There is Melbourne auction market confusion a week out from new auction rules being in force.
One in eight Victorian homes testing the auction market this weekend will be doing so with their reserve price disclosed, a week before they are required to.
Agents behind the listings have revealed in many cases they were responding to homebuyer confusion, after receiving phone calls asking why reserves hadn’t been disclosed under the new laws — but unaware there was an exemption until October 15 for sellers who had listed their home prior to October 1.
It comes amid early signs Melbourne’s clearance rate is hitting a new slump with barely half of sellers locking in a sale via auction in the past fortnight, despite an early spring rebound that had 55 per cent getting a deal done in the first half of September.
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Auction numbers are also highly suppressed, with the 684 slated for Melbourne this week down from about 1180 a year ago.
The 72 homes with reserves disclosed, collated from realestate.com.au listings late on Thursday when there were 562 auctions still advertised for the week, suggests 12.8 per cent of the state’s sellers were willing to take on the disclosure a week before it becomes mandatory.
It works out to just over one in eight sellers opting to go early.
Under new legislation that took effect earlier this month, but will functionally apply to all auctions from Friday next week, home sellers must disclose their auction reserve seven days prior to any auction or set date sale’s end date.
9/4 Leo Close, Wantirna South, was listed with a reserve price disclosed ahead of its auction as “within the range” of $930,000-$990,000.
Three of the homes disclosing reserves restricted it to being ‘in the range’ of their advertised price, an alternative that was touted by the Real Estate Institute of Victoria before the legislation passed.
REIV president Toby Balazs said he wasn’t surprised to see some level of early adoption, and having heard anecdotally that agents were encountering questions from buyers confused about the rollout of the new rules, he said it could also be a way for them to have won over prospective purchasers.
“Whilst the vast majority don’t feel it’s the best way to run an auction campaign, it is now law … so it makes sense that some vendors and agents are choosing to get ahead of it,” Mr Balazs said.
REIV chief executive Toby Balazs believes the new rules will need to be reviewed in the coming months to ensure they have made an improvement to the market.
He noted that while three vendors had opted to disclose their reserve as within their advertised range rather than a single figure, which had been the preference of the REIV, this would cease next weekend and even if all three sold well — would at best be a consideration for future tweaks to the legislation.
“We have asked and will continue to ask whoever is in government at the end of this year to do a review of these new auction and fixed date sale rules,” Mr Balazs said.
“It will be important to review it to ensure that if it’s not making the Victorian property sector better, that it be revisited, even as early as the autumn selling season.”
33 Flannery Ave, Bundoora, is slated to go under the hammer with its reserve price disclosed at $750,000.
REA Group senior economist Anne Flaherty said while auction numbers were down significantly from last year, there were broader market conditions that would also be influencing this as well as interest rate hikes including one late last month.
Ms Flaherty noted that the timing was not ideal for assessing how the new laws impacted the market as with clearance rates already weak for several months, there were already clear signs sellers were struggling.
The economist said she expected the success of the new laws would take some time to measure, but noted that for those who had embraced them early it was a potential way to stand out.
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