Sydney auction clearance rates are tumbling closer to the point where prices start falling

There has been mounting evidence that the heat has been coming out of Sydney’s property market after years of double-digit gains.

The tightening of investor lending rules and interest rate increases announced by all the major banks on mortgages are starting to bite.

The question now is whether prices will merely stall or if the market will reverse and see a period of price falls.

According to recent research from Deutsche Bank, house prices in Sydney typically start falling when auction clearance rates hit 45% or below.

The clearance rate is still some way off there but it is tumbling fast, hitting 59.2 Saturday, down from 64.4 last week, according to a report in Domain.

This chart from Deutsche Bank shows the relationship between clearance rates and price movements:

Here’s Domain:

There were 1011 auctions scheduled for Saturday and with 652 results reported, Domain Group put the clearance rate at 59.2 per cent – well down on last weekend’s 64.4 per cent.

There were 1011 auctions scheduled for Saturday and with 652 results reported, Domain Group put the clearance rate at 59.2 per cent – well down on last weekend’s 64.4 per cent.

“The market has crashed below 60 per cent with no sign of bottoming out,” said Domain Group senior economist Dr Andrew Wilson.

The report on Saturday’s auction activity also notes that at some sales, “sellers were shocked to discover that no buyers had turned up to their auction”.

Head over to Domain for more >>

SEE ALSO: These are the two critical numbers to watch on Sydney and Melbourne property prices

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