It looks like Sydney auction clearance rates have taken another big step down

The Sydney Harbour Bridge and Opera House. Getty Images.

It looks like the weakening of the Sydney and Melbourne property markets may be gathering pace.

Preliminary data from CoreLogic shows the Sydney auction clearance rate at 61.5%. This is almost a full three points lower than last week’s preliminary clearance rate of 64.4%.

The preliminary data issued on Sundays is usually revised down around five points or more to give a final result. Last week’s final clearance rate for Sydney 58.5%, so this week’s final number may well be around 55%, a level consistent with annual price declines in Australia’s biggest city.

This chart from CoreLogic shows the trend in Sydney:

Source: CoreLogic

Melbourne had its second-busiest week of auctions this year, with 1,717 properties under the hammer. Its preliminary clearance rate was 69.6%, fractionally above the final clearance rate of 69.2% last week.

Nationally, CoreLogic notes:

The final clearance rate has remained below 65 per cent for the last 4 weeks and it’s likely that this will be the case again on Thursday when the final results are released. One of the biggest contributors to the softer auction market conditions is Sydney, where the final clearance rate has remained below 60 per cent since the last week of October, while Melbourne has slipped below 70 per cent for the second week in a row.

Auction clearance rates are a reliable forward indicator of property price movements. This recent chart from AMP Capital’s chief economist Shane Oliver shows the relationship:

As you can see, sustained auction clearance rates in the mid-50s are associated with year-on-year price declines.

Business Insider reported last week that house prices nationally had gone backwards, led by the weakness in the Sydney market. More on that here.

Real estate agents have told Business Insider that people selling property in Sydney have “unrealistic expectations” when it comes to the prices they want for their properties.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.