- Australia’s combined capitals clearance rate fell to fresh six-year lows last week.
- Rather than being driven by Sydney and Melbourne, the decline was driven by weaker results in Australia’s smaller capital city markets. Property listings in these cities are higher than a year ago, pointing to the potential for lower property prices in the period ahead without an improvement in demand.
- In average weighted terms, Australian capital city home prices are currently on track to record the largest monthly decline since the GFC in November.
Auction clearance rates in Australia fell to fresh cyclical lows last week, driven on this occasion by weaker results in smaller capital city markets.
According to CoreLogic, a final combined capital city clearance rate of 41.9% was achieved, down marginally from 42% one week earlier. It was the softest national result since June 2012.
The fall came despite a small decrease in auction activity across the capitals with 2,701 homes going under the hammer, down from 2,745 in the prior week.
Reporting rates were also softer with 85% of results received, down from 86.4% previously.
One year ago, a nationwide clearance rate of 61.1% was achieved from significantly larger 3,438 auctions held.
Unlike previous weeks, the decline in the combined capitals figure was driven by smaller markets, rather than Sydney and Melbourne.
Brisbane, Adelaide, Perth and Canberra recorded final figures of 33.5%, 45.5%, 15.8% and 41.9% respectively, down from 34.9%, 59%, 28% and 48.5% one week earlier.
While auction activity in these markets is considerably lower compared to the levels seen in Melbourne and Sydney, accompanied by an increase in property listings compared to the levels seen a year ago, the result points to the potential for weaker home prices in these markets, or, in the case of Perth, continued price falls.
After recording its weakest clearance rate since the middle of 2012 a week earlier, Melbourne’s final auction rate edged higher, lifting to 41.4% from 41.3% week-on-week.
Sydney’s final clearance rate came in at 44.8%, well below the preliminary estimate of 52.4% but up from the final reading of 42.8% seen seven days earlier.
Despite the modest increase in Sydney and Melbourne last week, median home prices in these cities fell by 0.3% and 0.4% respectively, accelerating upon the levels seen in recent months.
With just a few days to go in November, Australian capital city home prices are currently on track to record the largest monthly fall since December 2008, according to data from CoreLogic.
Turning to the week ahead, auction activity will increase in Melbourne, Perth and across Tasmania but decline in all other capital city markets, including Sydney.
The largest increase will be seen in Victoria with 1,296 properties set to go under the hammer.
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