Australian home prices could soon be falling faster as a wave of properties hit the market

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  • Auction clearance rates in Melbourne have fallen to the lowest level in over six years. They remain near decade-lows in Sydney.
  • At around 45%, current clearance rates suggest price declines may accelerate a touch in the period ahead.
  • Total auction volumes this week will increase by 30%. The lift largely reflects a substantial increase in Melbourne.

Auction clearance rates in Melbourne have fallen to the lowest level in over six years.

According to CoreLogic, just 45.7% of homes sold at auction last week, down from 50.7% seven days earlier and well below the 70.3% level seen one year ago.

It was the lowest success rate since June 2012.

The reporting rate for the week was 86%, meaning the actual proportion of cleared auctions may have been even lower.

According to separate data from CoreLogic, Melbourne’s median home price fell 0.2% during the week, extending the decline since the beginning of the year to 4.7%.

CoreLogic

Mirroring the performance from its neighbour to the south, Sydney’s clearance rate was also weak, coming within a whisker of falling to the lowest level in a decade.

Of the 82.1% of reported results, just 44.6% resulted in a sale, below the 45.7% level of a week earlier and far softer than the 61.3% level seen in the same corresponding week a year earlier.

Sydney’s median home price has fallen 4.5% this year, just shy of the drop recorded in Melbourne.

Current clearance rates in both cities point to the likelihood that prices will not only fall in the period ahead, but perhaps at a slightly faster pace.

Across the remaining capitals monitored, clearance rates improved in Adelaide, Brisbane and Perth but weakened in Canberra.

However, despite the mixed performance, the falls in Melbourne and Sydney saw the combined capitals clearance rate slump to 46%, down one percentage point from the level reported a week earlier.

The national figure has now held below 50% in each of the past four weeks, and is now moving back towards multi-year lows seen at the beginning of October.

CoreLogic

If the current trends are anything to go by, there’s a good chance new cyclical lows may seen this week with a huge increase in properties set to go under the hammer in Melbourne and Sydney.

“The combined capital cities are expected to see an uplift in auction activity this week with 2,782 homes scheduled to go under the hammer,” CoreLogic says.

“This is an increase of 30% compared to last week when 2,139 properties were taken to auction.”

Melbourne will host 1,630 auctions, more than 500 more than the prior week. Sydney volumes will also increase, lifting to 756.

Activity levels will also increase in Brisbane and Canberra. Volumes will be largely unchanged in Adelaide and Tasmania and fall in Perth.

CoreLogic will release its preliminary clearance rate data on Sunday.

NOW READ: The downturn in Sydney and Melbourne’s housing markets is showing no signs of slowing

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