Auction clearance rates have fallen in Sydney and Melbourne, but they're still way higher than usual

Auction clearance rates in Sydney and Melbourne have weakened a bit in recent weeks, hinting that some of the heat may be coming out of Australia’s hottest housing markets.

However, as this chart from Westpac shows, not only has the decline been modest so far, they still remain well above historic averages.

Source: Westpac

Both cities recorded clearance rates in the mid-70’s — hardly the levels one would normally associate with falling prices.

And it looks like prices in both cities fell in May, at least according to the latest CoreLogic data.

“Over the first 29 days of the month, CoreLogic’s five city aggregate Index is down 1.1%, indicating a negative month-on-month result will be reported when the index results are finalised on Thursday June 1,” said Tim Lawless, CoreLogic’s head of research, in a note released on Tuesday.

“The weak preliminary result is largely influenced by a month-on-month fall in Sydney and Melbourne dwelling values.”

Lawless said that when seasonal factors are taken into consideration, the May result isn’t likely to be as weak as what the headline results are indicating.

That perhaps explains the divergence between house prices and clearance rates seen in recent weeks.

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