Many of the group of underbidders who repeatedly missed out at auctions had been trying to buy since last year.
Exhausted by the purchasing hunt and sick of being outbid by others, along with a fear of future rising prices and COVID-19 anxiety, they hit the auction circuit hard during the first quarter of 2021 and became a key driver behind some of the hotly contested auctions that saw prices pushed way above reserve.
But agents and experts say many of those buyers have finally purchased and left the market, leaving in their place buyers who are far more prepared and sticking to their budgets.
That means fewer runaway results, and a more stable — but still very strong — auction market.
“The market is subtly changing right now,” buyers advocate Cate Bakos said. “Fewer wounded underbidders is why the market feels like it’s gone from white-hot to red-hot recently.”
Belle Property Strathfield principal Norman So said Sydney buyers were going to auctions with set limits on what they would spend, and sticking to them, rather than getting caught up in the emotion of the sale.
Some were borrowing enough to have some wiggle room when making bids at auction, he said, adding that buyers understood prices were much higher than they were six months ago and were preparing themselves accordingly. Buyers who were more levelled and prepared were helping to stabilise the market, he said.
“We don’t have the momentum from January and March [in price rises], that’s gone now, but there is an equilibrium and I’m kind of happy because I can predict what a house price will actually be.”
In Melbourne, wounded underbidders have also successfully bought at auction, making way for buyers who were not willing to pay too much.
Marshall White Stonnington director and auctioneer John Bongiorno said bidders had become much more measured in their approach, especially over the past few weeks.
“Even the underbidders [at the most recent auctions], even if they did miss out, they’re being more measured in line with the market,” Mr Bongiorno said. “Common sense has had to prevail.”
He said although the market was definitely still strong, vendors were now having to rethink their price guides and reserves so as to not overprice their homes.
“I think the lesson for vendors, moving forward, is to not get carried away with your price expectations,” Mr Bongiorno said. “The same goes for buyers.”
Ms Bakos said there were still some desperate buyers creating competition and higher sales prices in Sydney and Melbourne, but they were mainly buyers who were going to run out of time with loan pre-approvals, or those in desperate need of a home as their family grew.
“They’re still stretching their budgets for A-grade properties because the market is really strong there,” she said. “Some have a firm strategy, but some still have FOMO [fear of missing out] and go hard.”
Unlike Sydney and Melbourne, Brisbane is still overflowing with wounded underbidders due to a severe shortage of stock that shows no signs of abating.
Harcourts Property Centre auctioneer Patrick Ivey said people were holding onto their homes and renovating rather than selling.
“No-one wants to move at the moment,” Mr Ivey said. “I’m getting lots of calls from buyers asking if I have off-market or pre-market sales and we just don’t.”
The intense competition, also further fuelled by a spike in interstate buyers, was seeing sale prices soar above their auction reserves and setting price expectations at record high levels, he said.
Buyers have now started making offers prior to auction, which has caused the average days on market before a sale under the hammer to fall from 28 days to between 14 and 21, Mr Ivey said.
“Family homes on a big block with three bedrooms and two bathrooms are selling really well,” he said. “Buyers don’t care if there’s only one living area, they just want the big block of land.”