The auction market is scorching right now
The market is certainly heating up, and I’ve got a story for you here of an investor who made two mill in two years off a single property.
But things are certainly heating up. The auction clearance rate for the weekend just gone came in at just under 80%. That’s booming:
Nearly eight out of 10 Sydney homes put up for auction at the weekend sold, the strongest result in 19 months, as buyers shrugged off the prospect of another interest rate increase on Tuesday, preliminary auction numbers from CoreLogic show.
Early auction results also show 77.2 per cent were cleared across the combined capital cities, the third consecutive week of robust increases, reflecting the solid house price increases during May.
Things are certainly movement, but it’s still a puzzle why more sellers aren’t coming to market, and why there’s such a shortage of stock available on the market.
Tim Lawless says it’s a ‘conundrum’:
“Clearance rates are clearly building some positive momentum on lower auction volumes, and it looks like demand is holding,” said Tim Lawless, CoreLogic research director.
“Selling conditions are getting better, but the number of auctions is well below a year ago. At a time when selling conditions are so strong, we’re simply not seeing home owners who are thinking about selling taking advantage of it. It’s a real conundrum.”
Yeah, maybe. If I didn’t have to sell right now I don’t know that I would be. The market is heating up. Why not wait a few more months and bank a bit extra for your trouble?
But with construction costs continuing to rise, plug-and-play properties continue to do well.
Like this one, that came in $400K over reserve and smashed the suburb record over the weekend:
Home buyers continued to flock to larger homes, such as the fully renovated four-bedroom terrace on just a 203-square-metre lot at 32 Malcolm Street, Erskineville, in Sydney’s inner west.
The house was sold under the hammer for $4.2 million, representing $400,000 above reserve and smashing the suburb’s existing record of $3.7 million.
Shaun Stoker from Ray White Surry Hills, who marketed the property, said the buyers were a young couple from the eastern suburbs.
“The market is super strong due to tight stock levels, particularly with properties where the work has already been done to a high quality like this,” Mr Stoker said.
The vendors bought the house unrenovated in March 2021 for $2.07 million. Not including renovation and other costs, the sale price represented a $2.13 million uplift, or 103 per cent.
Now obviously there’s reno costs involved there, but it’s hard to imagine they’d be more than a million right? At the extreme.
But even if they were that much, would you turn your nose up at making $1m in two years?
That’s still a pretty impressive return on your investment.
And show me another asset class offering returns like that.