Auction clearance rates remain soft while home prices continue to fall

William Thomas Cain/Getty Images
  • Preliminary auction clearance rates were near unchanged last week, according to data released by CoreLogic.
  • 58.1% of reported results across the capitals cleared. Reporting rates were firmer, though, pointing to a final clearance level of around 55% when released by CoreLogic later in the week.
  • While national clearance rates have improved from the levels seen earlier in the year, home prices are still falling.

Australian auction clearance rates remain soft and home prices continue to fall, in line with trends that have now been in place for well over a year.

According to preliminary data released by CoreLogic, a combined capitals clearance rate of 58.1% was achieved last week, marginally below the 58.8% preliminary level reported seven days earlier.

CoreLogic

While auction volumes across the capitals fell to 1,210, down from 1,472 in the prior week, reporting rates from agents improved, pointing to a smaller downward revision to final clearance levels when released by CoreLogic later in the week.

CoreLogic received results from 875 of the auctions that took place, or 72.3%. That was higher than the 66.2% of results that the group’s preliminary estimates were based upon in the prior week.

Based on historic trends, the stronger reporting rate points to the final national clearance level being revised down to around 55%, higher than the 52.5% level seen a week earlier.

In the same week a year ago, a final combined capitals clearance rate of 58.2% was reported by CoreLogic.

CoreLogic

By individual capital, Sydney (at 65.6%) once again recorded the highest preliminary clearance rate nationally, although reporting rates were still weak at just 65.3% of all results.

Melbourne’s initial estimate stood at 56.8% based on a far higher reporting level than Sydney at 80.4%.

The preliminary clearance and reporting rates point to both cities recording a final clearance level of around 55% based on prior trends.

Across the other capitals, both Adelaide and Perth recorded preliminary clearance rates of more than 50%, a noticeable improvement from the levels reported in previous weeks.

Brisbane, at 39.2%, registered the weakest performance across those capitals monitored by CoreLogic, coming in marginally below the 41.4% level reported in Canberra.

While nationwide clearance rates have improved from the levels seen late last year and in early 2019, home prices continue to fall across a majority of mainland state capitals, suggesting the recent recovery, particularly in Sydney and Melbourne, has been assisted by more realistic price expectations from vendors.

According to CoreLogic’s daily hedonic home value series, median prices in Sydney fell by 0.4% last week, double the 0.2% falls seen in Perth and Brisbane and 0.1% decline registered in Melbourne.

Adelaide values were near unchanged from the prior week.

12 days into May, median prices have fallen 0.5% in Sydney and 0.2% apiece in Melbourne, Brisbane and Perth while values in Adelaide have inched higher by less than 0.05%.

Across the mainland state capitals, median prices have fallen 0.3% so far in May in average weighted terms.

However, while home prices across most mainland state capitals continue to ease, Westpac senior economist Matthew Hassan suggests that may not remain the case for long based on historic trends.

“Preliminary auction results continue to show promising signs of improvement although they still need to be treated with caution due to high mark downs once final figures are in,” Hassan said in a note released on Monday.

“The preliminary figures this week suggest final clearance rates will again be comfortably in 50-55% range, the starting point for both being slightly above this range that historically has been broadly consistent with stabilising prices.”

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