Auction clearances weaken yet again

Photo: Matt Cardy/ Getty Images.
  • Australian auction clearance rates continued to slide last week, recording the seventh consecutive weekly reading below 50%.
  • Based on preliminary estimates, CoreLogic says the final clearance rate for the week could potentially “nudge the low 40% range”.
  • In the past, clearance rates this low have typically coincided with falling home prices.

Australian auction clearance rates continued to slide last week, recording the seventh consecutive weekly reading below 50%.

According to CoreLogic, a preliminary combined capitals clearance rate of 46.8% was achieved, down from the preliminary estimate of 47.4% reported seven days earlier.

It was the weakest preliminary reading for the current downturn in the housing market.


The small decline coincided with a sharp lift in properties going under the hammer, lifting to 2,384 from 1,541 seven days earlier.

Of those auctions held last week, CoreLogic received results from 1,674, equating to a reporting rate of 70.2%, an improvement on the 66.1% level seen a week earlier.

Of the results received, 790 properties sold prior to, at or after auction. A total 884 homes failed to clear, including a massive 192 that were withdrawn prior to going to market.

Despite the improvement in preliminary reporting levels, CoreLogic says there’s a risk the final clearance rate for the week could fall to fresh multi-year lows as late, often unsuccessful results, roll in.

“Given this week’s preliminary result is the lowest we’ve seen yet, it’s likely that as final results are collected, this week’s final clearance rate could come in lower again, potentially nudging the low 40% range,” the group says.

“The weighted average clearance rate has continued to track below 50% for seven consecutive weeks now. This is a considerably softer trend to what was seen over the same period last year when clearance rates were tracking around the low-mid 60% range.”

The prior weeks preliminary estimate was revised down from 47.4% to a final reading of 42.7%, the weakest since June 2012.

By type of property, CoreLogic said the preliminary clearance rate for units stood at 51.9%, above the 44.8% level for houses.


By capital, both Sydney and Melbourne recorded sub-50% readings, helping to explain much of the weakness in the national figure.

“The weakening weighted result is largely attributed to softening conditions across the two largest auction markets of Melbourne and Sydney (which) have accounted for 83% of all auctions held so far this year,” CoreLogic said.

Melbourne recorded a preliminary clearance rate of 48.3%, down from the preliminary estimate of 50.2% reported seven days earlier.

The decline coincided with a significant lift in auction activity in the city, jumping to 1,141 from just 266 in the prior week.

Reporting levels in the city improved week-on-week, increasing from 55.9% to 79.3%.

The improved reporting levels suggests there’s limited downside risk for the final reading when it’s released by CoreLogic on Friday.

In the prior week, Melbourne’s preliminary estimate was revised down to show a final reading of 45.7%.

In Sydney, the second-busiest capital city auction market last week, the preliminary clearance rate edged up slightly, lifting to 48.4% from 47.7% a week earlier.

However, reporting rates in the city were weaker, coming in at just 64.2%, below the already-low level of 67.5% in the prior week.

That suggests there could be another sizeable downward revision to the final clearance rate when its released in three days time.

In early November, Sydney’s preliminary rate was revised down to 42.6%, the lowest level since December 2008.

The ongoing softness in clearance rates in both cities suggests the mismatch between vendor and buyer price expectations is continuing to widen, pointing to the probability of further price declines in both cities in the absence of an unexpected reversal of recent trends in housing finance data.

Home loan growth has softened noticeably this year, driven partially by souring sentiment towards the outlook for prices along with stricter lending standards towards high debt to income borrowers.

Mirroring the results from Melbourne and Sydney, all of the smaller state capitals recorded clearance rates of less than 50% last week, a result that suggests the weakness in Australia’s largest cities is now starting to impact other markets.

We’ll get an indication as to whether that’s leading to weakness in housing values later today when CoreLogic releases updated weekly price measures from Australia’s five mainland state capitals.