I've read feedback about the auction results, claiming that this proves the Australian property bubble is about to burst.. I totally disagree. The only thing it proves is that the format of the Block doesn't work as well as it did in Sydney (given that Sydney property is, was, and always will be hotter than Melbourne), and the fact that the properties were houses and not apartments meant that there was a much narrower market.
I've been to tonnes of auctions over the years, have bought a number of properties, and always keep an eye on the market, and one thing I've noticed from all the auctions I have attended, is that more often than not, properties get passed in at auctions - not because people can't afford to purchase the property for the reserve price, but because people are for the most part, averse to purchasing under auction conditions. Auction conditions suck balls - who wants to waive their cooling off period, waive their chance at negotiating directly with the vendor, and waive their chance at getting building & pest inspection plus strata report before committing to a 10% deposit? You'd be mad. The ones that do get sold are the super hot properties that everyone wants so badly, that they have done all their pre-auction checks (which they would have had to pay for) because they can't risk the property selling to someone else. And those properties need to be really special. And selling in a strong buyers' market.
So many of the auctions I've been to have been packed full of looky-loos or serious buyers who are just busting for the property to be passed in, in order to make an offer post-auction (in fact, this is the only reason I attend auctions - to see what happens to the property; I would never actually consider buying at an auction, despite having registered as a bidder numerous times).
As for falling property prices, well yes, they seem to be down right now - but that is expected, given that its winter, the worst time to sell or buy property, and given current economic conditions, which are not looking good at all. Property prices fluctuate all the time, but over the long term, they can't go down, because demand will always exceed supply, especially in high density areas like the CBD, or popular beach/coastal areas. I do believe prices are going down, or as the graph below shows, the growth rate is going down (that isn't to say that prices themselves in Sydney are falling, just not growing as strongly as in previous quarters), but unless you're someone who buys and sells property on a regular basis, this is nothing to be concerned about. So thats my 2 cents on the Block outcome and the current property market. Over & Out.
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