FOOP hurts property market



Fear of overpaying, coupled with vendors who might have unrealistic price expectations, are starting to affect the auction markets, according to a recent report.

However, overall clearance rates remained firm in July and more than 50% of properties sold under the hammer, according to the latest Apollo Auctions Auction Report.

The auction group said during July, a new breed of bidders appeared at auctions in capital cities across Australia with FOOP (Fear of Overpaying) resulting in low-ball offers that are not in-line with current market conditions.

“While Sydney’s auction clearance rates improved slightly from last month – up to 45.3% – our auctioneers said that ‘FOOP’ bidders were reasonably common,” said Apollo Auctions director Justin Nickerson (pictured above left). “Conversely, many buyers in most markets understand that their current lending limit won’t last forever, so they are keen to transact and are bidding at fair and reasonable price points.”

Read more: Brokers celebrate top property spot Queensland

During July, the average clearance rate across Brisbane, Gold Coast, Canberra, Sydney and Perth increased to 52% from 49% in June.

Brisbane continued to be the clear auction market leader with a clearance rate of 70% achieved in July.

However, the three successive interest rate rises had reduced the number of registered and active bidders, with the average number of registered bidders down from 3.84 in May to 2.7 in July. The percentage of active bidders fell from 63.83% to 55% over the same period.

Tracy Kearey (pictured above right), managing director of Mortgage Advice Bureau Brisbane said she had yet to see FOOP in her local market amongst her clients.

“However, the fear of missing out/panic buying has definitely subsided and we are seeing more stock coming onto the market,” Kearey said. “This transitions Brisbane from a seller’s market to a buyer’s market.”

Kearey said the Brisbane market was still performing extremely well and had less than a 1% reduction in interstate migration in July.

“Partner this with the announcement of the 2032 Olympic Games and value for money on offer ., the Brisbane property market is still attractive for investors and the owner-occupied market,” she said. “However, this may change due to future rate increases.”

Read more: Which suburbs still have property price growth?

Nickerson said its auctioneers were reporting that vendors were slowly catching up with the changing market conditions, however, a fair cohort of sellers were still hoping to achieve a result that might have been possible in 2021.

“This has resulted in a number of properties being passed in when a sold sticker could have been applied to the sign board if the vendor had been a bit more realistic about the current market,” he said. “T. are still plenty of buyers’ keen to purchase by auction – especially with the lending environment changing rapidly.”

The July 2022 Apollo Auction Results are:










Region

Attended Average

Registered Average

Active Bidding %

Sold %

Brisbane

27.5

3.5

55.8%

70%

Gold Coast

30.6

3.6

60.7%

52.2%

Canberra

4.3

1.3

30.8%

33.3%

Sydney

19.7

2.6

47.8%

45.3%

Perth

42.5

2.5

80%

60%

Average

24.9

2.7

55%

52.16%

source