Sydney & Melbourne drag auction clearance rate lower

The combined capital city auction clearance rate fell to 44.1%, its lowest weekly result since late June, Cotality said.

The weighted average final clearance rate was down 1.3 percentage points from 45.4% a week earlier and 24.1 percentage points below the 68.2% recorded in the corresponding week a year earlier. Fewer than half of homes taken to auction sold across the combined capitals.

The spring auction market has yet to produce the usual seasonal improvement, according to the housing market data group. The combined capital clearance rate has now declined for four consecutive weeks, while auction volumes remain well below last year.

In Sydney, auction numbers more than doubled to 632 from 299 the previous week, following a long weekend-affected period. Even so, volumes were 36.0% lower than the 988 auctions held a year earlier.

The city's clearance rate fell to 45.6%, down 3.7 percentage points from the previous week and 22.6 percentage points lower than the same week last year, when 68.2% of auctions cleared.

Melbourne recorded 703 auctions, up about 6% from 666 a week earlier but 43.7% below the 1,249 held a year earlier. Its clearance rate was 49.8%, little changed on the week, and the strongest result among the capitals covered.

Only Adelaide and Brisbane recorded more auctions than in the same week last year. Adelaide held 138 auctions, up 97.1% from 70 over the long weekend and 43.8% above the 96 recorded a year earlier.

Adelaide also posted the largest weekly increase in clearance rates of any capital city. Its rate rose 12.0 percentage points to 44.9% from 32.9% the previous week, although it remained well below the 77.1% achieved a year earlier.

Brisbane's volumes rose to 197 auctions from 138 a week earlier and were 55.1% higher than the 127 held a year ago. Its clearance rate, however, remained near an 18-year low at 21.8%, compared with 66.1% in the corresponding week last year.

Canberra's clearance rate increased 4.0 percentage points to 38.5%. The city hosted 65 auctions, up from 29 the previous week but down from 106 a year earlier.

Perth cleared three of its 14 auctions, matching the number sold the previous week, when eight homes went under the hammer. No auctions were held in Tasmania, after two the previous week.

Annabelle Mezieres, Economist at Cotality, said: “The spring auction market so far has not delivered the usual lift in auction performance seen during this time of year. The combined capital clearance rate has declined for four consecutive weeks; with auction volumes well below last year, buyer demand appears to be the main constraint.”

Outlook

Across the combined capital cities, 1,501 homes are scheduled to go to auction in the current week. That is 14.2% lower than the 1,749 held the previous week and 42.8% below the 2,626 held in the same week a year earlier.

Melbourne and Sydney remain the largest auction markets, but Melbourne is expected to account for most of the weekly decline. Scheduled volumes in Melbourne are set to fall by a third to 469 from 703 the previous week, and are less than half the 1,142 auctions held in the comparable week last year.

The drop in Melbourne coincides with the first week of auctions subject to Victoria's new reserve price disclosure requirements. It is too early to determine whether the legislative change is affecting seller behaviour, although some vendors may have brought campaigns forward or delayed auction decisions while the market adjusts.

Sydney is expected to host 688 auctions, up 8.9% from 632 the previous week, making it the largest market this week. Even with that rise, volumes in the city remain 36.2% below the 1,079 recorded a year ago.

Among the smaller capitals, Adelaide is scheduled to hold 124 auctions, down 10.1% from 138 a week earlier but 40.9% above the 88 held a year earlier. Brisbane is set for the largest weekly fall in this group, with scheduled volumes dropping 21.8% to 154 from 197, which is also 23.0% below the 200 held in the corresponding week last year.

Canberra is expected to host 53 auctions, down 18.5% from 65 the previous week and 48.5% lower than the 103 recorded a year earlier. Perth and Tasmania remain small auction markets, with 12 and one auction scheduled, respectively.

Mezieres said: “The sharp drop in Melbourne auctions coincides with the first week of auctions subject to Victoria's new reserve price disclosure requirements. While it is too early to determine whether the legislative changes are affecting seller behaviour, some vendors may have brought campaigns forward or delayed auction decisions while the industry adjusts to the new rules.”