SPINNING AUCTION SUCCESS RATES
Treating the public like dummies.
Article originally published AUGUST 23, 2004 –Reviewed and approved.
By Neil Jenman
In the property world, there’s only a tiny difference between “realty” and “reality”. But in Victoria the gap is widening.
The Real Estate Institute of Victoria (REIV) continues to deny reality with its claim that, “contrary to media reports”, Melbourne’s auction clearance rate is 60%.
It seems that the institute learnt arithmetic at a different school to most of us.
The REIV arrives at a clearance rate of 58.8% for the weekend of 14-15 August by including properties sold by private treaty among claimed auction successes.
Its 206 “sold by auction” properties, out of an offering of 350 homes, includes 65 properties which sold through before the auction or some time after it.
A true analysis of the REIV data shows that 301 homes went to auction and 141 of them sold on auction day – a clearance rate of 46.8%.
Incredibly, it also shows that almost two-thirds of the unsold properties were passed in on a ‘vendor bid’, where the top bid was made by the auctioneer.
The REIV knows that auctions usually fail to deliver good results – and it’s worried. It says: “Auction clearance rates should not be used as the sole guide of market activity as they represent only a small proportion of sales.”
This is a startling departure from the usual relentless promotion of auctions as the best-selling method and prime barometer of the market.
The institute knows that the public is increasingly turning off auctions. The number of homes offered at auction is down 40% on a year ago.
The REIV continues to downplay the impact of the declining market, claiming that its figures “confirm a soft landing”. It speaks of a “price correction”, which is agent-speak for falling prices. Melbourne’s median price fell again in the June quarter, following an earlier “correction” in the March quarter.
Melbourne’s median sale price was $370,000 six months ago and is now $357,000. That’s a $13,000 loss for the average homeowner.
Despite the institute’s contention that there’s “no economic reason for significant price declines”, the combination of falling sales volumes (down 30% on last year), failing auctions and buyer reticence is likely to keep prices on a downward trend.
The use of misinformation and spin is treating consumers like dummies.
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