What is all the fuss about auction clearance rates?

There has recently been a little tussle in the media where the Age questioned the accuracy of auction clearance results, particulalry those reported by the REIV

In fact I discused this in a previous blog https://propertyupdate.com.au/are-melbourne-auction-clearance-results-being-manipulated.html

Enzo Raimondo CEO of the REIV has reponded, slamming the claims of the Age.

On the REIV website Mr Raimondo said:

For the last two Sundays The Age has published articles questioning the REIV’s collection and reporting of auction and private sales results. In the first article, The Age questioned the clearance rate and suggested that the laws in Victoria be changed to force every person selling a home to report to the public the address, reserve price, the sale price and the price if passed in.

The Age suggested that this was necessary to ensure transparency. To add some colour to their article, they quoted some disparaging remarks from Mr Chris Koren, a buyer’s agent, who is not a Member of the REIV and who, some years ago, had his licence suspended for breaches of the Estate Agents Act.

The second article, published last week, suggested that the health of the auction market could be worse if the method of reporting auctions were confined to reporting sales made under the hammer. To support this article, Sydney-based researcher Louis Christopher was quoted as saying “the clearance rate is inaccurate and misleading”. Mr Christopher is a past employee of the Fairfax-owned data company Australian Property Monitors (APM) who left that company’s employ under a cloud and has a history of disputing REIV research.

It is important for the public to be aware of the facts in relation to the method and purpose of the collection of sales by the REIV. The REIV clearance rate is calculated by adding up the properties sold before the auction, sales under the hammer, sales after the auction but on the same day and sales the day after the auction and dividing them by the number of auctions reported. Those sales which occur after a home is passed in and by the end of the day after the auction are counted as auction sales because they have occurred as a result of the auction and the sale is under auction conditions.

The REIV’s collection and publication of sales results is an expensive process and the information is provided free of charge to the media for the purpose of informing the public.   By the end of the weekend, the results collected from REIV Members represent around 90 per cent of auction sales and 75 per cent of all metropolitan residential sales – sufficient to determine how the market is performing.

On the face of it, the notion of a compulsory disclosure sounds good but fails to consider the privacy of individuals. The current system strikes the right balance of informing the market and protecting people’s privacy.

If a sale is conducted by auction, the sale price and address are published; if the property sells privately, as was the case for around 70 per cent of sales in Melbourne last year, then the sale price and address without the street number are published.
In all circumstances the vendor has the right to request that the sale particulars not be published. The REIV must respect that request, which is usually documented in the privacy notice of the Sales Authority.

In Melbourne, The Age prefers to publish in print the REIV sales results because we collect a higher number of sales than any other data company in Victoria. In Sydney, Fairfax use sales data provided by APM. Despite the claims made about the sales data, the information provided by the REIV is published in The Age and other media outlets every week.

The first article failed to mention that the owners of The Age, Fairfax, own APM. This company also collects sales results and publishes them on domain.com.au, often providing visitors to theage.com.au with a different clearance rate than that used in print.

The residential real estate market is different to the stock market; each home is different and just because one person paid a certain price for a house does not mean similar homes in the same suburb will sell for the same amount.

Around 70 per cent of the population buys a home as their principal place of residence and it is their biggest asset; as such, they are entitled to make a decision about whether or not the sale price is disclosed.

There is no doubt that the information currently provided is very helpful for buyers, sellers and the media; however, people have a right to privacy, especially as it relates to their financial affairs.

Enzo Raimondo

Source: REIV


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