Melbourne’s once-hot housing market is now following in Sydney’s wake and slowing down.
Auction clearance rates in Australia’s second largest city have fallen below 70% for the first time in over a year, according to data from CoreLogic today.
“Across Melbourne, final auction clearances rate dropped below 70%, recording a 69.2% success rate across a higher volume of auctions over the week [at 1,296],” CoreLogic said.
“This is the lowest recorded for the city since July 2016, falling from the 74.3% across 318 auctions over the week prior.”
It was also well below the 76.8% level recorded in the same corresponding week one year ago.
The decline in clearance rates mirrors a noticeable slowdown in price growth in the city. According to separate data from CoreLogic, prices in Melbourne grew by 1.9% in the three months to October, the weakest increase over a comparable period since mid-2016.
As seen in the table below, Melbourne’s market seems to be displaying all the traits seen in Sydney over recent months, only in a laggard fashion.
As in the previous two weeks, clearance rates in Sydney — Australia’s largest and most expensive housing market — came in below 60% once again.
“The final auction clearance rate recorded a more moderate fall across Sydney with 58.5% of the 1,102 auctions clearing, down from the 59.8% across 1,232 auctions the previous week,” CoreLogic said.
One year ago, Sydney registered a stonkingly-hot clearance rate of 81.4%.
As opposed to Melbourne where they are still increasing, prices in Sydney have fallen in the past two months, a trend that on early evidence looks like it will continue in November.
The slowdown in both cities reflects tighter lending restrictions on local and foreign investors, affordability constraints and, in Sydney’s case, a sharp increase in stock on offer compared to a year earlier.
While clearance rates in Sydney and Melbourne both fell from a week earlier, Australia’s combined capital city clearance rates rose to 62.8% from 61.5%, an outcome that largely reflects more stock being on offer in Melbourne following the long weekend a week earlier.
Nationwide, 2,907 properties went under the hammer, up from 2,046 in the previous week.
Fitting with the declines in Australia’s largest capitals, the national clearance rate was below the 74.4% level a year ago.
In the smaller capitals, clearance rates rose week-on-week in Canberra and Perth, but fell in Adelaide, Brisbane and Hobart.
Turning to the week ahead, it looks set to be another bumper weekend with 3,066 properties currently up for auction.
“Across the two major auction markets activity is expected to rise,” says CoreLogic.
“Melbourne has 1,563 auctions scheduled this week, increasing from the 1,296 auctions last week. Sydney is set to host fewer auctions with 965 homes currently scheduled for auction, down on the 1,102 auctions held last week.
“Across the smaller markets, the number of scheduled auctions has increased in Adelaide, Perth and Tasmania, while there are fewer in Brisbane and Canberra.”
Richmond, in Melbourne, will host 22 auctions, making it the busiest individual suburb. Mount Waverley, Essendon and Glen Waverley — also in Melbourne — will also have 20 properties or more going under the hammer.
This table from CoreLogic shows the final clearance rates in Sydney and Melbourne by region for last week.