- Sydney auction clearance rates fell below 50% last week, the first time that’s been seen outside of a holiday period in six years.
- Melbourne’s clearance rate also held below 60%.
- Auction clearance rates have historically lead annual price movements in house prices.
Sydney auction clearance rates have tumbled below 50%, pointing to the likelihood of further, and potentially accelerated, price declines ahead.
According to CoreLogic, Sydney’s final clearance rate tumbled to just 47.1% last week, the lowest level outside of a holiday period in six years.
“[This was] the lowest seen since early 2016 when activity was less comparable over the January low season,” it said.
For a non-holiday period, the last time Sydney’s clearance rate was this low was towards the end of the 2010-2012 market downturn.
In the previous week, Sydney recorded a final clearance rate of 56.1%. Auction volumes were largely unchanged week-on-week.
Demonstrating just how quickly the city’s housing market has cooled, Sydney’s clearance rate stood at 71.9%.
Only a handful of regions in Sydney recorded a final clearance rate of above 50%, with many seeing clearance levels in the 30% region.
Like Sydney, Melbourne also recorded another soft result with just 59.8% of auctions clearing, a modest improvement on the 59.0% level of a week earlier.
Auction volumes fell marginally over the week, perhaps contributing to the small uptick.
A year ago, Melbourne’s clearance rate stood at 73.1%. Clearly, the heat has also come out of its market, explaining why prices in the city are falling the fastest of any capital city at present.
In the smaller markets, clearance rates improved week-on-week in Adelaide and Brisbane but weakened in Canberra and Perth.
Largely reflecting the steep drop in Sydney, Australia’s combined capital city clearance rate slid to just 54.1% from 56.2% a week earlier, leaving it at the lowest level in five years.
Auction volumes were largely unchanged, falling to 2,281 from 2,297.
Turning to the week ahead, activity looks set to slow sharply due to a long weekend in many parts of the country.
Sydney is the busiest capital city market with 377 homes set to go under the hammer, presuming last week’s result doesn’t see vendors pull their property from the market.
Melbourne volumes are also low, falling to just 243.
Given that auction clearance rates have historically lead annual price movements in house prices, the latest figures suggest the small nationwide price decline seen in the 12 months to May could get steeper in the months ahead.
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