occupier home buyers and investors are flying blind as Sydney agents fail to report prices of their Saturday auction results.
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Last weekend Sydney scored an impressive 60-plus per cent auction success rate, but 85 of the 600 auction outcomes had no price disclosure.
These included hidden successful under-the-hammer sales, pre-auction sales, along with properties passed in on genuine and vendor bids.
Buyers and sellers need to know where prices currently sit to acclimatise to the new price landscape. We have seen Sydney median prices fall by around 14 per cent from the peak, so the current and prospective market participants need to know where prices are.
The longstanding voluntary reporting methodology ought see more prices being disclosed by estate agents after their auctions.
The neighbours all know the price when they wander along to see the auction drama. But miss the auction, and its means the price can potentially go missing for maybe two or so months until the official settlement.
The nondisclosure rate appears to have risen in tandem with the downturn. Some results are withheld by the vendors and some buyers who just prefer nondisclosure following public auctions. But there are estate agents who have been embarrassed in the falling market because they’ve told their vendor they could get a certain price and failed.
Historically some estate agents have a practice of keeping the sold price off websites, as a means to encourage curious buyers to phone the agent, to start a conversation so they can gain insights into who might next be thinking of listing.
The lack of auction result transparency has a flow-on effect, undermining confidence in the broader sales, valuation and mortgage markets. The auction price disclosure contributes to Australia featuring in the most transparent real estate markets in the world, according to JLL’s City Transparency Report which recently analysed 158 cities.
By country rankings, Australia has been consistently ranked in the top two globally. JLL considered factors such as the availability of market data, governance, transaction processes, property rights and the regulatory and legal environment.
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The JLL Australian chief Stephen Conry noted there was a strong relationship between transparency and cross-border investment attraction.
London tops the ranking with the world’s most transparent real estate market, while Los Angeles, Sydney, San Francisco and New York City round out the top five.
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Auctions are rightly sold to the real estate consumer as a transparent system of sale as each buyer gets to compare their bid to those of opposing bidders. Of course, there are also many auctions not being reported at all, distorting clearance rates that are used by buyers and sellers to gauge market strength and momentum.
These agents are dragging out the decline. After all, knowledge of pricing is empowering for buyers and sellers.
Originally published as Disclosing the price of auction results the key to boosting market confidence