It’s the huge buying fear that is getting in the way of millions of Aussies owning their own home.
And around one in three of one cohort of Australians don’t even want to know about it.
New data from Loan Market Australia spotlights how Australia’s auction process is leaving many feeling stressed and lacking confidence.
At least one in four Aussies find auctions a stressful and challenging process that no amount of research will help to make them feel confident, a new study has revealed
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Source: Loan Market Australia
The data found 25 per cent of Aussies find the process very stressful and challenging.
While 33 per cent of Aussies over 55 believe nothing would make them feel confident regarding property auctions a 31 per cent of Aussies under 35 do feel comfortable bidding at an auction, but would want to do significant research and have practice.
Loan Market mortgage broker Kris Faife said it was not surprising to see the quarter of the survey respondents result.
“We certainly feel that sentiment with buyers, that they want to avoid auction,” Mr Faife said.
“They find the process quite scary, having to make really important decisions in real time as opposed to in a private treaty situation.”
NO CONFIDENCE
A large sum of older respondents felt nothing would make them feel confident in the auction process.
According to Mr Faife, this is influenced by auctions being a common experience entering into the property market for firsthomebuyers today.
“It’s still a scary process for anyone, but I feel that for first-time buyers that are entering the market, this is what they know,” he said.
“For a lot of those customers age 55 and over, they might have only bought property once or twice in their life and this is a really new experience for them, most of their experience will have been through private treaty.”
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Loan Market mortgage broker Kris Faife said many Aussies find auctions a ‘scary’ process.
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Mr Faife said the comfortability also relates to generational decision making processes.
“What I found personally is that the older generation like to be a lot more calculated with their decisions,” he said.
“Before they make big decisions, whether to spend another $10,000 or $20,000, they want to understand what the consequences are while for some of the younger generation, an extra $20,000 or $30,000 can feel like loose change in the moment.
“The younger generation perhaps is not that much across the consequence of bidding that extra, which is why maybe they’re more inclined or that they might feel a bit more confident going to auction.”
Mr Faife said setting a bidding limit can help to turn an emotional decision into a strategic one.
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A majority of older Australians survey responses found nothing would make them confident in the auction process.
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“When buyers know exactly where they’re prepared to stop based on comparable sales, where they are comfortable and what they can afford, it becomes much easier to stay disciplined during the auction,” he said.
“Buyers who tend to succeed are the ones who treat property buying like research rather than guesswork.”
Ray White Head of Auctions NSW David McMahon echoed a similar sentiment, spotlighting when buyers come unprepared this can lead to stress.
“Maybe they haven’t done the research, they haven’t planned or most importantly, they don’t have a strategy, that can cause anxiety,” he said.
FEAR OF OVERPAYING
Mr McMahon said every buyer’s fear when they get to an auction, regardless of age, is the fear of overpaying.
“The nerves at the moment, for any buyer, is around what’s happening in the economy around interest rates, what’s happening in the world and that uncertainty trickles down into the auction,” he said.
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David McMahon. Picture: John Fotiadis.
Mr McMahon said it comes down to auction experience, regardless of age, he recommended understanding where you would like to start the bidding, a comfortable number for you to purchase with as well as identifying your absolute walk away number.
“Once you know those three numbers you can be really clear around your bidding strategy leading into the day and it should prevent any more nerves on the day than normal,” he said.
“That ties with research regarding the property you’re buying, understand the market and then the comparable sales then also go and experience a few auctions just as a bystander.
“You don’t want to get to the day of your dream property and you have never seen an auction before, don’t have a plan, don’t have a strategy or don’t understand basic auction language.”
An auction in Concord, NSW as auctioneer Emanuel Domino brings the gavel down on the $7.45 million sale. Picture: Julian Andrews.
Tom Edney, 29, said he experienced auction anxiety due to the listing price never correlating to the sale price while attending auctions.
“It’s either very competitive or the agents aren’t listing these properties for what they’re actually going to sell for,” he said.
Mr Edney and his partner ultimately purchased their home by offer, but reflects on the processes as a “50-50” with an auction.
“With an auction, you are there and you can see exactly what someone else is offering on the property,” he said.
“Whereas I guess a private sale, you’re sort of taking the benefit of what the real estate agent is saying.
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Homebuyer Tom Edney experienced auction anxiety.
“I guess you’re not put on the spot entirely so the pressure of, if I don’t bid now I’m going to lose it, you’re not really getting that with an offer as much.
“So, I’d say it’s probably less stressful in a way, even though they’re both very stressful.”
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