Under-bidders who’ve missed out at fiercely competitive December auctions are set to drive the property market in the first half of 2021, with their desperation to buy a home exacerbated by the fear of future rising prices and COVID-19 anxiety.
Large crowds at many of the auctions around Australia mean many hopeful buyers are sent away empty handed, and these “wounded under-bidders” are returning to auctions in later weeks even more determined to bid high.
“We had 16 people bidding on a house in North Epping which went for about $300,000 above the $1.1 million reserve, so that meant 15 people were disappointed,” said Catherine Murphy, of The Agency Epping, in Sydney.
“One of them came back to say that every single week that goes by, property is becoming more expensive, and everything that’s at entry level is going a little bit mad. I think people think they’re going to be paying even more after Christmas which is making them even keener and I think they may be right that prices will continue to rise.”
In Melbourne, where buyer advocate Mal James said he coined the term “wounded under-bidder”, there are some auctions turning “volcanic’ with several registered bidders jostling to take the prize each time.
Prices are rising as a result of more demand than supply, and those under-bidders are pushing up their limits in the hope of being luckier next time.
“When people feel wounded, demand rises more quickly because people are more hurt by their lack of success,” Mr James said. “This is for the people who want to be owner-occupiers; the investors just get dejected and withdraw more often as they didn’t have that emotional attachment to property.
“But for the others, buying property isn’t a choice, it’s a need. They don’t want to go home and tell their spouse they’ve not managed to buy and they’re still homeless, so they try even harder. And, with the market so strong at the moment, prices just rise.”
It’s not just the nervousness about price rises and the fear of missing out that are stoking the determination to buy sooner. Clinical psychologist Amanda Gordon says she’s noticed a pervading air of helplessness among many people at the moment caused by the pandemic.
“People feel they have no sense of control in relation to COVID-19, but they think the one thing they should be able to control is the place where they live,” said Ms Gordon, of Armchair Psychology. “They really want somewhere they can feel safe and snug and where the virus can’t get them.
“So, we’re seeing this level of anxiety rise even higher among those who miss out on auctions and we can see it pushing them further to offer more on a property. Their determination to buy is often unrelated to a particular home, but is a result more of this fear interfering with their sense of security.”
Ray White chair Brian White says he’s seeing this in all the capital cities and the regional areas. The longing for a property is often a result of a heightened feeling of a need for security and, with interest rates historically low and likely to remain so, demand is surging well ahead of supply.
“I’ve been in this business a long time, and I’ve never seen it like this before,” said Mr White. “It’s a career first for me, and now I think we all feel confident the market will continue like this for some time.
“The strength of demand for property in the run-up to Christmas this year [was] surprising. We’re holding auctions till the last minute and results are amazing, with so much competitive bidding and prices often going over the reserves as a result, boosted too by the availability of online bidding.”
COVID-19 is spurring on that competition between the under-bidders in another way, too. People do have some spare cash as they can’t travel, believes Sarah Hackett, of Place Estate Agents Bulimba, Brisbane, and without the distraction of holidays, they’re putting more of their savings towards finding a home.
“They’ll miss out one week on a property and then come back the next more prepared to meet sellers’ expectations,” she said. “There’s such a lack of supply, too, and with Brisbane more affordable than Sydney or Melbourne, we’re also attracting buyers from interstate and expats.
“That makes it much harder for under-bidders to be successful for the next time, especially now we have such big crowds – of 14 to 20 registered bidders – at each auction.”
Article Source: www.domain.com.au