Coronavirus: Sellers warned to avoid property auctions

Buyer demand grinds to a halt as COVID-19 rattles confidence and people shun crowds at auctions.

Dan Sowden calls the bidding at a property in Mudjimba Beach, on Queensland’s Sunshine Coast. The real estate industry fears buyers will shun auctions to avoid contact with other people. Picture: Erle Levey

Sellers have been warned to consider pulling their properties from auctions as clearance rates plummet amid coronavirus fears.

The buyer demand that has propelled the market for the past nine months has ground to a halt as COVID-19 rattles confidence.

The past week produced the weakest auction performance of the year, with the number of successful sales falling to 61.3 per cent, according to property researcher CoreLogic’s preliminary figures.

This number is likely to be revised down within days to finish between 55 per cent and 60 per cent.

SQM Research managing director Louis Christopher said interest rates were likely to fall in the lead-up to Easter as the number of coronavirus cases climbs and lockdowns create more anxiety.

“The best call for sellers right now is to withdraw to their properties,” Mr Christopher said. “We might be going into lockdown soon and I struggle to see how auctions could continue to keep happening.”

The federal government's restrictions on gatherings are likely to see auction attendee figures dwindle.

Real Estate Institute of Australia boss Adrian Kelly predicted the residential auction market would freeze once the existing list of scheduled properties goes under the hammer.

“This is uncharted territory,” Mr Kelly said. “The property market is driven by confidence. Without it, I would think the public auction market would grind to a halt.

“We will probably see a fall in the number of transactions, but I don't see it affecting prices too harshly.”

By Easter the market could enter a hibernation period for weeks, if not months. Similar to what occurs annually over Christmas and New Year, new listings and sales will disappear before bouncing back once the pandemic eases.

“I’m a bit more optimistic that we will get to the other side of case numbers by May. If we do and the number of cases drops off, the market will take off in a massive way with all the stimulus on offer from the government and interest rate drops,” said Mr Christopher.

“People are underestimating the power of that.”