The ratio of successful Australian home auctions, a measure of housing demand, is starting to trend lower in another sign of a slowdown in the nation’s property market.
While the preliminary auction clearance rate came in higher at 73.9%, research firm CoreLogic expects the final number to fall from the previous week, when it is released on Thursday. Last week clearances came in at 71.3%, the third lowest reading so far this year.
“With auction clearance rates typically revising lower as more results flow through, the final clearance rate is likely to be lower than what was recorded last week,” CoreLogic said.
That adds to signs of a cooling market. House prices in Australia’s capital cities slipped for the first time in 18 months in May as affordability and tighter lending rules come to the fore.
Combined capital cities home prices fell 1.1% in May, the weakest monthly result since November 2015. Prices nudged up 0.1% in April.
To be sure, while the auction clearance rate is slipping, it is still healthier than the same time last year. A total of 2,545 homes were auctioned last week compared with 2,008 last year, when the success rate stood at 68.2%, CoreLogic said.
Melbourne and Sydney saw their preliminary clearance rates rise compared with last week’s finalised results.
Sydney’s preliminary auction clearance rate increased to 77.5% from 72.7% in the previous week. Volumes were lower at 1,000 homes taken to auction, compared to 1,101 in the previous week.
Across Melbourne, 1,181 homes were taken to auction and preliminary results show a clearance rate of 75.4%, increasing from last week’s 74.2% across 1,366 auctions. That was the lowest clearance rate for the city so far in 2017.
Smaller capital city markets results were mixed with clearance rates falling in Brisbane and Canberra, CoreLogic said.