Australian clearance rates remain below the levels of a year ago

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Australian auction clearance rates edged higher last week, driven yet again by strength in Australia’s southeastern corner.

According to CoreLogic, a preliminary clearance rate of 70.7% was recorded across Australia’s capital cities last week, inching up from 70.3% in the previous week.

The group said the slight improvement came despite a noticeable pickup in the number of properties being taken to auction during the week.

“Auction volumes have increased across all but one of the capital cities this week with a total of 2,759 homes taken to auction, making it the busiest week for auctions since the end of May,” the group said in a note released on Sunday.

“So far, 2,226 results have been reported to CoreLogic, returning a preliminary clearance rate of 70.7%, up from last week’s final clearance rate of 66.7% across 2,510 auctions.”

The table below shows the performance of individual capital city markets last week, comparing the results to those seen in the same corresponding week of 2016.

Source: CoreLogic

The rebound last week was once again driven by Australia’s largest auction markets — Melbourne and Sydney — with clearance rates of 73.9% and 71.5% reported respectively.

“Melbourne was host to 1,359 auctions this week, returning a preliminary clearance rate of 73.9%,” CoreLogic said. “At the same time last year, Melbourne’s clearance
rate was 77.2% across 1,103 auctions.”

It was a similar story for Sydney where clearance rates rebounded after falling to the lowest level since late 2015 in the previous week.

“Sydney’s preliminary auction clearance rate was 71.5% across 1,014 auctions this week, after last week saw the final clearance rate slip below 65% for the first time this year,” it said. “The current clearance rate across Sydney is significantly lower than this time last year when 80.4% of the 946 auctions held were successful.”

So while clearance rates rose in Australia’s largest and most expensive capitals during the week, leaving the national weighed average at just over 70%, both cities recorded significantly lower rates than one year earlier.

“The final clearance rate across the combined capital cities has been holding around 66% for the last 3 weeks so it will be interesting to see if this is the case again on Thursday once the remaining results have been collected,” CoreLogic said.

Across Australia’s smaller markets, preliminary clearance rates rose in Brisbane and Perth increased week-on-week but fell in Adelaide and Canberra.

Source: CoreLogic

Mirroring the moderation in clearance rates in Melbourne and Sydney over the past year, price growth in these cities has also moderated from the levels seen in early 2017.

According to CoreLogic’s Daily Home Value Index, prices in Sydney have grown by just 0.2% over the past three months, a steel deceleration on the levels seen just a few months ago.

Prices in Melbourne rose by a larger 1.9% over the same period, although that too remains well below the levels seen in late 2016 and early 2017.

The slowdown likely reflects a combination of affordability constraints and attempts from Australia’s banking regulator, APRA, to limit the level of investor activity in these markets following the introduction of tighter macroprudential measures in late March.

With modest increases in Brisbane and Adelaide offset by a 1.5% drop in Perth, prices across Australia’s five mainland state capitals have increased by just 0.59% over the past three months in average weighted terms, seeing the year-on-year rate slow to 8.72%.

Source: CoreLogic

On these metrics the housing market is slowing but, at this point at least, it’s nothing more sinister than that.

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