- Australian preliminary auction clearance rates fell to just 50.7% last week, largely reflecting softer results from Melbourne and Sydney.
- Clearance rates for apartments remain considerably higher than those for houses.
- The downtrend in clearance rates points to further price decline in the period ahead. CoreLogic will release updated data for Australia’s five mainland state capitals later today.
Australian auction clearance rates softened last week, pointing to the likelihood of further price declines in the period ahead, particularly in Sydney and Melbourne.
According to preliminary data from CoreLogic, just 50.7% of auctions held across the capital cities cleared last week, below the 53.7% preliminary figure reported in early October.
Preliminary clearance rates for apartments stood at 58%, significantly higher than for houses which slumped to just 48% over the week.
A total of 1,850 auctions took place across the country, a small increase from 1,817 a week earlier. Reflecting the weakening in the housing market over the past 12 months, there were 2,525 auctions in the same corresponding week a year earlier.
Back the, a final clearance rate of 67.1% was achieved.
CoreLogic received results from 1,339 of the auctions held last week, representing a reporting rate of 72.4%, down from 73.1% in early October.
Of those results received, 686 homes sold prior to, at or after auction. As many as 653 properties failed to clear, including 124 that were withdrawn prior to going to market.
The large number of unreported results — some 511 — suggests the final clearance rate for the week will be revised to below 50%, maintaining the pattern seen in each of the prior two weeks.
CoreLogic will release updated figures on Thursday.
Final clearance rates tend to be revised lower, reflecting that the vast majority of tardy results tend to be unsuccessful.
By individual capital, preliminary clearance rates in Sydney and Melbourne both fell compared to the levels reported a week earlier.
In Melbourne, the busiest capital city in terms of auction activity last week, a preliminary rate of 52.1% was reported, down from 54.4% in the first full week of October. CoreLogic received results from 718 of the 914 auctions held, of 78.6%. That was below the 82.3% reporting rate of a week earlier when 904 properties went under the hammer.
Sydney’s preliminary clearance rate also softened, falling to 52% from 53.5% seven days earlier.
Corelogic received results from 433 of the 645 auctions that took place in the city, representing a reporting rate of just 67.1%. While low, that was an improvement on the 62.9% level of a week earlier when 606 auctions took place.
Given the proximity to 50% in both cities, there’s a risk that final figures released later in the week may show that less than half of all homes that went under the hammer sold.
In the prior week, Melbourne and Sydney’s final clearance rates were reported at 46.1% and 51.8% respectively. One year ago, they stood at 73.2% and 63.3% respectively.
Given the continued decline in both cities, it suggests the gulf between vendor and buyer price expectations, from a broad perspective, is extremely wide at present.
Across the smaller capital city markets, the highest preliminary clearance rate nationally was recorded in Canberra where 63.6% of auctions were successful, followed by Adelaide were 53.3% of homes sold.
Week-on-week, preliminary clearance rates weakened in every capital city except for Perth where just 13.3% of reported auctions resulted in a sale.
The continued downtrend in auction clearance rates, seen in the chart below from CoreLogic, points to the likelihood that national price measures will continue to soften in the period ahead.
In the first week of October, CoreLogic reported that median prices fell in each of Australia’s five mainland state capitals, leaving the weighted national drop at 0.1%.
From a month earlier, median prices fell in all capitals except for Brisbane, ranging from a slide of 0.2% in Adelaide to 0.9% in Melbourne.
CoreLogic will release updated price movements from these capitals later today.
Last week, the National Australia Bank said that confidence among Australian property professionals “collapsed” in the September quarter, driven primarily by a deterioration in price expectations for Melbourne and Sydney.
Separate data from Westpac revealed expectations for house prices in the year ahead fell to the lowest level since 2009 in its latest consumer sentiment survey for October.
The value of Australian housing finance extended in August also fell to the lowest level since January 2016, according to the ABS, reflecting weakness in lending to both owner-occupiers and investors.
SEE ALSO: Morgan Stanley’s Australian housing model says the current downturn will be the longest and largest since the 1980s
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