The housing auction market has undergone a transformation in response to the challenges of the pandemic, with trends such as online bidding and via cryptocurrency surfacing.
Apollo Auctions Director Justin Nickerson said the pandemic has forced the industry to move quickly away from traditional auction campaigns.
“Before the pandemic, online or in-room auctions weren’t available to agents and sellers, but usually traditional on-site auctions were the most popular,” he said.
“But when large segments of the population were locked up but still eager to buy and sell real estate, the auction industry had to evolve to make sure we gave them the opportunity to do this.”
This was reflected in strong uptake in auctions, with clearance rates remaining in the 70% to 80% range during the lockdowns in some markets in Sydney and Melbourne.
Auctions continue to evolve after the pandemic
Mr Nickerson said auctions are unlikely to remain predominantly in place once all pandemic-related restrictions end.
“In areas that weren’t often shut down, we’ve been holding what I would call ‘hybrid auctions’ that give buyers the opportunity to communicate in the way that suits them best,” he said.
“What I mean is that some bidders can attend the in-room auction, others can bid over the phone, and some can decide to submit their bids online while watching the auction livestream – this level of choice was never the norm.” before, but I believe it will be from now on.”
Nickerson said many sellers and agents are likely to benefit from in-room auctions in the future.
“One of the most important things I think they’ve learned is that in the rooms it eliminates the chance of being rained or drowned out by traffic noise or the party next door, while still getting an excellent result in a lake controlled environment,” he said.
Cryptocurrency Breaks into Auctions
Lloyds Auctions recently hosted an online first auction of residential and commercial properties on its platform where bidders can bid using cryptocurrency
Lee Hames, CFO of Lloyds Auctioneers and Valuers, said the platform works with a combination of live on-site bidding, online bidding, telephone bidding and out-of-office bidding.
“Come on auction day at the end of this month and it will be streamed LIVE on our website and Facebook page for viewers across the country to watch,” he told Your Investment Property.
“People can bid with cryptocurrency or Australian dollars and exchange rates will be converted at the time the bid is made.”
The property (pictured) up for auction is located on a 620 sqm lot at 51 Monaco St, Broadbeach. At the time of writing, the online auction is closed. It will reopen by the end of the month.
Mr Hames said the use of cryptocurrency as a payment method is increasingly being used for purchases as trust around the technology grows stronger.
“Cryptocurrency is relatively new here in Australia, but the response we’ve had in recent months suggests Australians are adopting this new technology,” he said.
“This opens up our platform to a whole new audience that might not otherwise have been interested in buying real estate.”
Lloyds Auctions is one of the few groups that has adopted cryptocurrency as a means of payment.
“Since then, we have found a huge demand for cryptocurrency attracting bidders from investors and high net worth individuals to moms and dads bidding on your everyday consumer goods,” he said.
Auction markets show resilience
According to CoreLogic’s Quarterly Auction Market Review, auction markets in the capital remained stable for the three months to September.
During the period, the combined capitals recorded a 71.7% cleanup rate, slightly lower than the 75.7% in June, but a strong improvement from the same period last year, when 59.2% was recorded.
The quarter covers the period when Sydney, Melbourne and Canberra entered their respective extended lockdowns.
The lockdowns resulted in a take-up rate of 18.3% across Australia, up from 7.3% in the previous quarter.
The biggest hit was Melbourne, which reported a quarterly clearance rate of 62.8%. The city reached a peak admission rate of 61.6% in the week ending August 29.
Sydney, on the other hand, held up fairly well during the quarter, with a clearance rate of 78.6%.
CoreLogic’s research director, Tim Lawless, said strong sales conditions in Sydney continued despite the lockdowns.
“The difference between Sydney and Melbourne clearance rates over the September quarter highlights the importance both buyers and sellers place on being able to physically inspect a property,” said Mr Lawless.
When physical inspections for Melbourne were reinstated, the average final approval rate bounced back by over 80%.
Auctions are gaining popularity in other cities
Another interesting trend during the September quarter was the increasing popularity of auctions as a way to sell a home.
Eliza Owen, CoreLogic’s head of research, said this was evident in Brisbane and Adelaide, both of which showed consistent home value growth in the September quarter.
“Not only were volumes in Brisbane and Adelaide higher, but clearance rates in the September quarter were well above historical averages, which may bolster auctions as a more popular sales method in these cities due to future housing market rebounds,” she said.
Both Adelaide and Brisbane hosted auctions significantly above their decade averages.
In the week ending Oct. 17, auctions in the capital reported their fourth busiest week so far this year, with 2,920 homes going under the hammer. Of the total auctions, 81.8% went through to a sale.
Melbourne led the pack in terms of activity after hosting 1,478 auctions this weekend.
On the other hand, Canberra reported the highest clearance rate of 90.7%, albeit only for a smaller number of auctions with 123.
Header photo by DrawKit Illustrations on Unsplash.