Sunny weather brings higher prices at auction

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Nov 10, 2017

Sunny weather brings higher prices at auction

Auction sales achieved prices that were 0.974 per cent higher on a sunny day, which equates to nearly $11,500, based on the current median Sydney house price of $1,178,000.

Photo: Jared Slitter, Unsplash

Everyone's in a good mood on a sunny day, and more likely to bid up that property at auction.

Sunny days attract higher prices at auction, according to new research led by the University of Technology Sydney.

Inversely, rain brings buyers a discount - and in other findings, long weekends are also a good time to nab a bargain at auction.

“There is a link between sentiment, or mood, as measured by consumer sentiment surveys, and asset prices – including house prices,” says Dr Adrian Lee, senior lecturer in finance at UTS Business School.

Chris Wilkins, agent with Ray White Drummoyne, agrees.

"It would always have to be said the mood is better on a sunny day," he told SCHWARTZWILLIAMS.

When the sun is out, people are happier and more optimistic, and more likely to buy, said Wilkins.

The research

Lee and real estate and finance assistant professor, Maggie Hu, from CUHK Business School, compared data from auctions and private sales in Sydney between 2000 and 2014 with data from the Bureau of Meteorology.

They took temperature, rainfall, solar exposure, and consumer sentiment data, into account.

Their research found that for auctions (but not private sales) a sunny day increased prices by 0.974 per cent or nearly $11,500, based on the current median Sydney house price of $1,178,000.

Warmer days also achieved a higher auction price than cooler days – a 10 degree higher maximum temperature resulted in a 0.635 per cent increase, or around $7,400 extra.

Rain appeared to dampen enthusiasm, resulting in 0.174 per cent lower prices at auction than on a clear day, or around $2,050 less than the median Sydney house price.

“Houses are not priced rationally. The price is partly driven by people’s feelings, particularly at auctions. So if you are buying or selling a house, it is good to be aware of these influences,” said Lee.

On long weekends auction prices were lower than average

Lee and Hu's research also found that auction prices were lower than average on long weekends.

Selling on a public holiday weekend resulted in a 1.3 per cent discount for the buyer.

"I don't agree with that one," said Wilkins.

Wilkins said that with technology allowing easy communication wherever you are in the world these days, having an auction on a weekend was no barrier. Neither the vendor or the buyer need to be there in person.

Wilkins said he recently had a vendor who was in a remote city in eastern Europe when his house was auctioned, and he was able to watch the whole thing live via Skype.

The Melbourne Cup factor

And Lee and Hu noted that selling around Melbourne Cup, either one week before or after, was linked to a 1.7 per cent increase in auction prices in Sydney.

“Our analysis was rigorous as we adjusted our estimates for the type of home – apartment, house, townhouse – as well as number of bedrooms, bathrooms and whether there was parking among other housing characteristics," said Lee.

“We also looked at the suburb, year of sale and quarter of sale, which controlled for seasonal weather patterns,” says Lee.

Lee said weather influences auctions, but not private sales because sentiment has more sway in an auction situation, which is held on a predetermined day and is often held outside.