Nicola Powell: Is an auction the right option?

A key decision sellers initially face is whether to sell by auction or private treaty. Auctions are perceived as a fast and furious path to sale but the speed and success largely depends on market conditions and location.

Selling at auction was a popular and successful method of sale during 2016 with one in three homes sold under the hammer. Compared to five years ago, only one in five homes sold at auction. This statistic rivals our Sydney and Melbourne counterparts, where selling by auction is ingrained in the property market.

Statistics surrounding auctions tend to reflect buyer sentiment and a good indicator of market conditions. Last year the local market was fraught with competition, particularly for quality detached family homes, sparse stock and strong demand that put pressure on our housing sector. Under such market conditions it is anticipated auction clearance rates will be high – translating into more homes selling at auction. The low interest rate environment sparked activity, with buyers seizing the opportunity of upsizing. It is this sector that helped to drive our market forward.

Auction success wildly varies depending upon location. Understanding the market climate of your area is a key consideration for sellers. The Inner South and Woden Valley illustrates a sellers’ market as more homes sold at auction than private treaty – 63 per cent, to be precise. Not far behind with 59 per cent of homes selling under the hammer in the Inner North and Weston Creek.

The strength of the auction market within the inner districts of Canberra highlights the intense demand for family homes. It is this demand and lack of supply that has fuelled competition between buyers at auction and house price growth.

In Belconnen almost half of the homes sold at auction last year. Gungahlin, Tuggeranong and Greater Queanbeyan had the lowest results with 22 per cent, 19 per cent and 17 per cent of homes sold at auction.

There are many benefits of selling by auction but some vendors prefer setting a price without a deadline, taking away certain elements of pressure from the selling process. Knowing the current market climate is vital when deciding to sell by auction or private treaty.

Nicola Powell is a property expert for Allhomes. Twitter: @DocNicolaPowell