Australia’s residential auction clearance rate fell to the lowest level in 2015 last weekend, pointing to a further softening in sentiment towards outlook for Australia’s property market.
According to preliminary data released by CoreLogic RP Data, the national capital city auction clearance rate fell to just 59.2% last weekend based on the results of 3,209 auctions held, down on the 60.1% level achieved in the previous weekend.
The same weekend last year saw 3,507 homes taken to auction with a clearance rate of 63.7%.
Sydney, the nation’s largest and most expensive property market, recorded a preliminary auction clearance rate of just 55.6% based off 1,051 auctions held, down significantly on the 66.1% level achieved during the same weekend a year earlier.
Melbourne, second to Sydney in terms of market size and property valuation, recorded a preliminary clearance rate of 63.0% based on the results of 1,603 auctions held.
Based on the charts below from Corelogic RP Data, the trend in clearance rates in both cities is clearly lower.
The results from Australia’s other capital cities can be found in the table below, also supplied by CoreLogic RP Data.
Reflective of weakening buying interest, vendor discounting – the average percentage difference between the original listing price and the final selling price according to CoreLogic RP Data – is now occurring across all Australian capital cities, particularly in those most aligned with the fortunes of the mining sector.
In late October, Deutsche Bank economist Phil O’Donaghoe suggested that an auction clearance rate of 45% in Sydney, and 55% for Melbourne, typically signalled falling property prices in both cities based on historic patterns.
This view was repeated by the RBA in its November statement on monetary policy in which the bank presented this chart that tracks the relationship between auction clearance rates in Sydney and Melbourne and annual movements in house prices.
While auction clearance rates in Sydney and Melbourne are not at levels that have previously heralded declining house prices, the recent fall in auction clearance rates signals that the house price boom in both cities is, at the very least, now close to its end.
CoreLogic RP Data will release the final auction clearance data for last weekend on Thursday this week.
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