Hot on the heels of a sharp deceleration in price growth in the last three months, we’ve just received another indicator showing Australia’s housing market is slowing down.
According data released by CoreLogic today, clearance rates just hit the lowest level seen this year.
At 66.4%, the final figure for last week was the weakest since mid-2016, driven by declines in Sydney and Melbourne, the largest auction markets in the country.
“Melbourne’s final auction clearance rate fell last week, with 71.3% of auctions clearing. There were 976 auctions held across the city, decreasing from the 1,124 auctions the previous week when a higher rate of clearance was recorded (72.3%),” said Corelogic.
In Sydney, final results saw the clearance rate for the city decrease last week, with 65.5% of the 779 auctions successful, down from the 67.4% across 832 auctions the week prior.
Of the smaller markets, Corelogic said that the weekly results were mixed with clearances rates improving in Brisbane, Perth and Tasmania while Adelaide’s and Canberra’s fell.
Largely as a result of the weakening in Sydney and Melbourne in recent months, the national clearance rate was well below the 77.1% level achieved in the same corresponding week in 2016, and came despite lower auction volumes during the first week of spring.
Yet another sign that the heat is coming out of the property market as tighter restrictions on investor activity and affordability constraints start to bite.
Earlier this month, CoreLogic warned that prices in Sydney and Melbourne — among those capitals that had experienced the fastest increase in prices over the past year — could start to fall in the months ahead.
“If the current trends continue, by the end of the year we could see dwelling values across Australia’s two largest housing markets, Sydney and Melbourne, trend lower as they move through their cyclical peaks,” said Tim Lawless, head of research at CoreLogic.
“Historically, a negative shift in home values has followed every growth phase, so it’s reasonable to expect a period of moderate value falls following such a sustained period of strong capital gains.”
Amidst signs of a slowdown, there’ll likely be plenty of interest on the the evolution in clearance rates as the Spring selling seasons kicks into gear.
CoreLogic is currently tracking 2,044 auctions across the nation’s capitals this week.
“Melbourne and Sydney are expected to see volumes remain relatively steady this week, with 998 Melbourne homes scheduled to go to auction this week, increasing by 2% on last week’s 976 auctions, while Sydney is set to see 2% fewer auctions this week compared to last, with 763 properties scheduled to go under the hammer from the 779 last week,” said CoreLogic.
“There are fewer auctions scheduled across the remaining capital cities this week compared to last, with the exception of Canberra where volumes are expected to increase slightly.”