Auction of Luxury Homes Flop

November 9, 2010  Bloomberg, Reuters
An auction of luxury homes held at the Sydney Opera House last night raised just $4.1 million, much less than the $30 million vendors were hoping for, less than a week after borrowing costs increased.
Only two out of the 11 homes were sold. The Ray White Group, which organised the auction, is in talks with potential buyers and expects to sell three more properties in "the next couple of days", chairman Brian White said after the event.
Mr White said he had hoped to sell at least five of 11 houses at the auction. The properties included 10 homes in NSW, five of which are in Sydney. The houses are valued at between $2 million and $10 million each and are worth an estimated $30 million altogether.
The auction included a penthouse overlooking Sydney Harbour in an apartment complex that is home to Hollywood actor Russell Crowe, but in the end only two rural homes sold on the night.
The auction was a test of demand for a housing market which the International Monetary Fund said might be overvalued by as much as 15 per cent.

The event took place less than a week after the Reserve Bank raised its benchmark interest rate by a quarter of a percentage point to 4.75 per cent and said it welcomed a cooling in house prices.
"We've been a little bit crash-tackled by the interest rate increase last week," Mr White said. "The Reserve Bank seemed to give the indication that they were keen to keep the lid on prices, and that's not what buyers want to hear. That's a very bearish sentiment."  
The properties were marketed in Australia and Asia and drew interest from bidders based in Singapore, China and Indonesia.
However, overseas buyers, typically more interested in waterfront Sydney property, were quieter than usual, auctioneer Sam Kelso said.
"The overseas buyers are more concerned about the Aussie dollar," he said. "It isn't buying as much as it was six months ago."  
The two properties sold at the auction were a $2.55 million riverfront development in Birdwood, 400 kilometres north of Sydney, and a $1.56 million country home in Mittagong, in the southern highlands of NSW. The auction was organised as more sellers were putting prime properties up for sale than in the first quarter, Ray White said. The company plans to hold an auction every November and March.