8 Rawson St Newtown Auction
How 2 identical properties go to auction 4 weeks apart and the auction result is 20% different!
The property
8 Rawson Street Newtown is a semi detached, single level, 2 bedroom, 1 bathroom, no parking house in a great pocket of Newtown.
A 1900’s Victorian style small cottage, with a lot of charm. Perfect for a young couple, an investment, a downsizer, or someone looking for a renovation project full of potential.
The property sits on a 110sqm block, north facing. The eastern side is open and the western side is the adjoining wall to number 10.
The property was styled for sale and well presented. It was last sold for $920,000 in December 2015.
The house next door - 10 Rawson St
What is most fascinating about this sale though, is that the other half of the semi, 10 Rawson St Newtown, went to auction just four weeks ago on 18th February 2023. The properties are almost identical.
10 Rawson St sits on 98sqm (a whole 2 sqm smaller than number 8), and while an identical floor plan in reverse, had not been ‘spruced up’ for sale. The bathroom and kitchen presented in a slightly inferior condition to number 8, albeit, were completely liveable and functional.
The auction of number 10 had 3 registered parties, with only 2 active on the day. It was like pulling teeth to get a bid out of anyone, and the auction slowly crawled. It sold under the hammer for $1,110,000. At the time, and still, I thought this was a bargain buy.
Picture: 10 Rawson St Auction 18 February 2023
8 Rawson St Auction | 7 active bidders
The start
Person 1 opens the bidding at $950,000. Drops out at ~$1,110,000 (what number 10 had sold for)
Person 2 comes in at $1,000,000. Drops out at ~$1,110,000 (what number 10 had sold for)
Person 3 comes into the race at $1,050,000
Person 1, 2 & 3 move quickly to get to $1,110,000 (what number 10 had sold for)
The middle
Person 4 enters at $1,120,000 and competes with person 3 for a while.
Person 5 (an investor couple) enters at $1,190,000.
Person 4 and 5 battle it out up to just over $1.2m.
The business end (now over $100,000 what next door sold for!)
Person 6 enters in at $1,235,000
Person 7 then comes in at $1,240,000
The result
Person 6 and 7 battle it out from $1,240,000 up to $1,300,000 going in $5,000 increments. The agent heads inside as they pass $1,250,000 and comes back out to confirm the property will be selling and is what buyers often look for as “on the market”.
You would expect that neither person 6 or 7 had turned up to the auction planning on paying more than $1,300,000. This is where an auction extracts every last emotional dollar out of people.
At the $1,300,000 mark the bidders start going up in $1,000 increments. Person 6 tries a couple of knockout $4,000 bids, but really, $4,000 at this price point is never a knockout. At $1,330,000 they then take a $500 bid from person 7.
It is finally called as SOLD for $1,336,000 to person 7.
Remember 10 Rawson St from 4 weeks ago though?
The result on number 8 is $226,000 MORE than what the identical other side of the semi sold for 4 weeks ago. That is a 20% increase in price in a very short period of time.
If you factored in a small amount for the ‘spruce up’, and styled furniture, say $26,000 to round it out, the property just sold for $200,0000 more.
Why? How? What can possibly explain this result?
This is a great question and one where the answer is simple. Timing. Timing the market.
Mid February 2023
Stock levels were low, but expectation was stock levels would increase dramatically in 2023 as people were forced to sell under mortgage pressure
People who just started looking in the new year are early on in their research
People still getting their finance pre approved if they wanted to buy in 2023
Buyers believing that prices are falling and if they buy now they are over paying
Mid March 2023
Stock levels have remained low, creating an increase on average number of bidders per property / increasing competition
More buyers are in the market thinking they are going to get a bargain
People who started searching at the beginning of the year are starting to tire of spending every Saturday house hunting (its been 10 weeks of wasted effort)
Early indications the RBA may start to slow, or hold, on interest rate moves increasing buyer confidence in lending value
Where to from here?
If you were a 2022 buyer who thought you would get yourself a bargain in 2023, and you are looking for a house, I think you’ve missed the bottom. These last few weeks may just be a blip, but it doesn’t feel like that.
If you’re looking for an apartment, you may still find some good value as apartments have not seen the same shift in momentum over the past few weeks.
