Auction clearance rates weaken amid a surge in homes going under the hammer

Mark Metcalfe/Getty Images
  • Australian auction clearance rates fell marginally last week. Auction volumes rose strongly.
  • Reporting rates were relatively weak, pointing to a sizable downward revision when final figures are released later in the week.
  • Clearance rates have improved in recent months. However, CoreLogic says this may not be a sign of things to come given the evidence seen in prior years.
  • Home prices in Melbourne and Sydney are continuing to fall, although not by the same degree as in late 2018 and in January.
  • CoreLogic will release its more comprehensive Home Value Index for February on Friday. This contains price movements across all capital cities and for regional areas, breaking the results down by different types of dwellings.

Australian auction clearance rates weakened marginally last week, coinciding with a large increase in the number of homes going under the hammer.

According to CoreLogic, Australia’s combined capitals preliminary clearance rate fell to 54.1% last week, down marginally from the initial estimate of 55.2% reported seven days earlier.

CoreLogic

According to the CoreLogic, 2,303 auctions look place across the capital cities last week, up substantially from 1,444 in the prior week.

Of those, CoreLogic received results from 1,621, representing a reporting rate of 70.4%. That figure was down from 74.5% seen seven days earlier.

Of the results received, 881 homes sold prior to, at, or after auction while 740 properties were passed in, including 107 properties that never made it to market.

Preliminary clearance rates for houses stood at 54.9%, marginally higher than the 52.2% level for units.

The soft reporting rates for the week point to the likelihood of a sizable decline in the final clearance rate for the week that CoreLogic will release on Thursday.

In the prior week, the preliminary estimate of 55.2% was revised down to final figure of 51.2%. Given most late results are for unsuccessful auctions, there’s a reasonable chance the final result for the week may come in below 50%.

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.

The reduction in volumes over the past year reflects weaker market conditions, one factor that seen some vendors prefer to sell via private treaty rather than at auction.

By individual capital city, preliminary estimates in both Melbourne and Sydney — Australia’s busiest auction markets — both fell from seven days earlier as market activity increased.

CoreLogic

1,144 auctions were held in Melbourne during the week, up from 657 seven days earlier when a preliminary estimate of 54.2% was reported.

In Sydney, 795 homes went under the hammer, delivering a preliminary clearance rate of 58.6%. That was down from 61% in the prior week when 523 auctions were held.

While both cities are now regularly recording preliminary estimates higher than late last year, they still remain below the high-60% level seen in early 2018.

“It will be interesting to see how clearance rates hold up now that auction volumes have started to pick up,” CoreLogic says.

“The seasonal pattern over previous years has seen a similar bounce back in the auction clearance rate in February through to mid-to-late March before trending lower into autumn and winter.

“Considering advertised stock levels remain high and most other indicators are soft, it’s possible a similar weakening trend in auction markets will become evident next month.”

While clearance rates in both Melbourne and Sydney have improved in recent months, median prices have continued to fall, albeit not at the same pace seen in late 2018.

According to CoreLogic’s daily data, Sydney home prices fell by a further 0.1% for the week, extending the decline so far in February to 0.8%. Prices in Melbourne fell by a larger 0.2% over the week, leaving them down 1% month to date.

Across the smaller capital city markets, preliminary clearance rates fell in Adelaide and Perth last week but rose in Brisbane and Canberra.

Over the same period, prices in Perth fell by a large 0.5% while those in Brisbane and Adelaide were unchanged.

CoreLogic will release its more comprehensive monthly Home Value Index for February on Friday this week. This includes price movements from all capital city markets as well as regional locations.

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