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Weak auction activity has highlighted a lack of momentum in the nation’s property markets but it also points to potential buying opportunities for shrewd investors.
The first official auction figures from Australian Property Monitors this week revealed a slow start for the 2011 property market with buyer confidence clearly weak.<
Just 48 per cent of properties listed for auction in Sydney cleared, compared to 68 per cent for the same weekend last year.
In Brisbane a tiny 24 per cent of properties under the hammer were sold, down from 40 per cent in 2010 and in Melbourne a clearance rate of 61 per cent was achieved, again down on the 75 per cent recorded for the same weekend last year.
These results clearly indicate that buyers are waiting on the sidelines and this is likely to translate into some downward pressure on prices – not great news for those hoping to sell. But for the astute investor, a weaker buyer turnout at auctions spells one thing and that’s better buying.
With fewer buyers vying for properties investors will face less competition, meaning they’ll be better placed to secure properties of interest.
Moreover, smaller numbers of interested parties places less pressure on prices and less chance that properties will sell for over and above reserve prices.
I spoke with Andrew Wilson, chief economist at Australian Property Monitors (APM), and he said investors could expect these market conditions to linger for some time.
“I would expect clearance rates to be down around the 50 per cent mark as they were last week for a little while, until the market recovers,” he said.
While the fundamentals of the market remain strong, Dr Wilson said it could take several months before any real recovery occurs, indicating a decent window of opportunity for investors.
“Certainly for the first months of this year it should definitely be a buyer’s market,” he said.