- Auction clearance rates dipped last week despite lower volumes and weak reporting levels.
- Home prices also continued to fall, led by Sydney and Melbourne.
- AMP Capital’s Chief Economist Shane Oliver says Australia’s election result will “likely add to confidence”.
Auction clearance rates dipped last week despite lower volumes and weak reporting levels, and home prices continued to fall across Australia’s largest capital cities.
According to preliminary figures released by CoreLogic, 57% of homes that went under the hammer cleared last week, down marginally from the 58% level seen in the prior seven day period.
With Australia’s federal election held on Saturday, volumes were understandably low, falling to 917 from 1,210 a week earlier.
CoreLogic received results from just 633 of the auctions that took place, or 69%. That reporting rate was below the 72.3% level seen in the prior week.
Of those results received, 366 properties cleared while 267 failed to sell, including 52 that were withdrawn prior to going on the market.
The slight decline in the preliminary clearance rate, along with softer reporting levels, points to the likelihood that the final clearance level for the week will be revised down to the low 50% region, down from the eight-month high of 54.0% reported in the previous week.
In the same corresponding week in 2018, a final combined capitals clearance rate of 56.8% was recorded from a significantly larger 2,100 auctions that took place.
Across the capitals, preliminary clearance levels rose in Melbourne and Canberra but fell in all remaining cities.
Melbourne, at 62.9%, recorded the highest preliminary clearance rate nationally, slightly ahead of Sydney at 60.7%.
Volumes in both cities were down substantially from a week earlier. Reporting rates were also softer compared to the prior week.
While, as a broader trend, clearance rates have improved in recent months, median home prices continued to fall in Australia’s largest cities during the week.
According to CoreLogic’s daily hedonic home value series, prices in Australia’s mainland state capitals eased 0.2% last week in average weighted terms, extending the drop since the end of April to 0.5%.
Median prices in Sydney fell a further 0.3% last week, leaving them down 0.8% from April. Melbourne prices slipped by 0.2% during the week, leaving them down 0.4% so far in May.
Elsewhere, median prices in Perth and Adelaide fell less than 0.1% for the week while values in Brisbane were unchanged.
While home prices continue to slide across most parts of the country, Shane Oliver, chief economist at AMP Capital, says the surprise reelection of the ruling Liberal-National Coalition in the federal election, along with the prospect of lower mortgage rates and increased government support for first home buyers, should help to cushion price declines in the months ahead.
“I suspect that the deposit scheme will morph into a far more attractive home buyer grant at some point,” Oliver said, referring to the announcement of First Home Loan Deposit Scheme from the LNP just before the election.
“This is something we have seen in most major housing downturns in recent times and it will likely add to confidence.
“Along with RBA rate cuts, the removal of the threat to negative gearing and the capital gains tax discount, and a slowing in new supply next year, [this will] help the property market bottom out short of the worst case falls some are putting out there.”
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