Properties That Passed In: Uncovering the Reasons Behind Failed Auctions

Yesterday's auction at the Sandton Convention Centre saw 12 properties go under the hammer, but only 7 found buyers, leaving 5 properties unsold. The properties that passed in were mostly located in the northern suburbs, with 2 in Fourways and 1 in Midrand.

The clearance rate of 58% is a significant indicator of the current state of the Johannesburg property market. With the average house price in Johannesburg sitting at around ZAR 1.5 million, and premiums being paid for properties in areas like Sandton, the fact that some properties are not selling at auction suggests that buyers are becoming increasingly discerning. This is particularly relevant now, as the market is experiencing a slowdown in growth, and buyers are taking a more cautious approach to purchasing property.

In areas like Melville, where urban renewal projects are underway, properties are still in high demand, but the auction results suggest that buyers are not willing to pay top dollar for properties that need renovation or are located in less desirable areas. The properties that passed in included a 3-bedroom house on Kingfisher Avenue in Fourways, which had a reserve price of ZAR 2.8 million, and a 2-bedroom apartment on Rivonia Road in Sandton, which had a reserve price of ZAR 1.2 million. The Johannesburg Property Owners Association has noted that the demand for sectional title properties remains strong, particularly among investors, but the auction results suggest that even these properties are not immune to the current market slowdown.

Drilling Down into the Data

A closer look at the data reveals that the properties that passed in were mostly priced at the higher end of the market. According to data from the Johannesburg Property Market Report, the average price of a property that sold at auction in the past quarter was ZAR 1.8 million, while the average price of a property that passed in was ZAR 2.5 million. This suggests that buyers are being cautious and are not willing to pay premium prices for properties, even in desirable areas like Sandton. On July 1, the City of Johannesburg announced plans to launch a new urban development program, which is expected to boost demand for properties in areas like Melville and Braamfontein.

So what happens next for the properties that passed in? In most cases, the sellers will need to reconsider their pricing and either reduce the asking price or withdraw the property from the market. For buyers, the auction results present an opportunity to negotiate a better price for properties that they are interested in. As the market continues to evolve, it's likely that we'll see more properties being sold through private treaty sales rather than auctions, as sellers look to avoid the risks associated with the auction process. The Johannesburg property market is known for its resilience, and it's likely that the current slowdown is just a temporary blip, but for now, buyers and sellers will need to be cautious and adapt to the changing market conditions.