Australian auction clearance rates continue to point to strong house price growth in the period ahead.
According to preliminary data released by CoreLogic, a national clearance rate of 71.1% was recorded across Australia’s capitals last week, down fractionally on the 71.7% preliminary figure reported in the previous week.
Last week’s preliminary figure points to the likelihood that the final national clearance rate — released on Thursday — will fall to the high 60% region, maintaining the same pattern seen since the start of June.
Final clearance rates are regularly revised down from preliminary estimates as late, often unsuccessful auction results, are reported to CoreLogic.
CoreLogic said that higher-than-usual auction volumes may have contributed to the slight decline in the preliminary reading last week.
“Auction activity increased across the combined capital cities this week with 2,239 homes taken to auction, the largest number of auctions held since the first week of June,” it said.
“The larger volume of auctions returned a preliminary auction clearance rate of 71.1%, up from last week’s final results when 2,064 auctions were held and 69.8%. Over the corresponding week last year, the clearance rate was 74.5% and 2,153 auctions were held.”
Across the country, Melbourne, the largest auction market of all Australian capitals, saw clearance rates fall to 73.8%, below the preliminary and final figures of the previous week of 77.7% and 75.6% respectively.
Sydney, at 71.6%, saw its preliminary figure tick up from the final reading of 67.8% reported in the prior week. It was also fractionally higher than the 70.8% preliminary figure offered for that week.
Of the smaller markets, preliminary clearance rates of 83.3% and 75.5% were recorded in Hobart and Adelaide, the highest of all capitals during the week.
While clearance rates have fallen from the levels seen earlier this year, recent analysis from UBS found that a rate of around 70% has typically coincided with an annual increase in Australian house prices of around 10% per annum in average weighted-terms.
Indeed, as seen in the table below, that’s the exact increase reported in CoreLogic’s Capital City Home Value Change Index over the past year.
Over the past month, prices rose in all mainland state capitals except for Perth where they fell by 0.7%. Combined, prices in these five capitals increased by 0.6% in weighted terms despite a small 0.2% decline in the more volatile weekly index.