Clearance Falls in Budget Wake 19th May 2014

Courtesy of the team at Jason Andrew

In the wake of the Federal Budget announcement last week, the overall national auction clearance rate almost halved, falling from 64% to just 33% according to the latest finalised data from the Jason Andrew Group. The feeling on the street was somewhat different to the headline results though, with results highly segmented and some above-reserve sales outcomes achieved in certain geographic locations and price segments.

In disappointing news for first home buyers, the First Home Saver Accounts were scrapped under the new budget – the scheme attracted up to 17% interest on deposited funds to help first time buyers save for a deposit. While other policies directly affecting the property market were largely left untouched, the budget did bring significant cuts to education, welfare and health, as well as the introduction of a new high income debt reduction levy. With a reduction of more than $20 billion in Government spending over the next year, analysts are predicting a tightening in the economy.

While it will take some weeks for the effect on the property market to become clear, motivation to act on both sides of the equation appeared dampened last week. While the average number of buyer registrations at auction remained relatively level, the percentage of those actually making a bid fell, indicating potential buyers were adopting a “watch-and-see” approach. Meanwhile, fewer vendors described themselves as highly motivated, and most were unwilling to shift their expectations on price to achieve a sale under the hammer.

Critically, every market offers its own unique opportunity. With effective marketing and a realistic approach to reserve setting, vendors are able to encourage competitive bidding on auction day and achieve the best possible outcome.

All the best