After a rollicking start to the year, all of the recent data is pointing to a slowdown in Australia’s southeastern housing markets.
According to data released by CoreLogic on Sunday, a national preliminary clearance rate of 69.1% was reported across Australia’s capital cities last week, down marginally on the preliminary figure of 69.6% recorded in the previous week.
The decline came despite few properties being taken to market, something that traditionally occurs during the winter months.
“This week’s preliminary result indicates that clearance rates are continuing to soften, after last week saw the final clearance rate surpass the previous week as the lowest recorded over the year to date across the combined capitals at 66.7%,” said CoreLogic.
Despite the preliminary figure being slightly above the final reading reported in the prior week, CoreLogic says its likely that the final reading — released on Thursday — will be revised lower, leaving it sitting around the same levels seen a year ago.
“With results still being collected, it is likely that the final clearance rate this week will revise even lower again,” it says. Compared to results from one year ago clearance rates are relatively similar with the 67.4% rate of clearance across a slightly lower volume of auctions.”
This table from CoreLogic shows how individual markets fared last week.
Clearance rates in Melbourne and Sydney, the busiest auction markets across the country most weeks, rebounded modestly, although both are likely to be revised lower when final figures are released on Thursday.
“Melbourne’s preliminary clearance rate increased to 71.9% this week, up from last week’s final of 71.0%, when the lowest clearance rate since July last year was recorded,” it said.
“Across Sydney, 918 homes were taken to auction this week with the preliminary clearance rate for the city above 70.0%. Last week saw the final clearance rate drop even lower for a third week in a row, with 66.7% of the 927 auctions clearing.”
Given the moderation in clearance rates in these cities, the largest in the country, it’s seen the national average slow in recent weeks thanks largely to tighter macroprudential rules from Australia’s banking regulator, APRA, limiting interest-only mortgage lending to 30% of total new mortgage lending.
Affordability constraints in some markets, along with out-of-cycle mortgage rate increases over the past few months, are other factors that have likely contributed to a slowdown in market activity.
Markets will get further news on that front later today when CoreLogic releases its weekly capital city home value index, revealing price movements across Australia’s five mainland state capitals.
On Friday, the Reserve Bank of Australia will release private-sector credit figures for June, with a further moderation in housing credit — led by the investor sector — likely to be reported.