2GB with John Stanley: Auctions, Renovation Risks & a Changing Market

On 2GB Nights with John Stanley, Peter O’Malley takes a hard look at the softening Australian property market and what weakening auction clearance rates mean for buyers and sellers. As competition thins, the focus is shifting from auction theatre to genuine negotiation, while rising renovation costs are forcing many owners to rethink their plans.

They also discuss:

•  Winter stock levels tightening and the short selling window this can create 
•  Weakening auction clearance rates and what they reveal about buyer demand 
•  Why auctions depend on a deep buyer pool to generate strong results 
•  The shift from competitive auctions to direct negotiation in softer markets 
•  Selling a property's true value through fundamentals such as aspect, layout, and liveability 
•  Local infrastructure projects and neighbourhood changes influencing buyer interest 
•  How negative property headlines affect confidence and price expectations 
•  The risks of waiting for spring if listings surge and buyer demand remains subdued 
•  Renovate versus sell: when a blank canvas may be the better option 
•  Why more DA-approved properties are coming to market 
•  Builder cost blowouts derailing renovation plans across Sydney 
•  Avoiding overcapitalisation and the importance of obtaining valuation and local market advice before spending

As always if there is a specific topic you would like for us to cover, please reach out and let us know!    

Transcript

Winter Market Pressure Signals

SPEAKER_00 0:00

Uh good evening to you, John.

SPEAKER_01 0:01

Yeah, it it it is very uncertain at the moment. What's your take?

SPEAKER_00 0:05

The auction clearance rate on the weekend was uh some of the weakest clearance rates we've seen for quite some time, according to Domain. Um there's no doubt that it's probably not the right sales process for a lot of properties at the moment, John. Um probably the good news for vendors at the moment is stock levels are tightening because we're in winter. So it does create an opportunity to secure a sale before spring when you can expect listings to sort of surge fairly decisively. Um but there's no doubt the market's

Why Auctions Struggle Without Competition

SPEAKER_00 0:39

under pressure.

SPEAKER_01 0:39

Yeah, just to explain that, the the the the the sale process, because we've often talked about this that uh Sydney auctions are very much dominant, and then you've got Brisbane where there aren't anywhere near the number of auctions. So the sale process is different, but just explain because if the if there's not a lot of demand, do you then almost run a what a silent auction or an informal auction? How does it work?

SPEAKER_00 1:02

Well, look, you can still sell a property if you've only got one buyer at the auction, but clearly as a vendor your position's uh compromised. Uh so to give give your listeners an idea, John, on the weekend there were 135 auctions scheduled for the city of Brisbane, whereas in Sydney there was 865 scheduled. Uh in in Melbourne, for example, there was eight hundred and eighty-one. Um but an auction relies on a deep buyer pool competing against each other to drive the price back up. And clearly we're not in an environment where that's really happening. So real estate agents really need to sell to the value of the property. Um, they don't have the luxury of pitting buyers against each other, which is what the public auction system relies on.

SPEAKER_01 1:48

Yeah. So you're in a situation where you talk to the people who are selling and they say, Well, this is how much I'd like ideally. Obviously, I'd prefer to have more than that. And then as people inquire, as people go through, they'll say, Well, how much is it worth? What do you think? Uh, how much do you think that uh they're they're willing to accept? So that that's I guess I'm referring there, that toing and frame as part of the selling process. It's not strictly

Selling On Value Not Hype

SPEAKER_01 2:13

an auction, but it is a bit of bargaining. Is that a better way of putting it?

SPEAKER_00 2:16

Uh negotiating, I think, John, would be the right way. So there's real estate agents who wait for buyers to buy property, and then there's real estate agents that are very adept at selling property. If you can't sell a property in the current environment as a real estate salesperson, you're going to go hungry because very few buyers are walking in to properties at the moment and saying, I love it, how do I buy it? You really need to know how to construct the sale at the moment and sell the benefits of your listing over the one down the road. And um it's very easy to sell a property by slashing the price, but uh unsurprisingly, vendors aren't real keen on that, John. So real estate agents need to understand the value offering that their respective listing has and bring that to light in the eyes of the buyers.

SPEAKER_01 3:02

Yeah, and we often like you know, the whole cliches about, you know, harbour glimpses, renovators to light, but the the things that I'm guessing you'd need to know is what the sales have been like in the area, whether there's a new bus being put on next month, whether there's a plan for a you know metro. I guess people should be aware of that, but maybe they wouldn't be. All those things that can make a difference.

SPEAKER_00 3:23

Yeah, they're the fundamentals, uh, and infrastructure is one of those. Uh aspect is another, John. Um if you've got the right aspect with a property, um, but you don't like the kitchen, you can change the kitchen, but it's very hard to turn a house around. Uh, and as you know, with a lot of inner city properties, if you've got the wrong aspect, they're very cold winters because you're effectively getting no sunlight for three direct sunlight for three months. So these are the sorts of things where the agents need to understand their listings, what the value offering is, and then communicate that to the buyers as they're

Headlines Hurt And Spring Risks

SPEAKER_00 3:56

coming through. Just looking at the press today, the press are running really, really um uh hard on the downturn in the property market, which only makes agents' jobs tougher. And clearly buyers are using that against real estate agents in negotiations, even when they love the respective listing. But for the first time in some time, buyers are holding the upper hand and they're not ashamed to use it.

SPEAKER_01 4:20

Yeah, because uh not long ago we have predictions of uh eight to ten percent rises, which did actually happen. So people are going, well, I'd better buy now because uh the price is gonna go up. If uh they keep reading that prices are gonna go down by eight to ten percent, they'd be saying, Well, um I'm not gonna buy at this price, because if it's gonna be down eight to ten percent, take ten percent off. So it becomes self-perpetuating.

SPEAKER_00 4:43

It certainly does. And if we get to spring with these low clearance rates maintaining themselves through winter, and then you see a surge in stock, um, there probably will be another leg down for prices, John. I'm not seeing any support come in for the market at the moment. Um so there are risks there for vendors, and uh I think saying we'll just wait till spring when the garden looks better is not the solution I would encourage vendors to take at the moment.

Renovate Or Sell As Is

SPEAKER_01 5:12

It's just one other question I'll ask you, because I'm I'm I'm so intrigued by the process and you've lived this all your life. So you might have a house which uh is is like a uh a renovator's delight means it's a bright blank canvas and there are things you can do, and you've talked about the aspect in kitchens and the like. So are you better off doing that work and adding the value or simply presenting it or as that blank canvas and saying, well, you could do this, you could do this, you could do this, that's that that massive roof there uh faces north, you can put solar panels up there and and let the person uh then buy the place rather because if you spend the money and do it all, are you gonna get that money back?

SPEAKER_00 5:51

Oh look, this is a great conundrum that you're highlighting here, John. Uh I said to someone today that you could spend $250,000 on your property doing internal renovations and repairs, but the risk for you is as you're doing those improvements and repairs, the market is dropping by the same amount. Um so the the the the market downfall is offsetting the the you know the improvements that you're making to your home. Uh, if you look closely at real estate ads at the moment, John, you'll notice there's a disproportionately high amount of properties being sold with DA approvals in place. So what's happening there is that the respective owners are saying, hey, we need a bigger house, let's just extend this one. They go through all the hassle of getting a uh uh a DA approved with the local council. When they've got the DA approved, they get a price from a builder. The price is, you know, um 50 to 100% higher than they're expecting. Yes, they say we can't follow through with this DA, we'll need to sell the property. The DA is now a benefit to uh uh to the sale, but the thing is is the buyers don't want to renovate either. There's a clear

DA Approvals Builder Shock Overcapitalising

SPEAKER_00 6:58

preference in the market at the moment for essentially fully done properties or properties that don't need work. Um, because everyone's heard a horror renovation story where not so much about the builder um not doing a good job, but costs just being far more than anyone originally anticipated. That's right, that's right.

SPEAKER_01 7:16

And if you do something that you think is fantastic, it's cost you a lot more. The person that's looking to buy is going, uh I don't like that. So that's part of it, isn't it? That's there's got to be part of it, surely.

SPEAKER_00 7:26

Oh, that's right. I think if you're renovating for the market, you need to be really careful, you're not too individual. Yes, particularly with your colour scheme and some of the features in the property. Yes. Because whilst you love it, um will the next party love it as much as what you do? And the answer often is no.

SPEAKER_01 7:41

You'd have seen some places, wouldn't you, Peter, where you're going, what were they thinking? But you can't I suppose what can you do? Your Josh to sell it.

SPEAKER_00 7:48

As a real estate agent, you certainly can't uh ask that question what were you thinking, but uh um you know people do get themselves in in strife by overcapitalizing. That's the classic overcapitalizing scenario. And before you do embark on those works, sitting with a property valuer or a local real estate agent who knows the market and just running your ideas and your plans past them could make you or save you a lot of money.

SPEAKER_01 8:14

Very interesting.

Wrap Up And Weekly Sign Off

SPEAKER_01 8:15

I'm glad we're able to borrow some of your expertise here tonight, Peter, with our weekly real estate report. We'll talk again very soon. Thank you.