- Australian auction clearance rates are now back below 50%.
- Volumes are far weaker than a year ago, as are clearance levels.
- While clearance rates are higher than they were late last year, not everyone is convinced that means home prices will also start to stabilise.
- CoreLogic’s Home Value Index for February will be released on Friday.
- Auction volumes will drop modestly across the capitals this week.
Australian auction clearance rates have fallen back below 50%.
According to final figures from CoreLogic, 49.4% of capital city homes cleared at auction last week, down from 51.2% seven days earlier.
The group received results from 1,942 of the 2,293 auctions that took place, representing a reporting rate of 84.7%.
Of those result received, 961 homes sold while 981 were passed in.
In the same week a year earlier, Australia’s final clearance rate stood at 66.8% from a monster 3,313 auctions that took place. So clearance levels were significantly higher back then despite far more properties going under the hammer.
Across the capitals, Canberra, at 53.5%, recorded the highest clearance level nationwide, followed by Melbourne where just over half of all homes sold.
All other capitals recorded clearance levels below 50%, in some cases significantly so.
While nationwide clearance rates have started to ease lower in recent weeks, coinciding with an increase in properties being taken to market, the recent rebound has seen some speculate that home prices may soon follow suit.
However, economists at Capital Economics aren’t among that group.
“The recent surge in clearance rates has given some analysts renewed confidence that price declines in Australia may soon come to an end,” says Ben Udy, Economist at the group.
“The rise in auction clearing rates in early February is probably just temporary.
“Housing remains overvalued and other leading indicators point to a continued decline in house prices. We therefore still think the housing downturn has further to run.”
Capital Economics retains the view that home prices in the combined capital cities will eventually decline 15% from their peak in 2017.
While that theory remains to be tested, it’s worth noting that a pickup in clearance rates early in the New Year is not all that unusual. Indeed, it’s happened every year over the past six years.
That suggests its a seasonal pattern, rather than a sign of things to come. Housing credit data out today — growing at the slowest pace since 1984 in January — suggests that home prices are likely to fall in the near-term at least.
CoreLogic’s Home Value Index for February will be released on Friday, March 1. At this point, another sizable fall is likely, although not as fast as January.
Turning to the week ahead, auction volumes will fall modestly, largely reflecting lower activity levels in the two busiest markets, Sydney and Melbourne.
2,095 homes are currently set to go under the hammer, down from 2,293 last week and 3,026 from the same week a year ago.
The reduction in volumes over the past year reflects weaker market conditions, a factor that seen some vendors prefer to sell via private treaty rather than at auction, or not list at all.
Business Insider Emails & Alerts
Site highlights each day to your inbox.