This article is from the Australian Property Journal archive
WEAKER buyer sentiment, rate hikes and rising inflation sent auction clearance rates tumbling by 15% over the year to the June quarter, despite it being the second-busiest on record, and more vendors may opt for private sales.
CoreLogic’s Quarterly Auction Market Review showed that 60.8% of reported auctions were successful in the three-month period, a far cry from the 75.7% seen a year earlier and also the lowest clearance rate for any quarterly period since September 2020, which saw 59.2% while Melbourne was in the throes of an extended lockdown.
There were 31,439 auctions held in the June quarter, following the busiest March quarter on record when 23,748 homes went under the hammer and clearance rates held up at about 70%. Auction volumes on the weekend lifted but are down by more than 15% annually, according to Domain, and clearance rates remain in the low 50% range.
CoreLogic research director Tim Lawless said the results continue to highlight tougher selling conditions as interest rates rise and consumer sentiment remains low.
The rate of growth in values has slowed since peaking in early to mid-2021, and the trajectory has impacted the auction market, gradually declining from its record high of 80 % in March 2021.
Adelaide recorded the highest clearance rate this quarter (75%) followed by Canberra (68%), Melbourne (61.1%) and Brisbane (58.7%). Sydney’s clearance rate for the quarter was 57.2% while Perth (46.4%) and Tasmania (41.7%) both came in under 50%, although auctions make up a very small portion of listing campaigns in those states.
In terms of volumes, Melbourne was the busiest auction market, with 13,818 homes taken to auction, followed by Sydney (11,119). Adelaide was the busiest of the smaller capital cities (2,457), followed by Brisbane (2,281), Canberra (1,528) and Perth (211). Just 25 homes were taken to auction across Tasmania.
Lawless said that after the volume of auctions was consistently higher than a year ago through the first four months of the year, the number of auctions held have been lower compared 2021 since the start of May.
“The trend towards lower clearance rates has been most visible in Sydney and Melbourne, where housing values are now falling and advertised stock levels are back to above average levels, however clearance rates are also trending lower in stronger markets like Brisbane and Adelaide.
“Seasonally the number of auctions held in winter normally trends lower, however it’s possible this could be amplified this year as the housing market moves into a downturn.
“Potentially we could see more vendors choosing to sell by private treaty rather than auction as fewer competitive bidders make the auction process less effective at achieving the best possible price.”
Auctions that pass in or are withdrawn are counted as unsuccessful auctions. As conditions weakened over the quarter, the combined capitals withdrawal rate rose by 3.14%, from 9.61% in the March quarter to 12.75%. Sydney’s withdrawal rate rose from 12.9% over the three months to March, to 19.4% in the June quarter, with Melbourne’s up a less substantial 1.6 percentage points to 9.6%.
All 15 of Sydney’s sub-regions saw auction volumes increase over the June quarter the March period, although clearance rates were lower, while volumes and clearance rates were down. North Sydney and Hornsby held the most auctions this quarter (1,655), and recorded the highest clearance rate (61.9%), while all other sub-regions recorded a clearance rate below 60%.
In Melbourne, all but one of the nine sub-regions saw an increase in auction volumes over the June quarter compared to the previous three-month period, while clearance rates dropped across all sub-regions. Melbourne’s outer east recorded the highest clearance rate over the June quarter with two-thirds, followed closely by the Mornington Peninsula. The west, inner and north west regions all saw clearance rates drop below 60%.
Reservoir in Melbourne’s north held 255 auctions in the June quarter, the highest volume of any capital city region while 29 of the 31 auctions held in Adelaide’s Ingle Farm sold for a 93.5% clearance rate during the period.
Newcastle and Lake Macquarie was the best performing regional auction market with 62.2% clearance rate from 418 auctions.. The Gold Coast was the busiest regional centre with 902 properties going under the hammer.
